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Feb 2, 2012

Mayne: now's not the time for Rinehart to be be saying 'look at me'

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.

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.

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31 comments

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31 thoughts on “Mayne: now’s not the time for Rinehart to be be saying ‘look at me’

  1. pintado

    Nice, but the author of the Good Weekend piece was Jane Cadzow, not Janet Hawley!

  2. stephen Matthews

    2corrections:
    Andrew Forrest is not a buffoon
    Gina Rhinehart is not worth $20billion

  3. Mack the Knife

    When I look at Gina, I see someone who is unloved and unlovely.

    Guarding her fortune has consumed her life, overtaken her relationships with her kids and judging by how massively corpulent she has become, my impression of her is that she is a bitter, self loathing creature who hates easily.

    Her fortune will always be her poison.

  4. Edward James

    Kevin Rudd this and Kevin Rudd that. Kevin Rudd is still to answer questions about his part as Chief of Staff in the Wayne Goss government in relation to the Heiner Affair and Shreddergate. Also the woman who received the one hundred and forty thousand dollars awarded by the Bligh Labor government last year. Later identifed in the print media as hush money by the recipient, brings the process of governance under Labor into disrepute. Kevin Rudd is involved as a party member now and then. why is he getting a free ride from bought and paid for journalist? Edward James

  5. davidk

    Gerard Henderson can’t see anything wrong with Gina joining Faifax board and neither does Joe Hockey, so it must be alright. I like the idea of bringing back the MSPT irrespective of who does it. Julia screwed Andrew Wilkie so why not Rio Tinto and BHP?

  6. john2066

    Edward, you have a classic conservative mindset:

    Gina and the miners rip billions a year out of resources owned by Australians while paying a pathetic 7.5% royalty, and you’re all steamed up about the ‘Heiner Affair’ and ‘Shreddergate’, oh and someone who got 140k apparently. The billions stolen from under our noses merit no comment, of course.

  7. arnold ziffel

    Re: Cadzow/Hawley mix-up, the piece needs another edit:
    ‘Any Fairfax director, shareholder or journalist who read Hawley’s Good Weekend profile …’

  8. Toypoodle

    “Kevin Rudd could mount a very strong case for a return to the Lodge and a far more aggressive mining tax proposal…” Don’t hold your breath waiting for this to happen. Rudd may knife Gillard but he won’t take on the miners.

  9. SimsonMc

    DavidK – I suspect that the “cat who swallowed the canary” grin that Hockey had on his face last night when asked about the takeover indicates that the LNP think the only thing wrong with the deal is that it isn’t happening fast enough.

  10. Coaltopia

    I’m reminded of the inscription on Pieter van der Heyden’s “Avarita” engraving: “Scraping Avarice sees neither honour nor courtesy, shame nor divine admonition”.

    Arguably the protagonist in the engraving is not nearly large enough to be Gina, but the dystopian landscape seems to suit a mining camp. I wonder if the “poisonous toad” at her feet could represent her favourite radio/TV personality or climate change denier.

    http://www.metmuseum.org/toah/works-of-art/26.72.31

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