GINA and the press gang
A ‘Save Fairfax’ plan proves not so simple, write Nabila Ahmed, James Chessell and Michael Hobbs.
THE PLAN seemed simple enough: buy up 5 per cent of Fairfax Media, pile in with 15 per cent shareholder and Australia’s richest person, Gina Rinehart, launch a takeover offer, secure 30 per cent of the register, spill the board and whisk in new management and directors.
That is how to save Fairfax Media in six easy steps, at least according to Macquarie Radio co-owners – and some would say professional troublemakers – John Singleton and Mark Carnegie.
Singleton, Carnegie and their band of outsiders, including former Consolidated Press Holdings chief Trevor Kennedy and former Qantas boss Geoff Dixon, reckon they can salvage some value out of a company now worth a quarter of the A$5 billion-plus it was capitalised at less than five years ago, before the advertising market fell off a cliff and before new digital media started choking the more traditional segments of the sector.
In fact, they have even talked about former News Ltd chairman and chief John Hartigan as the man who would make it happen.
But their plan took an early stumble when, on New Year’s Eve, they were forced to lodge a notice with the Australian Securities Exchange disclosing their interest.
Through their Gutenberg Investments Trust (cheekily named after Johannes Gutenberg, who introduced printing to Europe) they had bought 3,554,783 shares or a teeny 0.15 per cent of the company. Based on Friday’s price, the holding is worth A$1.9 million (NZ$2.39m).
Although it makes a 15.14 per cent stake combined with Rinehart’s 14.99 per cent, the holding is well short of the 5 per cent Gutenberg was gunning for.
Their ambitions were foiled when early disclosure was forced on them by Rinehart’s lawyers, concerned about them acting in concert without telling other investors.
Fairfax shareholders including Allan Gray’s Simon Marais are watching carefully but there are those in the market who doubt the loud, larger-than-life quartet of Carnegie, Dixon, Kennedy and Singleton will have much success.
At least, their recent record does not hint at any rapid resolutions.
Carnegie, Singleton and Dixon are all part of a group that has been agitating for months for change at Qantas. Although they have managed to snare a stake of less than 2 per cent, the group has failed to win the support of unions and major shareholders.
Carnegie, through his A$130m Companion Fund, is trying to break up the cross-shareholding arrangement between Washington H Soul Pattinson and Brickworks. But he has not had any luck yet. Kennedy has been out of the public eye since giving up all of his public company directorships, including Qantas, after attracting the attention of the Australian Securities and Investments Commission in the 1990s as a partowner of a secret parcel of shares in Offset Alpine Printing, along with former Labor Party powerbroker Graham Richardson and deceased stockbroker Rene Rivkin. The commission spent seven years examining the secret shareholding before closing the probe without filing any proceedings in 2010.
But the agitators are not going away in a hurry, although they will need to find some new executive talent. Hartigan turned down the offer of being involved, partly because he is still bound by a noncompete agreement with News.
He has publicly spoken of his respect for Fairfax chief Greg Hywood. Sources close to former Ten Network chairman Nick Falloon say speculation that he has talked to members of the Gutenberg group about a role at Fairfax is not true.
Another option is John Alexander, Crown deputy chairman and former boss of Publishing and Broadcasting Ltd. A former editorin-chief of The Australian Financial Review, it is understood Alexander has been touted to the board – without success – as a potential director because of his wealth of old and new media experience.
Whoever ends up at the helm, the Gutenberg group’s end game is a deal between Fairfax, which owns mastheads including The Sydney Morning Herald, The Age, The Australian Financial Review and New Zealand papers including the Sunday Star-Times and has an extensive rural print network as well as radio and digital assets, and trans-Tasman newspaper, radio and outdoor advertising company APN News & Media.
They want to merge Fairfax and APN’s print assets in New Zealand, assets which include newspaper titles such as The New Zealand Herald, The Press, The Dominion Post and magazines such as NZ Fishing News and TV Guide. A print joint venture in regional Australia, where APN owns titles mostly in Queensland and northern NSW, is another element of their strategy, aimed at reducing duplication.
Although they say these print joint ventures could save A$100m, Fairfax is reluctant to increase its exposure to troubled print assets.
Besides, it contends that the NZ joint venture would raise competition issues.
APN chief Brett Chenoweth has been frustrated that talks with Fairfax have not led to a deal.
The other part of the Gutenberg investors’ plan – a sale or joint venture between Fairfax’s radio assets including 3AW in Melbourne and 2UE in Sydney and their Macquarie Radio Network – was summarily dismissed by Fairfax