Formerly serving as outgoing chief David Kirk’s deputy, McCarthy was initially installed as the interim chief following Kirk’s resignation last week.

Meanwhile, Ron Walker will retain his role as chairman, despite speculation that he would be given the shove in favour of major shareholder John B. Fairfax.

McCarthy, who was the boss of Rural Press for more than a decade before it merged with Fairfax last year, will be charged with reversing the company’s ailing share price – which has declined 68 per cent over the past year – and an earnings slump which began prior to the global economic plunge.

McCarthy’s appointment may also see another wave of staff cuts, with the executive developing a reputation for ruthless cost-cutting at Rural Press. It is also expected to trigger a raft of appointments for former Rural Press staff to more senior executive positions, as the company prepares to tighten its belt across its operations.

Fairfax also announced a 20 per cent cut in its dividend to help ease a $2.5 billion debt.

“Given the significant recent deterioration in the global outlook, and the high level of economic uncertainty ahead, the board has decided to temporarily reduce its dividend payout to approximately 20% for the interim dividend payable in March 2009 to preserve capital and facilitate debt reduction,” the company said in a statement.

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