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Rinehart didn't start the fire

<em>Illustration: michaelmucci.com</em>

Illustration: michaelmucci.com

Here is a combat zone.

ABC TV, Q&A,

May 28:

Tony Jones (host): ''We've got a Facebook question … Why is Gina Rinehart so greedy?''

David Marr: '' … she's humiliating herself and her family in the courts … This is amazingly perverse behaviour … she seems to be willing to appear greedy … [and] brutally cruel to her own family … ''

Barry Humphries: ''I am not drawn to Gina. I mean, if I woke up in a motel with her on the next pillow I would … be very surprised. But then I don't like her family very much either.''

Miriam Margolyes: ''It's very difficult, isn't it, because, poor woman, she is not a beauty and I am not a beauty either so I know what it's like to be fat and ugly … ''

John Hewson: ''I find it very difficult to understand people like Gina Rinehart … I think you have a responsibility to put a bit back beyond what you've taken out.''

Q&A, June 4:

The Greens leader, Senator Christine Milne: ''Gina Rinehart had asked to lower the English language literacy standards for people being brought in. That's been something that unions have fought for 100 years for decent occupational health and safety standards … ''

June 7, the union house committees of the Herald, The Age and Australian Financial Review write to Rinehart urging her to support a charter of editorial independence which gives full editorial control to editors.

Q&A, June 11:

Julia Gillard: ''Gina Rinehart … got involved in a political debate … It's the right time to share a bit more from mining with other people around the nation … They said they didn't want to pay any more tax.''

The Herald, June 23, front page: ''[Rinehart has] a voracious appetite for litigation … ''

The Herald, Weekend Business opinion headline, June 23: ''Rinehart might influence people but she's winning few friends in doing so.''

The Herald, News Review, June 23: ''Former prime minister Malcolm Fraser believes this exercise of power is a frightening prospect for Australia. 'The idea that you can buy what you want is becoming pervasive and Rinehart seems to think politics and politicians are for sale.'''

THIS is just a snapshot of the combat zone as the traditional, informal alliance of like-minded people at the ABC and Fairfax tell the largest shareholder in Fairfax Media that, as things stand, she is not fit to control the company.

Ms Rinehart has also lit a fuse. She has criticised the performance of Fairfax, its management and its board. Having assembled 18.7 per cent of the company's shares, she wants to be appointed deputy chairman and have three positions on the eight-member board.

I don't know who has been advising her, but the best course of action would have been to say nothing in public, demand nothing, politely seek board representation commensurate with her holding, which is two positions, and not alarm the company, its staff, and the other 81 per cent of shareholders by implying she intends to heavily intervene in a business in which she has no experience.

It is not boards who change the culture of a company. It is the praetorian guard they install. That is key. The power to appoint editors has always been vested with the board.

None of what has transpired has so far addressed the structural problem that has obliged Fairfax to make extensive job cuts to staunch losses at its flagship newspapers.

The company's deepest structural problem is not the internet, nor changes in technology that are obliterating the distinctions between television, computer and phone. Its deepest structural problem has been the bureaucratisation of the company.

Fairfax has behaved like the ABC except that it does not have the almost $1 billion a year in annual government tax-funded subsidy.

The portrayal of this ominous stand-off between Fairfax Media and its biggest shareholder has seen self-absorption on both sides. The narcissism of the metropolitan media in reporting about itself has been evident, especially at Rupert Murdoch's subsidised ideological mouthpiece The Australian.

You would think Fairfax was a company of three newspapers with a bushel of minor add-ons, when the opposite is true. It is a company of 330 newspapers and magazines, one of the biggest newspaper groups in the world. Last week, Deutsche Bank issued a report on Fairfax which valued its metropolitan print business at zero. That is fair value under their current cost structure, which is among the highest in the world for newspapers.

It is being addressed. Fairfax is far from a sunset company. It has at least a billion dollars in enterprise value trapped inside its current structure and not reflected in its market value. It has a big, profitable and growing internet operation. It has more readers and more reach than ever before. It can maintain the Herald and The Age as quality newspapers indefinitely providing their costs are contained within a new business model.

Most of the Fairfax newspapers and niche publications are small and humble but profitable and sustainable. They are below the radar of the internet. They are key information hubs for their local communities. They are thus the sort of newspapers that the world's most successful investor, Warren Buffett, has begun buying.

What Fairfax needs most is a proprietor who is a media entrepreneur. What it needs least is a self-appointed priesthood of the status quo willing to fight to the last dollar of other people's money.

If an ongoing public power struggle breaks out between progressive union activists and a libertarian who despises progressive journalists the most likely outcome is that Fairfax Media will be broken up so that its viable elements can prevail and its shareholders can salvage their investments.

As things stand, the Herald and The Age are worth more dead than alive. The market is indifferent to their survival. This is no time to bluff.

