It took three days for Fairfax Media to see the light about the need for more cash. How long will it take for it to see the reality that board changes need to be made? New CEO Brian McCarthy should be pulled aside by someone and told to stand up for the company and not the corporate line.

For Fairfax to suddenly alight upon the need to raise $684 million (it admits it won’t get all of that) in a three for five issue at 75 cents a share (last sale 93 cents), indicates it is trying to raise as much as possible — that’s the same figure for the abortive Ten issue last week, which was seeking a smaller amount. Let’s hope it’s not a kiss of death. Otherwise, why go for such a large amount?

Months of denying that it needed to raise money have deprived Fairfax the chance to raise more through a higher price and offer less dilution to existing shareholders.

Chairman Ron Walker deserves a kick up the bum from shareholders for not asserting his position and insisting on an earlier cash raising: when the 550 jobs were chopped last August, for instance. The rest of the board needs to explain how they earn their fees — it’s through tough decisions like this and the job cuts that directors earn their money. Equally, when they fail the company, shareholders and employees by needlessly ignoring the obvious from the market, then directors need to be paid less. But that won’t happen.

Fairfax announced the formal terms of the issue this morning and the departure of the Chief Financial Officer of five years, Sankar Narayan. He is leaving to pursue new challenges. He will be replaced by Brian Cassell, completing the takeover of the company’s management by the Rural Press gang. Cassell joins his mate Brian McCarthy in the top two executive roles, now for John B Fairfax to turn chairman Ron into the potential cost saving that he so obviously is.

The terms of the underwriting of the issue might achieve that. Fairfax said around $450 million of the offer is committed, with $438 million underwritten and $12 million to be taken up by the company’s largest shareholder, John B Fairfax’s Marinya Media. Once that is over, Mr Fairfax will still be the dominant holder and in a much stronger position to move on the chairmanship.

And why should Mr Walker be marched down the plank? For this comment in today’s statement.

Our decision to raise new capital at this [time] is in response to market feedback following our results presentation this week. It has become clear to us that in these extremely unstable times our shareholders are supportive of improving our balance sheet.

Why did it only become clear this week?

It has been clear for over two months that major companies with large debts were raising fresh capital to cut those debts and keep their banks happy. Fairfax’s papers, such as the expensive Australian Financial Review and the Sydney Morning Herald and the Melbourne Age were carrying reports daily, and also explanations from those companies as to why they saw the need to raise new capital.

Or is the subtext here that the CFO has been punted as a consequence of giving poor advice, or telling the board that the capital position was solid and the debt was ok, only for the board to find out from shareholders otherwise; or did the CFO oppose the issue?

McCarthy said in today’s statement that the capital raising should alleviate continuing market concerns about the company’s capital structure. On Monday there seemed to be no need from his point of view. Does he have an opinion, or is he the board’s poodle?

News Ltd papers are of course frothing at the computer over the Fairfax volte face and saying ‘told yus all’. But they have yet to report that a day after Rupert Murdoch reported the News Corp first half and second quarter results, news raised $US1 billion in fresh debt, at higher interest rates and lower ratings. That’s more than twice what Fairfax is raising in equity.

Rupert of course would not be able to ask shareholders for new equity because he and his family would not be able to afford to maintain their holdings. That’s why for alll the $US4 billion in cash on his books, Murdoch is a debt junkie.