Worse Days Ahead for Fairfax as Gina Rinehart Attempts to Dump Shares of Media Firm
Gina Rinehart is having her sweet revenge on the Fairfax Media board, which rejected her bid to become director, by attempting to dump her shares of the financially challenged company.
Report of Fairfax's annual loss of $2.73 billion bolsters the theory of Australia's richest woman that the media firm is poorly run and needs somebody with a track record of running a business successfully and billions of dollars to prove it. News of the loss caused Fairfax shares to plummet on Thursday to almost 10 per cent to 51 cents, the firm's lowest closing price.
However, worse days are ahead for Fairfax as Ms Rinehart tried to get rid of her share of the losing media firm, publisher of several mastheads including The Age. Reports said that the mining tycoon tried to sell her 5 per cent share in Fairfax at 50 cents a share, but there were no takers.
Morgan Stanley offered about 117 million shares of Ms Rinehart one cent below the closing price, but the sale was pulled out because of lack of investor interest in the media firm.
While Fairfax Chief Executive Greg Hywood believes the bust cycle that the media firm is going through will pass, analysts believe it would take several years.
"I have been in this industry since the late-1970s and I have never seen an advertising environment of the type that we are currently experiencing," Mr Hywood said.
"We are the company that has the largest news audience in the country bar none. Other companies might sell more newspapers, but we have the largest total news audience," The Australian quoted Mr Hywood.
Ms Rinehart initially bought Fairfax shares at the end of 2010 and spent $285 million to claim an 18 per cent stake in the firm. She first reduced her share at the height of the boardroom battle and dumped another 5 per cent of her stake in July at 58 cents per share.
With her billions, Ms Rinehart's stake in Fairfax is just a drop in the bucket for the world's richest woman but for the successful mining tycoon who has been rejected by the board of a losing media firm, Thursday's announcement by Fairfax of record losses is a big "I told you so" for Ms Rinehart who appears to have the last laugh at the Fairfax boardroom.
