Journalists love nothing more than speculating about the future of media companies, so Gina Rinehart has created an avalanche of commentary with her high-profile raid on Fairfax Media. We’ve had everything from Paul Barry saying she will almost certainly score a board seat to Michael West speculating she’ll swap her stock for the newspaper division and Alan Kohler saying she’ll end up frustrated and out of pocket.
Personally, I prefer the theory that Rinehart was so outraged by Jane Cadzow’s extremely tough Good Weekend cover story on January 21 that she’s out for revenge, not unlike the way Kerry Packer stalked Fairfax for years courtesy of the Goanna saga.
Having dropped more than $100 million on her previous $300 million bet on stakes in Fairfax and Network Ten, it is also significant that she has just inked a lucrative deal with South Korean steel giant Posco, which paid $1.5 billion for an additional 11.25% stake in Rinehart’s Roy Hill iron ore project south of Port Hedland
However, it is wrong to assume this constitutes cash in Rinehart’s pocket because Roy Hill is expected to cost $7 billion to develop with first production not scheduled until 2014. The valuation may also be inflated for tax reasons, with Posco clawing back value through a discounted supply agreement. I very much doubt Rinehart has the capacity or appetite to risk ploughing $4 billion of real cash into a full takeover of Fairfax.
But without full control, where does she go? Any Fairfax director, shareholder or journalist who read Gadzow’s Good Weekend profile would be horrified at the prospect Rinehart could influence the venerable publishing house as a director.
While conflicts of interest seemingly didn’t matter when the four billionaires — James Packer, Lachlan Murdoch (post-inheritance), Gina Rinehart and Bruce Gordon — swooped on Network Ten, a Fairfax board seat will be an entirely different proposition.
Once Ten’s executive chairman Nick Falloon was rolled and his non-executive successor, Brian Long, agreed that Packer and Murdoch could have two boards with their combined 20% stake, it was difficult to resist representation arguments from Rinehart and Gordon.
Incredibly, Gordon was allowed to appoint a lawyer to represent him even though he owns Channel Nine in Adelaide and Perth, which directly competes against Ten. Talk about being blind to conflict of interest.
Fairfax is in a different place after suffering the embarrassment of having ACMA force David Evans off its board in 2009 due to conflicts of interest and regulatory breaches from his status as a director of Village Roadshow, back when it still controlled Austereo.
Even former Fairfax chairman Ron Walker, who has navigated through numerous personal conflicts of interest over his career, saw red when deputy chairman Mark Burrows thought it was fine to advise Lachlan Murdoch on his proposed 2008 takeover of Consolidated Media Holdings. He resigned a few days later acknowledging the perception problems.
Given all this history, current Fairfax chairman Roger Corbett has the easy out by pointing to the obvious conflict of interest that the Ten directorship creates for Rinehart if she does indeed aspire to join the board.
A more likely scenario would be Rinehart attempting to engineer a merger between Ten and Fairfax in which she emerges as the largest shareholder with 20% and a board seat. But that would also be messy.
Another feasible alternative would be for Rinehart to trade her Fairfax stake for the company’s radio assets which can be easily separated from the newspaper and digital divisions and were recently on the market until 2GB owner John Singleton failed to come up with a realistic offer, despite rumours he tried to put together a joint bid with Rinehart.
Having developed close friendships with numerous conservative MPs, it is clear that Rinehart is pushing hard to help remove the Gillard government and receive greater regulatory, tax and infrastructure support for her West Australian resources projects.
The unions will fight this one to the death given her support for importing cheap foreign guest workers to build her projects.
As for whether the Fairfax raid will work, I think she’s made a big mistake by putting a giant target on her back. And with three of her children litigating to remove her from the family trust, now is not the time to be be saying, “look at me”.
With buffoons such as Clive Palmer, Twiggy Forrest and Rinehart now worth an estimated $40 billion and all throwing their eccentric weight around, Kevin Rudd could mount a very strong case for a return to the Lodge and a far more aggressive mining tax proposal than Gillard’s pathetic compromise.
After all, if Labor really wants to return to surplus next year and help fund pet projects such as wage rises for community workers, the mining industry could comfortably contribute at least $10 billion a year more in tax while still delivering for its largely foreign and billionaire owners.
