Fairfax Media Group has ruled out a breakup and sell off of its business, with chairman Roger Corbett telling shareholders today such a move would destroy value.
In his address at today’s Annual General Meeting, Mr Corbett reiterated the importance of the company’s transformation plan, but added the group was “ruling nothing out” as it sought to turn around the situation for shareholders.
“We are prepared and able to ride out a tough cyclical environment - and structural change,” Mr Corbett said, adding that this meant profits would rise when conditions improved.
Fairfax chief executive officer Greg Hywood told shareholders the company would continue to produce print newspapers as long as there was demand for them, and recommitted to maintaining The Age and the Sydney Morning Herald mastheads, saying that their future would be predominantly digital.
He added that given the group’s growth in digital revenue, it was in reach of a profitable digital only model.
“Does this mean that we will go digital only when that occurs? No, because while there is cash flow to be generated form the print business we’ll still be there.”
Fairfax has left open the possibility of reversing some of the writedowns in the value of its mastheads, should conditions improve.
Asked whether the board had discussed Gina Rinehart’s intentions for the company, Mr Corbett said the board welcomed her 14% holding in the company and wanted to find a way to accommodate her.
“But arriving at this position the board needs to have regard for the rights, benefits and interests of shareholders,” Mr Corbett said.
“This has not been a Roger Corbett issue, it’s been a board issue,” he said.
Cowin weighs in
Board member and Gina Rinehart associate Jack Cowin defended his independence as a director, but admitted he had had discussions with Mrs Rinehart about the company prior to the meeting.
“This is her decision. I put forward a point of view that I carry as a director of this company as to what I thought. Her decision rests with herself,” Mr Cowin said.
Asked by Australian Shareholders Association representative Stephen Mayne why Mr Cowin visited Fairfax Media and toured its offices along with Gina Rinehart prior to becoming a director, Mr Corbett said he invited him to do so.
“Mr Cowin is well aware of his obligations as a director in terms of information, and no information that he has as a director that shouldn’t be passed to anyone else is passed, and that’s one of the tests of independence,” Mr Corbett said.
“The fact that he knows Mrs Rinehart is a help not a hindrance to the current situation. This board welcomes Mrs Rinehart’s investment as I’m sure all the shareholders do.”
Mr Cowin said he was bullish on the future of Fairfax and was considering buying more shares, in addition to the one million shares he purchased in September.