Update Mining magnate Gina Rinehart is attempting to snare a cornerstone stake in Fairfax Media, the newspaper, digital and radio group, as Australia’s richest woman seeks to extend her growing influence over the media landscape.
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A stockbroker acting for Mrs Rinehart today approached fund managers in a $192 million attempt to acquire a 10 per cent stake in Australia’s biggest independent media company, which owns The Sydney Morning Herald, The Age and this website.
If successful, the purchase will give her a 14 per cent in Fairfax Media and a possible boardroom seat.
BusinessDay, though, understands that brokers acting on behalf of Mrs Rinehart had secured only a 5 per cent shareholding, which added to her existing stake would give her aless than a tenth of Fairfax’s equity. Negotiations were continuing this evening with some of the company’s other shareholders about adding to that amount.
The share purchase comes on top of her existing 10 per cent stake in broadcaster Ten Network, where she sits as a director alongside Lachlan Murdoch - son of billionaire media tycoon Rupert Murdoch.
Last month Mrs Rinehart’s estimated wealth swelled by $10 billion, to almost $20 billion, after South Korean steel company Posco increased its state in an iron ore deposit held by her flagship company Hancock Prospecting.
Fairfax Media, which is capitalised at $1.74 billion, remains vulnerable to being acquired given its share register is relatively open without a significant holding by an individual investor.
Critical time
The raid on Fairfax comes at a critical time for the media industry which is battling a weak advertising market as well as adjusting to a structural shift towards the internet.
It also comes as the Federal Government is scrutinising ownership in the media as part of two separate inquiries into the sector.
Notoriously secretive, Mrs Rinehart has rarely discussed her interests in the media. However, sources close to Mrs Rinehart recently indicated she was seeking a bigger influence in national affairs.
During 2010, Mrs Rinehart rose to prominence through her vocal opposition to the federal government’s proposed mining tax. Then she surprised media watchers by taking a 2 per cent holding in Fairfax and later paying $165 million for the Ten Network stake.
Shortly after the Ten Network acquisition Hancock Prospecting issued a statement saying her company was ‘‘interested in making an investment towards the media business given its importance to the nation’s future’’.
In January last year Mrs Rinehart quietly increased her holding in Fairfax Media to 4 per cent.
Fairfax Media also owns The Australian Financial Review and a national radio network based on 2UE and 3AW as well as extensive rural publishing interests.
Fairfax chairman Roger Corbett was unavailable to comment. Mrs Rinehart’s office did not return calls. She did not respond to email requests for comment.
The approach for the 235 million shares was made to fund managers by brokerage Morgan Stanley after the stock market closed.
The broker did not disclose the buyer but was offering 81.7 cents per share, or a 10 per cent premium to today’s closing price of 74 cents.
One former Fairfax board member expressed doubts that Mrs Rinehart could wield excessive influence over the 180-year-old company.
Other fund managers also cited the inability of former director John B. Fairfax to exert influence in the boardroom in recent years, ultimately leading to the selldown of Fairfax family’s 16 per cent stake.
Suppression orders
The timing of the purchase comes as suppression orders are expected to be lifted in Mrs Rinehart’s bitter court battle with her adult children.
In September, Mrs Rinehart’s 33-year-old daughter Bianca and two of her siblings - John Hancock, 36, and Hope Welker, 26 - launched proceedings in the NSW Supreme Court to remove their mother as head of the family trust. The trust was set up by Mrs Rinehart’s father Lang Hancock for his four grandchildren.
Both Mrs Rinehart and Bianca have fought to keep the details of the legal dispute out of the media. But the suppression order over the case is expected lapse on Friday, unless an appeal is granted to the High Court.
In a separate development Mrs Rinehart’s lawyers today filed an application seeking to extend the suppression orders beyond February 3.
Aside from being a vocal opponent of the mining tax, Mrs Rinehart has been behind the recent formation of a lobby group pushing for the development of a low-tax zone in Australia’s north.
Australians for Northern Development & Economic Vision, which Mrs Rinehart chairs, advocates the creation of a ‘'Northern Economic Zone'’ that will attract investment through lower taxes.
Mrs Rinehart and her family’s interest in investing in the media appears to extend as far back as the 1970s. One clue to their interest was in a book published by Mrs Rinehart’s late father Lang Hancock in 1979 entitled Wake Up Australia.
In the book, Mr Hancock discussed the idea of challenging the power of governments by taking control of a media company. ‘‘It could be broken by obtaining control of the media and then educating the public,’’ Mr Hancock wrote at the time.
Fairfax’s biggest shareholder is listed as Commonwealth Bank, with 12.37 per cent although that is held on behalf of dozens of fund managers. Maple Brown Abbott and Orbis Investment Management hold stakes of 8.9 per cent and 7.3 per cent, respectively.
Sources close to Orbis Investment Management, which controls a 7.3 per cent stake of Fairfax, said they ‘‘would not sell a single share’’ to the buyer.
ejohnston@theage.com.au with Scott Rochfort, Mark Hawthorne