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245 comments

  • Danny is wrong. Paul Sheehan is a tiresome Rightist who sometimes aggravates me intensely, but he also represents a sizable chunk of opinion out there in the community and he represents it well. To have the Fairfax board or their editors sack him for his political opinions would be to make the same mistake that I'm worried that Gina Rinehart will make.

    The day you start sacking people in the media for their political opinions is the day you close down freedom of speech. If having Paul Sheehan on staff is the price of being able to read the excellent work of (say) Martin Flanagan, it's one I'm perfectly prepared to pay.

    Commenter
    Greg Platt
    Location
    Brunswick
    Date and time
    June 25, 2012, 9:15AM
  • What worries me about this women is what she had done to her own children to keep her money. If she'll go to these lengths against her own children, what hope is there for those she doesn't care about?

    Commenter
    John
    Location
    Burbs
    Date and time
    June 25, 2012, 7:55AM
    • Sorry, I disagree. She made the money by smart reinvestment. The company was not so healthy when she took over. Her children should try and work.

      Commenter
      Bruno
      Location
      Bondi
      Date and time
      June 25, 2012, 8:43AM
    • Why? Gina's never worked a day in her life.

      Commenter
      sarajane
      Location
      melbourne
      Date and time
      June 25, 2012, 8:54AM
    • sarajane, what does the word 'work' mean to you?

      Commenter
      Ironbark
      Date and time
      June 25, 2012, 9:22AM
    • ironbark - does inheriting money, suing people and riding a commodities boom constitute 'work'?

      Commenter
      hired goon
      Date and time
      June 25, 2012, 9:31AM
    • @ sarajane & hired goon; How exactly does one quadruple their money and start down the road of becoming the richest person in the world without 'working' especially given as Bruno mentioned, the company was not in great condition when she received it.

      Lets call a spade, a spade here. She did inherit a lot of money, should we dislike her for that? No. Has she worked extremely hard (and I challenge anyone to PROVE that she hasn't) to get the company back up and made some very smart investments. Thus makes her very large amounts of money. Yes. So what's with all the angst?

      She didn't take it from your pocket, in fact lets not forget how much money her multi-billion dollar company IS bringing into Australia. It's true, she has outsourced some jobs for people overseas, and in a Utopian world, we would love to see nothing but Aussie's in those roles. Although for a moment lets think about how much a 30% tax of her company into our government coffers is equal to? Then let's also think about how much her company DOES inject into our economy, and how many jobs HAVE gone to Australian's.

      Now if you happen to be a billionaire that has put those things into our country, then please speak up and correct me, but if your are still sitting there buying things from eBay because they are cheaper and not looking for 'Australian Made' symbols on your groceries and clothes. Please take a moment to think of how much of your money you are taking overseas. And leave the woman who is pumping Hundreds of Millions, if not Billions of dollars into our economy alone for a moment.

      How unlucky she is to have been so lucky...

      Commenter
      Aaron
      Location
      Melbourne
      Date and time
      June 25, 2012, 10:01AM
    • It's been well reported in the media that Gina's Hancock Prospecting Pty Ltd paid an effective tax rate of 10.6% for the 5 years leading up to 2008. I'd be surprised if anything has changed. These companies pay nowhere near 30% and Twiggy and Palmer may be worse than Gina. http://www.afr.com/p/opinion/labor_at_the_mercy_of_rent_seekers_sIq465m25ypeQXIABkNy0J

      Commenter
      Breko
      Date and time
      June 25, 2012, 10:44AM
    • Aaron - why do you have so much love for the woman?

      I don't understand why people idolise others simply because of the propensity they have to make money. Particularly when your argument can be boiled down to "she has lots of cash and, you know, the trickle down effect means we might benefit from it! Cool!"

      She wants to manipulate the political discourse in this country to serve her own financial desires. So she can have more money than she will ever need to live. To me, this is an odious thing to do. She is trying to purchase this paper and, while it has its problems, wants to influence editorial content so as to further her own financial interests.

      She denied her children access to money that their grandfather had set aside for them because, well, her justification was that they might have to pay tax on it. But whatever her justification, the result is that she maintains control of it.

      Perhaps she works hard. But so what? She isn't improving the lives of Austrailans in any way apart from tossing a few shekels their way as she sends our dirt to China.

      Commenter
      hired goon
      Date and time
      June 25, 2012, 11:14AM
    • Who cares about 'who said what to whom' or how Gina makes and spends her money. The average person is entitled to unbiased opinions of all and sundry. If Gina is not prepared to sign the 'Charter for editorial independence' we need to be really worried. Obviously she has ulterior motives. Once she starts manipulating the government for just one purpose, i.e. making more and more money who will stop her? Do we have politicians who will stoop to any gutter to win power? Do we need death and mayhem we hear about on a daily basis from the Middle East to win our democracy back?

      Commenter
      sensible
      Location
      Narre Warren
      Date and time
      June 25, 2012, 12:08PM
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