Date: June 16 2012
It looks as if the pressure to have Gina Rinehart on the board of Fairfax, the media company which, inter alia, owns The Canberra Times, will prove irresistible. Rinehart is already the biggest shareholder in the company, and she has been steadily increasing her holdings, even as company chairman Roger Corbett has made it clear that he does not want her on the board.
His objection to her being on the board is that he does not think that she would limit her participation to judgments about Fairfax as a business. He thinks that she wants to be there so as to influence its editorial policies. She probably does, of course.
She is, on the other hand, one of the few people showing much in the way of faith in media organisations at the moment. Fairfax shares sell for less than a tenth of their price of only a few years ago, and most of what passes as business analysis of media stocks would not suggest that it is greatly undervalued. This is not necessarily for want of faith in its management as such, but serious uncertainty about the future of newspapers, and even about the business models by which Fairfax, along with other major media owners, is making a transition on to the internet. We are in Indian territory without a map, and no one is certain of where we are going, or whether we are on the right path.
The conventional argument against having a Rinehart on the board starts with the fact that she is the substantial controller of an enormous business. The profitability of that business, moreover, turns in serious part on decisions made by government, whether as to taxation, importing and exporting licensing, access to skilled staff, probably from overseas, and so on. There is a fear that a Rinehart will manage a media company, if she gets control, so as to influence, and reward and punish government, according to her views about the best interests of her company, rather than by some abstract theory of the general public interest. Corbett and the existing directors have a self-denying ordinance that they will not seek to influence editorial decisions.
This fear of being conflicted is aggravated by the fact that Rinehart is notoriously a person of strident political views, supposedly on the far right of politics. She is decidedly not in favour of big government, or high taxation. Some say her views are similar, if not as earthily described, as her father, Lang Hancock, who died 20 years ago. Hancock himself once established a newspaper in Western Australia to promote his opinions.
Two other prejudices against her, which may or may not be true, is that she has more than her share of the Western Australian chip on the shoulder about easterners and that she is so rich that she could own and operate Fairfax as an instrument of propaganda rather than on a profit and loss account. Accordingly, some suspect, Rinehart might wish to purge the organisation of commentators and writers with whom she disagrees, or against whom she has grudges, or who have been identified to her by her friends as pinkos.
This is put up as a counter-argument to those who suggest that a major investor has no interest in trashing her product, or in lowering its reputation for integrity, quality or reliability. This was the argument used by Robert Holmes a Court in 1987 when it appeared, for a brief moment, that he owned the Australian Financial Review as a result of the dispersal of the old Fairfax empire by Master Warwick Fairfax.
People were worried that Holmes a Court - a stockmarket raider, pirate and, some said, whitemailer would use the Fin Review to promote the interests of companies whose shares he owned, and bag the managements of companies he wished to own or to extort. He would also, it was said, use it as a bully pulpit to hector governments and others about his ideas.
Holmes a Court pointed out, patiently, that doing anything like that would diminish the value of the paper. He had, in fact, purchased little more than its masthead, and the services of its staff: there was virtually nothing in the way of tangible assets in the sale. Did people really think that he, whether as investor or speculator, would do anything to undermine its value?
We never got to find out, both because the sale fell through (in effect because of an argument about the terms and conditions by which the Fin Review would have
access to Fairfax services, such as its library, and printing presses) and because Holmes a Court died suddenly and unexpectedly a few years later. But he had acquired, in the course of other adventures, the West Australian (which he was to offload on Alan Bond), and certainly showed no tendency then to treat it as a personal plaything or instrument of his vendettas.
Then again, some might say that Robert Holmes a Court, if sometimes a billionaire, was not in the league of Hancock, either for wealth, eccentricity, or willingness to spend money to spread some personal gospel regardless of cost, expense, circulation or profitability.
Rinehart could afford to wager a few billion without putting her whole fortune in doubt, but I expect that her primary motivation is to take advantage of what she sees as a business opportunity, rather than to hector public opinion. Indeed, if the latter was her main intention, I would expect that she would be more focused on wheedling the Murdoch tabloids from News Ltd, with their mass focus, rather than seeking the more cerebral and focused organs of Fairfax.
One answer to that could be that a sentimental Rupert Murdoch would never sell his Australian newspapers. Perhaps, but, like his British newspapers, they are no longer important in the general scheme of News operations. Many in the empire, including probably all of the children, have no sentiment about newspapers at all.
It is, of course, the spectre of Murdoch as interfering owner which hangs over Rinehart. Yet if Murdoch is an interferer, he has never been the dilettante that some suggest Rinehart might be. Murdoch newspapers are the modern working model for images of proprietors using their organs to push their views, puff their friends and their side businesses, and punish their enemies. This is of course always denied, but it is remarkable how much, over the years, Murdoch newspapers have sung from the same hymn sheet, acted as uncritical advertisers of businesses such as Ansett, Lotto, rugby league, as well as media businesses such as Foxtel and Fox.
That's apart from the way newspapers have been used to create news propaganda to support the prejudices of Murdoch and his senior editors, to anoint political parties thought likely to win elections (so that Murdoch's capacity as a king-maker could be enhanced with headlines such as ''It's the Sun wot done it'') and to kick politicians on the way out.
At Britain's Leveson inquiry, Murdoch has been blandly denying that he has ever asked a political favour of British politicians or officials, with generally, prime ministers, past and present, lining up to agree that they were never influenced or affected by anything he said or did. Of course a few chaps - Gordon Brown for example - have broken ranks to say the exact opposite, but even then they have seemed full of contradiction. Brown's wife, for example, is the self-proclaimed best friend of Rebekah Brooks, the former Murdoch executive now before the courts (and abandoned by Murdoch) on charges of attempting to pervert the course of justice.
By now, I should expect, the denials of influence or of unceasing efforts by politicians on both sides to brown-nose the Murdochs and other moguls are widely disbelieved. The behaviour of politicians, in particular, has seemed shameful. One might not like the Murdochs or their acolytes, but they are at least doing what they can to feather the Murdoch nest - otherwise called acting in their own economic interest. It seems clear, indeed, that one of the things which has distinguished Rupert Murdoch as an ever-accumulating mogul has been that he has had a clearer view of his interests - particularly long term - than anyone else, even among his own advisers. Which is not to say that he has not made bad investments - because Murdoch, in business, has been a gambler who plays the odds. But he has generally had a clear view of where he is going, and how he is going to get there.
But if he has used his businesses to ruthlessly push his own interests, and, sometimes, allowed businesses (say The Times of London or The Australian) to run at a loss because they provide him with influence and access to power, one will generally search hard for cases in which he has plainly worked against his own interests, for mere self-indulgence, even about his own political views.
I expect that it will be much the same with Rinehart. In any event, what happens to Fairfax because of Rinehart may not be seen first with Fairfax print products. More and more of the business of Fairfax is on line; and more and more of its content is managed around on-line needs. This does not mean that the interests of newspapers, as such, are neglected, but they are less and less important to the bottom line and many think that questions of the influence and power of media entities will have to be entirely rethought. Newspapers are losing revenue, and can no longer sustain the journalistic staffs of old. The internet is now beginning to generate revenue, but, so far, in nothing like the previous volume. The media badly needs long-term investors, perhaps patient ones. There's a shortage of volunteers.
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