Cox Plan to “Save Fairfax”

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Below is a summary of my plan to save Fairfax. If you would lile a copy of the detail behind the plan that has beeen supplied to the major institutions or would like to discuss my objectives in standing for the board of Fairfax please do not hesittae to call me on 0413676326 or email me at petercox@ozemail.com.au

Peter Cox’s plans to “Save Fairfax”

I am standing for a position on the Fairfax Media board at the AGM and the chairman Roger Corbett is opposing my nomination. Fairfax urgently needs media experience and knowledge and a fresh approach to save this once-great company

My goals as a director, if elected, will be to develop policies for Fairfax that offer the greatest value accretion to shareholders at the lowest risk.

It is my belief, explained in more detail in the accompanying report, that the

Operating segments are largely in mature, low growth businesses with growing competition and diminishing returns

  1. The metro and regional newspapers, broadcasting stations, New Zealand  media businesses and Trade Me (New Zealand) have little in common and require different skill sets, marketing and resources
  2. They are geographically spread, have diverse products with low synergistic benefits and can be operated independently of each other or sold individually
  3. The board strategy of moving from print to digital has unrealistic commercial objectives for online services that are already a mature product with high penetration and low yields
  4. The SMH and The Age need to be repositioned editorially to meet target socio-economic markets to maximise readership, circulation and advertising revenue
  5. The Financial Review, and other products, need to maximise the monopoly profits of specialisation in niche markets with international syndication and lower costs
  6. Consideration needs to be given to the sale or merger of regional newspapers within Australia and also in New Zealand that can provide deep tissue connectivity into local communities
  7. The poorly performing disparate broadcasting stations are losing share and should be sold individually to best attract buyers and gain the greatest total realized value
  8. The existing digital transactions segment is mature, small and has low growth EBIT despite being subsidized by related party marketing. With limited upside potential sale could be considered
  9. The Metro digital online business is low growth with no profitability and expectations are based on false assumptions. In contrast to the Chairman’s claims the business is not fast growing and the optimism that Mr Corbett holds for digital seem to be unfounded
  10. The realization of non-core assets such as Regional media, New Zealand Media, Trade Me, Digital transactions and radio stations will reduce debt, improve profitability and increase shareholder value

The board has made a number of disastrous decisions over the last decade (my Ten Deadly Sins of Fairfax) that have destroyed shareholder value. In the last three years the rate of decline in circulations, ratings and advertising revenue has accelerated threatening the future survival of the company.

I have attached some of my workings to demonstrate the veracity of my proposals. However, one really needs access to the detailed management figures to be more definitive.

Your support of my election would send a clear message to the board, shareholders and the market that the major shareholders are prepared to take action to change the policies of the board to maximise shareholder value.

 

My ultimate goal is to save Fairfax as a leading Australian media company.

It’s time for urgent action.

 

About me

I have been a leading media economist and analyst in Australia for more than 30 years and have provided advice to Australian and overseas operators, technology suppliers, bankers, stockbrokers, the Senate and the Government. I bring to the Fairfax Media board a unique set of qualifications and skills as a media economist to evaluate the cyclical threats and opportunities facing the media industry. Further, I provide extensive experience and expertise in preparing and evaluating media business models.

I have consulted on new disruptive technologies and new media in Australia from the introduction of commercial FM in the late 70’s to satellite transmission, Pay TV, broadband and digital. I bring to the board experience in disintermediation and meeting the challenges of technological and structural changes in media.

Independent expert advice on the Australian media industry has also been provided to private equity funds and investment banks in the US, the UK and Asia. I bring to the board expertise in evaluating the financial requirements of lenders and investors in media companies.

I have been invited to be chairman or speaker at more than 70 media industry conferences and have written numerous papers and articles.

At the newspaper industry PANPA conference in 2008 I warned that the newspaper model was broken – a position later confirmed by Rupert Murdoch but denied by Fairfax.

My concern about the number of poor strategic decisions made by Fairfax Media led me to attend the 2009 AGM and to write the chairman warning of the threats facing Fairfax and offering my media experience to the board. I was rebuffed without any consultation and the board was to subsequently appoint a number of new directors with no media expertise.

The Fairfax Media share price has fallen by 90% from its peak in 2007 causing a reduction in market capitalization of up to $5 billion which has been borne by the 35,000 shareholders of the company and by millions of Australians with superannuation funds invested in Fairfax.

I believe I can offer media experience, digital understanding, independence and credibility to the board. I am completely independent, will agree to meet all corporate governance requirements and have no other board or committee commitments which would prevent me from devoting whatever time and effort is needed to the Company.

There are no quick fixes and I would take a collegiate approach to add to the collective knowledge of the board.

Please do not hesitate to call me with any questions and I would welcome the opportunity to meet with you to discuss my proposal and your views on Fairfax Media.

 

Peter J. Cox  B.Ec MBA

 

My contact details:       E: petercox@ozemail.com.au

P: +61 2 93631429

M: 0413676326 [+61 413676326]

W: www.coxmedia.com.au

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