Jun 26, 2012

Time for a circuit breaker at Fairfax

Caught between the threat of a new owner and the demands of a skittish sharemarket, Fairfax needs to reconstitute itself to survive, writes Peter Browne of Inside Story.

Fears about the future of newspapers, intensified by the advertising downturn during the global financial crisis, have depressed Fairfax’s share price with two results: the company’s board and management has been constrained in the ways they can respond to the company’s difficulties, and Gina Rinehart has been able to acquire a significant parcel of shares at a relatively low cost. Neither pressure — the demands of shareholders nor the ambitions of Rinehart — is likely to go away.

In Australia we’ve tended to worry most about media proprietors who want to use their outlets to gain political influence and shape public opinion. But developments at Fairfax over the past few weeks have highlighted how an open share registry can be just as corrosive to good quality journalism. At a time when Fairfax needs to develop a long-term strategy for survival, its owners — who are mainly large investors with no particular interest in the media as a key part of a democratic political system — treat the company like any other investment and make judgments every day about whether to shift their funds into higher yielding investments.

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One thought on “Time for a circuit breaker at Fairfax

  1. 81dvl

    Thanks – great article.

    This is of course a real worry and a complex issue but it was good to see the issues put together so concisley – as something I would quote in such a discussion.

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