Australia gov't fears billionaire's media stake

AP News
Posted: Jun 19, 2012 2:38 AM
Australia gov't fears billionaire's media stake

Australia's government said Tuesday it fears the country's richest person Gina Rinehart plans to use her growing stake in a major newspaper publisher to push her own commercial agenda.

Rinehart, a mining magnate whom Forbes magazine estimated in March was worth $18 billion, is a vocal critic of the center-left government's plan to impose a 30 percent tax on the burgeoning profits of iron ore and coal miners from July 1.

She is also opposed to a 23 Australian dollar ($23) tax that Australia's worst industrial polluters will have to pay for every metric ton of carbon dioxide they emit from July 1.

Rinehart last week increased her stake in struggling Fairfax Media, Australia's second biggest publishing company, from 12.6 percent to 18.7 percent.

Fairfax newspapers reported on Tuesday that Rinehart, Fairfax's largest shareholder, wants three seats on the Fairfax board of directors including the deputy chairman's role plus the right to make significant editorial decisions.

Her reported demands are in conflict with traditional Fairfax board protocol that directors not interfere with editorial decisions and a charter of editorial independence that has been honored since 1992.

Rinehart could not be immediately contacted for comment on Tuesday. But her friend John Singleton, a former Fairfax board member, told Australian Broadcasting Corp. that "editorial interference would have the made the papers more readable in the past."

Acting Prime Minister Wayne Swan said it was clear that Rinehart and Singleton "reserve the right to impose their political views upon that particular newspaper chain."

"That has very big implications for our democracy. I think we should all be very concerned at this turn of events," he told reporters.

"She certainly has a commercial right to do what she has done, but it appears to be that she will go a step further, not respect the charter of independence and reserve her right to direct journalists with instruction that follow her commercial imperatives," Swan said.

Communications Minister Stephen Conroy said while Rinehart was entitled to board representation, she was not entitled to "trash the brand" by turning Fairfax newspapers into a "Mining Gazette."

Fairfax announced Monday it will shed 1,900 jobs over three years and erect pay walls for two flagship newspapers as readers increasingly move online.

The company owns more than 300 newspapers, 50 websites and 15 radio stations in Australia and New Zealand.

Its share price rose more than 7 percent to 65 Australian cents on Monday on the news.

But Fairfax shares lost almost 5 percent to 62 Australian cents by early Tuesday afternoon.

Market analyst Peter Esho said he thought Tuesday's retreat was partly linked to the fact that Rinehart might stop increasing her stake.

Rinehart would have to launch a formal takeover offer if her holding went above 19.9 percent.

Esho said he was not convinced Rinehart intended to make a takeover bid.