Gina Rinehart has increased her stake in Fairfax Media group to almost 19 per cent and is now demanding three board seats and the power to hire and fire editors.
The mining billionaire launched her latest assault on the ailing publisher as it shocked the media industry by announcing it would sack 1900 staff over the next three years and turn its flagship broadsheet newspapers into tabloids.
Fairfax has resisted Mrs Rinehart's demands for a seat on the board of directors for months, fearing she would interfere in editorial policy.
But the company's refusal only appears to have strengthened Mrs Rinehart's resolve and Fairfax chairman Roger Corbett is expected to meet institutional investors to consider her latest demands.
Documents lodged with the Australian stock exchange show her company, Hancock Prospecting, spent $86 million on Friday raising her stake in Fairfax to 18.7 per cent, from 12.6 per cent.
Mrs Rinehart, the richest woman in the world, cannot hold more than 20 per cent of Fairfax without launching a takeover bid.
Fairfax said its restructure was designed to prepare the company for a "digital only" future with no newspapers.
The Sydney Morning Herald, the nation's oldest newspaper, and the Age will from March move to what the company described as a compact format similar to the Australian Financial Review.
Fairfax will close its two biggest printing presses by June 2014 and introduce digital subscriptions early next year, based on a metered model where articles over a certain quota attract a download fee.
With the company expecting to save $235 million by June 2015, Fairfax shares rose 7.5 per cent yesterday, closing at 65 cents.
Fairfax chief executive Greg Hywood insisted the changes would not compromise the company's investment in quality journalism or its editorial standards.
Of the 1900 jobs to go, 150 will be journalists from the SMH and the Age.
The Financial Review Group, which includes the AFR and BRW, will lose 10 per cent of its staff.
News Ltd, publisher of the Australian and the Daily Telegraph in Sydney, is also expected to announce staff cuts in coming days.
As Victorian Liberal Premier Ted Baillieu voiced concern that Fairfax's demise would see media diversity decline, his Federal colleagues attempted to link the redundancies to the looming carbon tax.
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