Fairfax’s smoke and mirrors

Fairfax chairman Roger Corbett is clearly  stretching the bounds of credibility a bit with his explanation of the appointment of Hungry Jack’s owner and Gina Rinehart ally Jack Cowin to the Fairfax board – but’s he’s actually made a very smart move.

Announcing the appointment yesterday, Corbett claimed it had nothing to do with the fact that Gina Rinehart has been doggedly pursuing seats on the Fairfax board.

“Our discussions with Mr Cowin over recent months have made it clear that he has considerable value to add to the company. Neither Mr Cowin or Fairfax Media consider his appointment as being indicative or connected to the potential outcomes of the company’s inconclusive discussions with Hancock Prospecting Pty Ltd,” Corbett said in a statement.

“Mr Cowin joins the board as an independent director and on the same basis as all other directors.”

C’mon Roger and Jack. We read your newspapers and they’ve been full of talk about how close Gina and Jack are.

Take this story from The Australian Financial Review on May 30 (note: subscription site): “Billionaire Gina Rinehart, Fairfax Media’s largest shareholder, asked fellow Ten director Jack Cowin to take one of two board seats she is seeking at Fairfax.”

Or this quote from a story from the AFR on July 5, describing a meeting in March between Fairfax and Gina, where she took Cowin along. “That day, Rinehart sat by chairman Roger Corbett and Cowin sat next to chief executive Greg Hywood, as the two Fairfax heavyweights took them through a presentation about the media company’s performance. Fairfax’s largest shareholder – Rinehart now owns just less than 15 per cent – was pressing hard for board representation (she wants two seats), plus an independent seat for?Cowin. Cowin, meanwhile, was there to assist his friend and determine if he should join her as an investor.”

Later in that article, Cowin described himself as the “Henry Kissinger of shuttle diplomacy” between Fairfax and Rinehart. Cowin also explained how he enjoyed his 70^th birthday party on a yacht in the Mediterranean, with Gina as his guest.

Or take today’s headline on the front page of the AFR: “Cowin: Room for Rinehart at Fairfax.”

We can accept that Cowin can make a strong contribution to the Fairfax board. We can accept that Cowin has signed the Fairfax charter of editorial independence and can work for the benefit of all shareholders, as an independent director should.

But the idea that Cowin’s appointment isn’t connected to Rinehart’s board push is really pushing it.

Would the Fairfax board have even considered Cowin were it not for Rinehart buying a stake and dragging Cowin in to meet Corbett and CEO Greg Hywood? There was certainly no suggestion he was in the running for a board seat back in late May, when accountant James Millar joined the board.

As the AFR said less than two months ago, Cowin is the man Gina wanted to take one of her board seats. The fact that he is now on the board can only be seen as a win for Rinehart.

But for all the smoke, mirrors and semantics, I think it’s a smart move by Corbett.

By appointing Cowin to the board and getting him to sign the charter of editorial independence, Corbett can do a few things:

• Mollify Rinehart to some extent and hopefully stem the flow of vicious missives out of her office.
• Keep Cowin in his Henry Kissinger role with the aim of brokering a peace treaty between Gina and Fairfax.
• Use Cowin as a filter for Gina’s ideas, the idea being Cowin is savvy enough to interpret Gina’s philosophy in a practical and helpful way.
• Actually add a director who could help the company.

Corbett will be hoping he’s bought some time – by soothing Gina, he and Hywood can actually try to execute their digital turnaround.

There’s absolutely no guarantees that turnaround will work, but it will be a hell of a lot easier pulling it off without Gina Rinehart on their backs.