Standard & Poor’s Warns Ratings Cut on Fairfax

Standard & Poor’s said there is a chance the ratings agency may cut the long-term credit rating of Fairfax Media. The cut may happen if the newspaper does not improve its business amid the changes sweeping the media industry.

S&P rated Fairfax Media with a BB+ credit rating. The agency, however, lowered its outlook on the newspaper company from stable to negative. S&P worries that Fairfax Media may not be able to keep up with the changing media landscape.

According to Adrian Chow, the negative outlook is a reflection of the difficulties and challenges Fairfax Media is facing. The company is in the midst of restructuring its cost base and also facing internal issues with Gina Rinehart.

Adrian Chow is a credit analyst from S&P. He added that he is uncertain if the cost-cutting and layoff plans of Fairfax Media would offset the company’s structural deterioration.

The revised ratings come after a challenging week for Fairfax. Just a few days ago, Gina Rinehart reduced her Fairfax stake from 18.67 percent to 15 percent. Rinehart’s private company Hancock Prospecting said the reduction was an obstacle to Rinehart’s bid for a board seat.

For the last few months, the mining magnate has been pursuing three board seats. The board, led by Fairfax chairman Roger Corbett, has continuously rejected the bid.

It appears that Fairfax’s battles are not yet over. Amid the internal struggles, employee layoffs, decline in advertising revenues, Fairfax Media has its work cut out for it.