Fairfax rebel with a cause gets my vote

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“Fairfax rebel with a cause gets my vote” is the heading for Mark Day’s column in The Australian newspaper on October 1. Mark Day writes why he would “put a Cox on the House of Fairfax”

To read the actual story as it appeared in the paper go here.

FAIRFAX REBEL WITH A CAUSE GETS MY VOTE

Mark Day

On Media

The Australian, October 1 2012

I don’t think it is being unfair, unkind or unreasonable to suggest Peter Cox has just two chances to get on the board of Fairfax Media – Buckley’s and Nunn. He says so himself. Yet he persists with his idiosyncratic tilt for a place on the most difficult board in the nation with the cry: “Save Fairfax.”

Roger Corbett, the former Woolworths grocery boss who chairs Fairfax, has recommended that shareholders vote against Cox in the ballot to be held in conjunction with the embattled publisher’s annual general meeting on October 24.

This has given Cox the green light to embrace the role of gadfly – a pesky and annoying distraction for Corbett and the board with little to gain but nothing to lose by constantly repeating the refrain: “The current board has failed.”

The business world’s best-known gadfly is Stephen Mayne, the lanky journalist and Crikey website founder who won a Walkley Award by buying shares in companies, turning up at annual meetings and grilling directors from the floor with loaded and hard-hitting questions.

It was a canny but irritating approach. Company bosses could tell a pesky journo to nick off, but had to respond to a shareholder, even if the likes of Kerry Packer did do with a graceless riposte: “Do you try to be obnoxious, or are you always like that?”

Cox, having twice put up his hand to join the Fairfax board and having been rejected twice without ever meeting Corbett to discuss his ideas and skill set, has now been turned into an active campaigner against the board.

I must disclose that I have been a mate of Cox for many years. We met in 1979 when he was managing director of 2Day-FM, one of the first FM broadcasters in the nation. He built the station from ground up – no mean feat when you’re pioneering a new market.

I later invited Cox to become a director of Truth Newspapers and for almost a decade closely observed saw his professionalism and number-crunching skills. I have no doubt about his ability to deconstruct a balance sheet or a profit and loss account or the reverse; to build models setting out the key elements of any start-up business. He might come across as a trifle shrill on occasions, but he knows his stuff.

Knowledge of your industry is clearly not a requirement for a seat on the Fairfax board to help deal with some of the most challenging problems facing the company. Corbett’s knock back to Cox is a classic piece of corporate pomposity and myopia. He says the company has a “succession planning process to identify and nominate potential directors in a professional and structured manner.” It waffles on about the process and says: “Prospective director candidates with required experience, expertise, skills and independence and offering cultural fit and diversity are then reviewed… This process has resulted in seven directors joining the board over the past three years.”

Yes, well, that’s terrific then. Don’t you think somebody might have whispered in the chairman’s ear that three years ago the share price was around $1.75 and Fairfax’s market capitalisation was $4.5 billion? Now it is 41.5 cents and the market cap is under $1 billion.

If you wanted to be really cruel or impertinent, you might also point out that when Mr Corbett joined the board nearly a decade ago the share price was $3 and rose as high as $5.20. Cox wryly notes: “Obviously, the board has made great decisions.”

According to Corbett, while Cox has consultancy experience in electronic media, he has “little direct management experience, limited relevant digital business experience and no public company board experience.” I presume the latter element translates into “he’s not a member of the club.”

In response, Cox lists his credentials and makes the entirely valid point that five of the incumbent non-executive directors “have never worked directly in media at all nor as far as we are aware have they been close advisors to any media companies.” For good measure, he adds: “Corbett claims I have experience only in electronic media – an old-fashioned term in the digital age – yet two months ago he appointed Jack Cowin, whose only ‘electronic’ media experience is as a director of the Ten Network which has crashed in ratings, revenue, profit and share price. Is that illogical or disingenuous?”

There’s a touch of Mohammed Ali in there somewhere… float like a butterfly, sting like a bee!

In response to Corbett’s charge that he has little relevant digital business experience, Cox points out he helped write the technical specifications for Australia’s satellite systems, consulted to subscription TV companies and telcos and to the Australian government and given countless lectures on the subject to media companies, advertising agencies, banks and the defence forces. “Unfortunately the board or management of Fairfax did not commission those presentations,” he says. “Instead, they undermined their own business by developing free online competitive services and allowed new competitors to strip away their real estate, employment and car sales advertising, destroying the foundations of the business along with shareholder wealth.”

In a parting shot Cox adds: “None of the directors appointed under Corbett’s process satisfies all the requirements to which they say I should be held. They also seek a cultural fit but with no ethnic, religious or staff directors I assume the fit required is with the culture of the chairman.”

None of this will endear Cox to Corbett or his board. It is possible Cox will get support from Gina Rinehart, the mining billionaire who has been also agitating for a couple of board seats – based on her 15 per cent share holding rather than her media credentials – but it is unlikely he’ll get support from the institutions which frequently passively follow board voting recommendations.

Cox sees this is a great pity. “The Fairfax board has a history of making terrible decisions and nobody at that level pays for it. They all get their remuneration and bonuses. The institutions don’t invest their own money – they invest the money of millions of Australian superannuants and it is these people who ultimately suffer these incredible losses. It is they who deserve a voice”

That’s why he’s running this quixotic race he won’t win and that’s why I’m going to vote my lousy self-managed super fund shareholding (bought at $4.85, I remorsefully disclose) to put a Cox on the House of Fairfax.

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