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howard puts brakes on media reform

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    Fairfax looks back to Hilmer as boss
    Mark Day and Jane Schulze

    AUSTRALIA'S second-biggest newspaper publisher, Fairfax, broke off talks with its chosen candidate for its new chief executive when his remuneration demands reached $25 million.

    Fairfax said last week it had ended talks with Doug Flynn, former head of British advertising giant Aegis, and said its worldwide search for a new chief executive would be "extended and broadened".
    But reports yesterday suggested the board of Fairfax, publisher of The Sydney Morning Herald and The Age in Melbourne, may look the other way and try to entice incumbent Fred Hilmer to stay on.

    Mr Hilmer, who took over as Fairfax head in 1999, announced last May he wanted to leave in 2005. Fairfax began a search for a replacement, and started serious talks with Mr Flynn shortly before Christmas. Mr Flynn, an Australian with extensive publishing experience, worked for News International in London in the 1990s before moving to Aegis, where he earned a salary and bonuses worth almost pound stg. 2million ($4.8 million). It is understood he demanded annual remuneration from Fairfax of $5 million, which is more than the $3 million a year Kerry Packer's Publishing and Broadcasting pays its chief executive, John Alexander. PBL, which also operates a large gaming business, has a market value more than twice that of Fairfax.

    But the biggest problem was Mr Flynn's demand that, if the ownership of Fairfax were to change during the proposed five-year contact, he would be paid out in full. This would have made him a $25million man.

    When Fairfax baulked at hiring Mr Flynn, he accepted an offer from the troubled British pest exterminator and cleaning company Rentokil, where he will earn more than pound stg. 2.4million a year.

    Fairfax is seen as a potential target if the Howard Government uses its control of the Senate on July 1 to relax media ownership laws.

    Financial markets were betting on the Government changing the rules to allow companies to own newspaper and television businesses in the same market.

    Changes to foreign ownership rules could also make Fairfax, with no controlling shareholders, vulnerable to a takeover bid.

    However, John Howard yesterday raised for the first time the possibility that reform of Australia's media ownership restrictions may not occur.

    In an interview with The Bulletin magazine, the Prime Minister restated his view that media reform was less of a priority than industrial relations or welfare reform.

    But he then went further, suggesting it may not occur at all.

    "It's not something that I'm going to dissipate a lot of political capital on. People should understand that," he said. "If we end up with everyone coming in for a chop and the thing being impossible to resolve, we'll just leave it as it is."

    Asked about Mr Howard's comment on media reform, Communications Minister Helen Coonan issued a statement saying the Government was committed to the reform "while protecting the public interest in a diverse and vibrant media sector".

    "No decision has been taken as to the timing of introduction of legislation to reform Australia's media ownership laws," Senator Coonan said.

    A Fairfax spokesman said yesterday the search for a new chief executive would involve a review of "the existing shortlist, plus new candidates".

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