CORRECTION: An original version of this story stated the Good Weekend profile on Gina Rinehart was written by Janet Hawley. It was in fact written by Jane Cadzow.
31 thoughts on “Mayne: now’s not the time for Rinehart to be be saying ‘look at me’”
Edward James
February 2, 2012 at 5:44 pmJohn2066 My mindset is hardly classic conservative. I tend to be focussed on the details which I believe I understand. I name politicians and identify those political sins they commit or accommodate, because I don’t think people should forget. The politicians political sins open the door for constituents like you perhaps, to ask questions in public forums about the politicians personal values. And how their personal values translate into how they represent us. How can you be so comfortable supporting politicians and political activist who turn their backs on published allegations supported with photographs which identify crimes and cover ups? In another place consider this on going political farce surrounding Craig Thomson and involving the Labor Party from the top to the bottom. A matter getting a good airing in the peoples court of public opinion. You are accusing miners of ripping billions a year out of resources owned by Australians while paying a pathetic 7.5 %royalty. Are you accusing them of a crime? You are right I am steamed up about the shonky politicians who have oversight over the way in which we are governed. I pay first world taxes and get third world governance. I am busy doing what I can to bring about change and change again. In my local government area five members of my community died in a ditch at the bottom of Piles Creek Somersby. Because no least of all our politicians really cared that our council was malfeasant. Edward James http://bit.ly/EJ_PNewsAds
davidk
February 2, 2012 at 5:45 pmSimsonmc
I think you’re probably right, I also noted the evident joy on his face as well as the shifty, sly look on Hendo’s. Makes me shudder.
[email protected]
February 2, 2012 at 5:57 pmShe once told me that Her potential wealth was 100 times all the Arab Oil Sheik’s potential wealth put together. And at the rate the Iron ore was being dug up it would take a thousand years to be exhausted!
That was on a flight around all the mining sites in Northern Australia to celebrate Lang Hancock’s seventieth birthday.
AR
February 2, 2012 at 7:02 pmTAX them into the (ore rich) ground and let them take their (sic!) mining elsewhere.
Anyone who does not shudder at Pureheart being in control of more than a chip shop is a suitable case for treatment. With a piece of 2×4.
Glen
February 2, 2012 at 7:23 pmMs Rinehart’s wealth appears to derive, at least in part, from a certain Johannes Bjelke-Petersen, who lead the abolition of state and federal death duties in Australia – probably the most regressive taxation “reform” in our history. Dad and Joh were great mates.
Jan Forrester
February 2, 2012 at 8:35 pm1. Tell us more about the guest workers Stephen? What visas are they being recruited under? And do we know anything about contracts, wages, conditions?
2. Rudd tougher on a mining tax? He began the mess: his own minister in charge of mining seemed to find out about ‘negotiations’ in the media, so many things on burners he couldn’t swing them all. The miners had won PR, before Julia got to it, amazing…..
john2066
February 2, 2012 at 9:30 pmJan above, Gina’s proposal is to bring people out on 457 visas to work for her, min wage approx 55k if they are lucky. Quite hilarious that she campaigns against the mining tax saying it will affect jobs, and now she wont employ Australians!
Incredible gall when she is Australia’s biggest welfare recipient- she (in fact her father) was given an exclusive lease on our minerals, where she gives us 7.5% of the value. They are our minerals, Gina, give them back!
john2066
February 2, 2012 at 9:33 pmPs because the original mining tax went down, howled down by the coalition and their moron supporters, my company has to pay extra companies tax!
Thanks for nothing, conservative twits, you sure are useful idiots for billionaires!
outside left
February 2, 2012 at 9:35 pmAmazing, isn’t it. The most compassionate,generous and humble of the rich are lean, energetic and visionary[ Turner, Gates, Jobs et al. The greedy, spiteful and vindictive are FAT[ enter your favourite here]
Rob Dawson
February 3, 2012 at 8:14 amFairfax is a basket case. Rinehart is kicking it around. Palmer is toying with it. Mayne is, as usual, w-nking on as if he has a clue. It’s all down hill from here.