Fairfax Media says it is unable to offer Gina Rinehart, the company's largest shareholder, a seat on its board.
On Wednesday, Fairfax Media chairman Roger Corbett said the company and Mrs Rinehart had not been able reach agreement on acceptable terms.
However, Mr Corbett left the door open for further discussions.
"I regret that agreement has not been reached for Mrs Rinehart to join the Fairfax Media board of directors," Mr Corbett said in a statement released after a Fairfax board meeting on Wednesday afternoon.
"I hope that this might be possible in the future."
Mrs Rinehart holds about 18 per cent of Fairfax Media and was keen to secure up to three board seats.
However, existing Fairfax directors wanted Mrs Rinehart to sign the media company's charter of independence before any offer to join the board was made.
While Mrs Rinehart's Hancock Prospecting released a statement on Wednesday signalling she was prepared to acknowledge the company's editorial charter, Mr Corbett said the charter and other board governance principles remained the major stumbling blocks.
Mr Corbett said the board took into consideration feedback from other shareholders before coming to a decision.
"In coming to this view the board has gauged the opinion of other shareholders and noted some of their recent public comments on these matters, noting in particular they share the company's view on maintaining editorial independence and their desire that board members act in the interests of all shareholders," Mr Corbett said.
"The company has received tens of thousands of emails and other correspondence from shareholders, our readers and others making it clear that they support Fairfax's long-standing position on editorial independence."
The chief development officer of Mrs Rinehart's Hancock Prospecting, John Klepec, said Hancock was "prepared to acknowledge" Fairfax's board governance principles existed "subject as they must be, to the overriding fiduciary duties of directors".
However, Mr Klepec said those principles had been "repeatedly overridden in the past", and cited the example where Fairfax journalists were ordered to support Earth Hour.
Mr Klepec made the comments in a statement on Wednesday and was quoted in reports on Fairfax Media websites.
He said the board required new members to assist in making Fairfax more sustainable, as it has "plainly not delivered for the last several years of declining share value".
"We are certainly in support of journalist integrity and accuracy, these are important principles in journalism, and are keen to support an effective charter to endorse this in the interests of Fairfax Media, assuming one can be agreed," Mr Klepec said in the statement.
"Fairfax Media has an abysmal track record and our intention is should we be in a position to have sufficient seats to influence the board, which it is doubtful two seats would bring should only two seats be offered, we would like to aim towards making Fairfax Media sustainable."
Fairfax shares closed up half a cent off record lows, finishing the day at 55.5 cents.
Meanwhile, the editor of Fairfax tabloid the Newcastle Herald has resigned two weeks after the company confirmed plans to move the newspaper's editorial production to New Zealand.
Roger Brock, who joined the company 35 years ago, will be replaced by the paper's deputy editor Chad Watson from Monday.
He would not comment on his resignation to AAP but told his own newspaper he was leaving the title in good hands.
"I know that the Newcastle Herald in all its forms will be in very good hands under Chad," Mr Brock said.
"He is an experienced journalist and he knows this paper and its people.
"He also knows our community and the unique relationship the Newcastle Herald has with its readers."
Mr Brock told staff in a memo that he would stay at the paper while sub-editing, design and layout work was moved offshore to Fairfax Editorial Services.
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