Fairfax board on McCarthy, Walker and coping with debt

Brian McCarthy has been confirmed as chief executive an managing director of Fairfax Media, with chairman Ron Walker backing the decision … and the board backing Walker. An announcement following this morning’s meeting announced “unanimous support” while acknowledging the “great contribution he continues to make to the company”. There were no surprises about the McCarthy appointment, effective immediately, with Walker describing him as “an excellent choice given his deep and extensive media experience and very successful track record as managing director of Rural Press Limited for 13 years”. Walker says Fairfax Media benefited enormously by his achievements since the merger: “Mr McCarthy is the right person with the right experience at this time to run the company.” The board also agreed to temporarily reduce the company’s dividend payout ratio to approximately 20 per cent (from its usual 80 per cent) to reduce debt. This affects the interim dividend payable next March. It has also announced the sale of Carnival Film and Television, previously part of Southern Star. The statement says Fairfax is “well positioned” to manage the economic downturn, given factors including its diversification to a broader media group, continuing reduction of its cost base, and containing capital expenditure. Major acquisitions and mergers over the last three years of Trade Me, Rural Press and Southern Cross have been financed more than 70 per cent by issuing new equity. The board statement says there are “minimal” refinancing requirements until 2011, and under the current cycle of interest rate reductions, expects a significant reduction in interest costs in the second half of the 2009 financial year with further reductions anticipated in 2010.