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Rinehart and Singleton Seek to Boost Say in Fairfax Media

Hancock Prospecting Chairman Gina Rinehart
Georgina "Gina" Hope Rinehart, chairman of Hancock Prospecting Pty Ltd., right, arrives to the Boao Forum for Asia in Boao, Hainan Province, China, on Sunday, April 1, 2012. Photographer: Nelson Ching/Bloomberg

Gina Rinehart, Asia’s richest woman, and broadcasting investor John Singleton plan to team up to boost their influence at publisher Fairfax Media Ltd.

Singleton’s Gutenberg Investments Unit Trust bought shares in Australia’s second-biggest newspaper publisher after it rejected a sale or joint venture of its radio assets to his Macquarie Radio Network Ltd., according to an e-mailed statement yesterday. Gutenberg didn’t say how many shares it bought in the publisher of the Sydney Morning Herald or detail specific proposals for the company.

Rinehart, the biggest shareholder in Fairfax, has failed in her push to become a director this year after disagreeing on conditions set by the board, including signing its Charter of Editorial Independence. The publisher has cut jobs, closed print sites and written down the value of its newspapers as readers and advertisers switch to the Internet.

“Both Gina and I believe that the lifeblood of Fairfax is the integrity and accuracy of its journalism,” Singleton said in the statement. “This in no way would be compromised if Hancock Prospecting and Gutenberg Investments had a significant say in the future of Fairfax.”

Rinehart’s Hancock Prospecting Pty owns almost 15 percent of Fairfax, according to data compiled by Bloomberg. She failed in an attempt to offload a third of her stake in August, after the company posted a record A$2.73 billion ($2.8 billion) loss in the year to June 24, the Financial Review reported in August.

Gutenberg’s stake is less than 1 percent, the Australian newspaper reported today, citing unidentified people at Fairfax. Gutenberg has been formed with M.H. Carnegie & Co., a venture capital and buyout firm founded by investment banker Mark Carnegie, according to the statement.

Sales, Writedowns

Fairfax also publishes the Australian Financial Review newspaper and operates radio stations in Sydney, Melbourne, Brisbane and Perth. The company this month sold its remaining stake in online auction site Trade Me Ltd. for A$616 million.

Singleton’s Macquarie network operates the 2GB radio station in Sydney, the most popular commercial talk broadcaster in Australia’s largest city.

Fairfax scrapped plans to sell its radio assets in October 2011 after failing to receive an acceptable proposal, it said.

“For the amount of money I was prepared to pay for the radio assets of Fairfax I could buy a significant amount of all the assets of Fairfax at a far lower price to earnings multiple,” Singleton said in the statement. “With my preferred direct route closed, I have decided to pursue another path.”

Widening Loss

Fairfax took a A$2.8 billion writedown of items including newspaper mastheads, goodwill and customer relationships, which led to the widening in its full-year loss from A$391 million a year ago. Fairfax on June 18 also said it would cut 22 percent of its workforce, close printing sites and introduce digital subscriptions to halt sliding sales and a stock price slump.

Fairfax shares closed yesterday at 47.5 Australian cents. The stock has lost 34 percent of its value this year and has slumped more than 90 percent since May 2007.

The publisher faces many challenges amid a weak advertising market, Rinehart said in yesterday’s statement.

Rinehart and Singleton plan to file a statement with the Australian Securities Exchange Dec. 31 to inform the market of their holdings and association before developing any plans, Singleton said.

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