War breaks out between Oz mining magnate Rinehart and Fairfax over editorial control

Sydney - A war of words has erupted between Gina Rinehart and Fairfax media after the Australian mining magnate called on the media firm's chairman Roger Corbett to agree to a 'performance milestone' of returning the company's share price to 87 cents.

In a letter to Corbett, Rinehart said the performance of Fairfax over the past five years had been 'distressing for shareholders'.

According to The Age, Rinehart, the firm's largest shareholder, called on Corbett to reverse 'the five-year decline in paid circulation and revenue'.

"Shareholder value has fallen significantly. So has the circulation of once-proud mastheads," the letter read.

"The milestone we propose is that the Fairfax Media weighted average trade share price increase from current levels to 87 cents per share prior to the (annual general meeting), which would represent only a 50 per cent loss from the commencement of your chairmanship in October 2009," it added.

In a statement late today, Fairfax returned fire, disputing her statement that the differences with the board were not about editorial control and calling on Rinehart to bid for the company if she wants control.

"Contrary to Rinehart's repeated assertions that this isn't about editorial control - it is. It is also about her obtaining control of the company and not paying a premium," Fairfax said.

Rinehart's letter, in the form of an ultimatum, came after the Fairfax board announced it would not be able to give Rinehart a board seat citing disagreements over editorial independence.

Rinehart holds an 18.7 per cent stake and has demanded as many as three board seats.