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Gina Rinehart, Australian billionaire, seeks bigger stake in Fairfax media

Australia's richest person, iron-ore magnate Gina Rinehart, has moved to increase her share in the influential Fairfax media group.
Gina RinehartEnlarge
Gina Rinehart, chairman of Hancock Prospecting joins a protest against a proposed 40 percent resources super profits tax outside the Perth Press Club on June 9, 2010 in Perth, Australia. (Paul Kane/AFP/Getty Images)

Australia's richest person, iron-ore magnate Gina Rinehart, has moved to increase her share in the influential Fairfax media group.

Rinehart — incidentally the world's second-richest woman after Wal-Mart widow Christy Walton — paid $192 million (or 81.77 cents a share, representing a 10.5 per cent premium) to become the biggest shareholder in a company that arguably boasts Australia's most-valuable newspaper, radio and digital media assets. 

Fairfax itself reported that the company's shares "rocketed" by 15 percent, or 11 cents, to 85 cents on the news. 

Great news for shareholders, and unloved media shares in general, but is it good news for ... news?

Not if you ask the media.

"Gina Rinehart is a woman driven by power, not always conventionally rational in her pursuit of it, and seemingly never afraid to exercise it," wrote Ian McIlwraith in the company's flagship newspaper, The Sydney Morning Herald.

And this, from a separate Fairfax report:

"Notoriously secretive, Rinehart has rarely discussed her interests in the media. However, sources close to Rinehart recently indicated she was seeking a bigger influence in national affairs."

And then this, from the same article:

One clue to [Rinehart's] interest was in a book published by [her] 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," Hancock wrote at the time.

Rinehart actually inherited the seed of her vast fortune from Hancock, himself a mining tycoon, in the form of a debt-ridden mining company called Hancock Prospecting. 

While Rinehart from her teens learned the family business at the feet of her father, who discovered the world's largest iron ore deposit in Australia's Pilbara region, she reportedly bristles at the suggestion that she is an "heiress," insisting that she turned the company into what it is today.

Alan Kohler, a longtime Australian business commentator, meantime, writes on the ABC News website that:

Like her father Lang Hancock, Rinehart is not a portfolio investor looking to invest her iron ore money in a diversified portfolio of businesses and assets to spread risk.

She was raised on mining and right-wing politics and was taught by her father that owning media was a source of influence, along with giving politicians money directly and nagging them, and everyone, endlessly about the benefits of small government and the evils of environmentalism.

Consider also that China's appetite for Australian resources is only likely to get bigger, and as a result Rinehart, whose estimated wealth derived from the sale of resources to China stands at around 20 billion Australian dollars is only likely to get richer.

Citigroup, for its part, said last year that Rinehart would eventually overtake both Mexican magnate Carlos Slim and Microsoft chairman Bill Gates to become the world's richest person.

Add to that the woeful state of media companies the world over (Fairfax in its heyday traded above $5), and it begins to look very likely that Rinehart harbors a burning desire for influence, and the kind of influence — political, economic and social — that only an influential media company can offer.

Among Rinehart's most-obvious concerns are taxes on the mining industry (she's financially backed numerous protests against them), the development of a low-tax zone in Australia’s north (she's actively lobbying for it — to attract investment, of course), the British monarchy (she's a stickler for tradition) and the environment (she's known for sponsoring climate-change denialists).

So what chance does Rinehart have in acquiring Fairfax to further her broader interests?

Not much, says Kohler, unless she manages to acquire more than 15 percent of Fairfax — her bid is for 10 percent, which if successful would increase her total shareholding to 14 percent. And even then there's no assurance she'll get on the board.

Writes Kohler, "15 percent doesn't buy you the ability to change strategy or management."

However, the company itself reports that its market value in toto is about $1.8 billion, with $1.5 billion debt, leading to speculation that Rinehart could at some point simply buy the company — or at least its newspaper and digital operations. Unlikely, the Fairfax media says, given likely community, political and regulatory resistance.

But Rinehart is a driven woman. Her own family could attest to her desire to wield power and influence, whether it be as a pseudo head of state, a mining boss, a mother or a daughter.   

Rinehart is currently embroiled in a court case over a multi-billion-dollar family trust set up by Lang Hancock to benefit his grandchildren. Her opponents: three of her own four children.

She has also fought court battles against Hancock's last wife, Filipino-born Rose Porteous — who once worked as Hancock's maid — as well as the children of his prospecting partner.

And, as Kohler points out, Rinehart has managed to wield a smaller stake (10 percent) in the Channel 10 television network to influence programming decisions "quite effectively." 

As the battle heats up, Jason Wilson of the University of Canberra helps readers to appreciate the irony of the situation:

Not so long ago, the richest and most powerful people in Australia were media moguls like Kerry Packer.

Now, the big money belongs to mining bosses, with fortunes grown during a long boom that's coincided with a relative and absolute decline in media enterprises. 

Mining bosses whose greatest desire, it seems, is to ultimately become media moguls.

http://www.globalpost.com/dispatches/globalpost-blogs/down-under/gina-rinehart-fairfax-media-australia-mining-industry-iron-ore-pilbara

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