Fairfax board stands firm on Rinehart abiding by charter
THE mining magnate Gina Rinehart is unlikely to get broader shareholder support in her bid for a seat on the board of Fairfax Media unless she agrees to abide by its 20-year-old charter of independence.
Meanwhile, Fairfax Media yesterday dismissed commentary that the charter was non-binding on board members.
''No existing or former board member has ever challenged the notion that editorial independence was at the heart of the company,'' a Fairfax spokesman, Brad Hatch, said. ''The board adopted the charter of independence in 1992 by resolution and it is considered binding - to suggest otherwise is total nonsense. Indeed, the board relied on the charter as a successful defence in a defamation action in 2002.''
Ms Rinehart has amassed an 18.6 per cent stake in Fairfax Media (publisher of the Herald) over five months and is said to be seeking up to three seats on the board. However, she is said to have refused to agree to resolutions adopted by the board which prevent directors meddling with editorial content.
Fairfax's second largest shareholder, Allan Gray, supports Ms Rinehart's bid for a seat but said editors should be allowed to report the news independently and without influence from board members.
''If they're not independent, people will cease reading the paper,'' Allan Gray's chairman, Simon Marais, said. ''That is important.'' He told ABC TV it would be inappropriate for directors to use Fairfax's media assets to push personal beliefs or advocate for their own industry.
Fairfax shares fell 1¢ to 58¢ on Friday, suggesting investors were not counting on Ms Rinehart launching a full takeover. ''If people thought [Rinehart was] going to to make a bid for the company, then the share price would be rallying,'' a Goldman Sachs analyst, Christian Guerra, said.
It comes as Kerry Stokes's Seven Group revealed late on Friday its intention to take over James Packer's Consolidated Media Holdings by building on its 24 per cent stake. CMH owns 25 per cent of Foxtel and half of Fox Sports. Seven asked the competition watchdog to review its ''proposal for an acquisition of all of the shares in CMH which [Seven] does not currently own'' after News Limited revealed on Wednesday that it was offering $3.50 a share for ConsMedia.
News owns the other half of Fox Sports and a 25 per cent stake in Foxtel. If Seven is successful, it will thwart News Corp's plans to increase its pay TV assets and emerge with its own quarter-share of Foxtel and half of Fox Sports. And Foxtel will maintain its existing three-owner structure rather than News Corp and Telstra owning 50 per cent each. The Australian Competition and Consumer Commission expects to make a decision on both applications on August 2.