Stormy Times at Fairfax Media

| June 1, 2012

By Trevor Smith
Australia Bureau Chief

BYRON BAY, NSW – Fairfax Media Limited is one of Australia’s largest diversified media companies. The group’s operations include newspapers, magazines, news/talk radio stations 2UE, Sydney; 3AW, Melbourne; 4BC, Brisbane; and 6PR, Perth as well as digital media operating in Australia and New Zealand. Fairfax Media was founded by the Fairfax family as John Fairfax and Sons, later to become John Fairfax Holdings. However, the family lost control of the company in December, 1990. The group’s chairman is Roger Corbett and the chief executive officer is Greg Hywood.  As of May 2008, Fairfax Media had a market capitalization of over A$5 billion.  By September 2011, this had fallen by more than 60% to less than A$2 billion.

In early February, 2012, mining magnate Gina Rinehart, Australia’s wealthiest person, increased her shareholdings to over 14% of Fairfax Media to make her the group’s largest non-institutional investor.

On Friday, May 25, Fairfax Media was embroiled in an editorial interference row after a director complained about one of its top radio presenters who had criticized the company for denying the world’s richest woman, Gina Rinehart, a seat on the board.

The unidentified male board member wrote a letter to Fairfax Radio about comments made by 2UE breakfast presenter Jason Morrison on Thursday.

Industry sources said Fairfax Radio responded by hiring outside legal counsel, as it felt it would be compromised if it attempted to arbitrate in a matter between a board member and the actions of one of its staff.

Fairfax chief financial officer Brian Cassell was “furious” that news of the stoush had leaked, a Fairfax insider said.

A spokesman for Fairfax Media declined to comment.

Morrison criticized Fairfax’s decision to overlook Mrs. Rinehart, its largest shareholder who had been pushing hard for a place in the boardroom, and instead appoint corporate reconstruction specialist James Millar.

“I am staggered that a decision has been made not to include Gina Rinehart on the board,” Morrison said on his radio show.

“That’s no comment about the person they have put into a spare seat, but why on earth would you not want to have on the team and in the room arguably one of Australia’s most successful businesspeople?”

Mr. Millar replaced Bob Savage, who has decided to step down to spend more time with his family.

Some fear Mrs. Rinehart may try to exert influence on the journalism of the company’s media outlets, which include The Australian Financial Review, The Age and The Sydney Morning Herald.

Mrs. Rinehart responded to this week’s boardroom shuffle with a stinging attack on the performance of the company.

“We welcome changes to the board of Fairfax, as it is quite evident the market understands that the approach of the current board is not delivering for the owners of the company, and maintaining the status quo will not improve performance,” she said.

“Circulation for its mastheads has fallen for five years continuously, affecting revenue.”

Morrison said yesterday he knew nothing of the complaint but that he did not regret his on-air comments.

“I stand by what I said on the air, and the content of it, and to be honest I don’t understand what the problem is with what’s been said,” he said.

At the close of trading Friday, May 25, Fairfax’s shares hit a new record low of $0.63, down by 2.34%.

 

Trevor Smith is a legendary Australian radio broadcaster who has recently assumed the role of Australia editor/bureau chief of TALKERS.  He is president of Aloha Media, producers of documentary content for radio and television broadcast all across Australia.  He can be e-mailed at alohamedia@iinet.net.au.

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Category: International