More blood to come as Fairfax continues its public fight

Tuesday 29th September 2009

The outcomes of Fairfax Media's latest boardroom infighting are no clearer with yesterday's announcement its chairman has bowed to Fairfax family member pressure and will step down.

Ron Walker said he will not seek re-election to the Australasian media giant's chair position at November's AGM, at the same time some of the company's other directors expressed concern the market was "ill-informed" as a result of extensive media coverage of the battle.

Fairfax Media, publisher of The Dominion Post, Press and Sunday Star Times, announced a A$380 million loss in the 12 months ended June, from a profit of A$387 million a year earlier.

Fairfax Media's largest shareholder is Sydney dynastic media family member John B Fairfax's Marinya Holdings, with 9.7% of the company's shares.

Among other things, Marinya Holdings has been critical of Fairfax Media's continued series of debt-funded media acquisitions undertaken on Walker's watch.

The ongoing criticism, and rarely seen public stoush between members of a publicly listed company, is seen by many as John B Fairfax's attempt to take over leadership of Fairfax Media.

Traditionally, these battles take place privately. But by engaging in an American-style proxy battle for control of Fairfax Media's company board, the gloves are off and the stakes high.

Following Walker's resignation yesterday, Fairfax Media independent directors lead by recently appointed deputy chairman Roger Corbett sheeted recent drops in the sharemarket price back to John B Fairfax.

In a two page statement the five directors turned the spotlight on the Fairfax's failure to disclose an A$170 million margin loan last year.

"The independent directors were made aware of the margin loan taken out by Marinya against its stake in Fairfax Media...by market speculation, not by Marinya or any of its directors," the directors said.

"It was regrettable that when the Marinya margin loan speculation entered the market, the company's shares suffered a dramatic loss in value."

The usually conservative Fairfax Media shareholders will be forced to choose between the John B Fairfax and the independent directors' camp.

John B Fairfax, with less than 10% of the company, will probably be accused of trying to wrest control of Fairfax Media without offering a premium or launching a takeover bid.

The ultimate winner is still unknown in what is likely to be a fight to the death, fought in public.

Yesterday Fairfax Media shares closed 1.5% at A$1.66.

Former Fairfax Media chief executive, and former All Black captain, David Kirk resigned the CEO position last December.

In August the company also announced a A$513 million write down in the value of its mastheads, and along with other global newspaper groups faces recession-induced declines in advertising spending while rising online media eats away at classified advertising revenues.

Businesswire.co.nz

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