NZME's biggest shareholder says maintaining the status quo is not an option but company says it is performing strongly; TVNZ Breakfast host Chris Chang interviews E tū union director Michael Wood.
NZME’s biggest shareholder backs billionaire’s board nominees, saying status quo is ‘not an option’ but chair says the firm is ‘performing strongly’; Did TVNZ miss a scoop over Jim Grenon’s plans? Willie Jackson loses broadcasting and media responsibilities.
The battle for board positions and control of NZME is escalating publicly, with the media company’s biggest shareholder saying it has been “deeply disappointed” by the company’s performance and that it backs a billionaire’s plan for four new directors.
But NZME’s chair says the company has been “performing strongly in a challenging market” and that its existing board is “highly engaged”.
Australian-based Spheria Asset Management, which owns 19% of NZME, says a board shake-up is necessary for the NZ Herald, Newstalk ZB and OneRoof owner “to not only survive but also have a chance to thrive”.
“Spheria takes its voting responsibilities seriously. Over the past two years, we have been deeply disappointed with NZME’s financial performance,” Spheria portfolio manager Matt Booker said in a statement to Media Insider.
“Operating NPAT [net profit after tax] has declined from over $23 million in CY22 to just $12 million in CY24 - a near 50% drop. If this trend continues, the company faces a genuine risk of becoming unviable in the near future, which would have serious consequences for both shareholders and employees. This trajectory is simply unsustainable.”
He said Spheria would vote to support Auckland-based Canadian billionaire Jim Grenon joining the NZME board, along with his three other nominees - lawyer Philip Crump, experienced retail executive Simon West and private equity businessman Des Gittings.
In a statement to the NZX on Thursday last week, NZME said Grenon - who now owns 9.97% of NZME shares in his own name and through one of his companies - had indicated he had the support of 37% of NZME’s shareholders for his proposal (that support included his own holdings).
The following day, NZME told the NZX “Mr Grenon advises that additional shareholders with ~10% have also indicated their support. We can advise an updated percentage closer to the time of publication of the [annual shareholders meeting] materials”.
The April 29 meeting will determine the future shape and direction of NZME. The current board is made up of chair Barbara Chapman and directors Carol Campbell, David Gibson, Guy Horrocks and Sussan Turner.
Chapman told Media Insider in a statement yesterday the company was “not surprised by Spheria confirming its support”.
“We’d assumed it was included in the reported 37% Mr Grenon has claimed,” Chapman said.
“We note Matt Booker’s comments.
“NZME has been performing strongly in a challenging market, we have a highly engaged and professional board with a clear strategy focused on delivering ongoing value for all shareholders.”
Booker said in his statement that “despite our patience, it has become clear that a shake-up is necessary for NZME to not only survive but also have a chance to thrive”.
He said Grenon was an “accomplished and highly successful businessman” who had acquired a significant stake in the company.
Latest public disclosures indicated Grenon owned 17.5 million shares, Booker said, while the current NZME board collectively held 273,000 shares.
“This stark disparity underscores Mr Grenon’s substantial commitment and strong alignment with shareholder interests,” he said.
“In our view, maintaining the status quo is not an option. We have therefore decided to support Mr Grenon’s director nominations and his proposed restructuring of NZME’s board.”
Chapman said the NZME board had updated shareholders again yesterday on the process it was following having formally confirmed all nominations for directors.
“In today’s shareholder update, the board noted NZME’s governance framework ensures that the board renewal process is structured, deliberate and aligned with long-term shareholder value.
“The board remains committed to a process that delivers the best outcome for all shareholders.”
Another substantial shareholder, Osmium Partners, which owns 6.57% of the company, has separately nominated two other directors - its president Adam Hoydysh and chief investment officer John Lewis. They have not returned messages.
Another NZME shareholder, Caniwi Capital executive chairman Troy Bowker, posted a comment on social media this week indicating Chapman’s alleged lack of engagement with shareholders was an issue.
“The largest shareholder is an Aussie fund who she has never spoken to,” Bowker wrote. “No surprise they are wanting change. Not a phone call or email.”
Bowker earlier told Media Insider in a statement: “I will be supporting Mr Grenon’s proposal at the AGM in full and my company (currently) has voting rights for 6,600,000 shares, some of which are held in our name, some in nominee accounts.”
In her statement to Media Insider, Chapman said: “In my role as chair I have engaged with shareholders at strategy days, annual shareholder meetings and in one-on-one meetings on occasion.”
While Grenon appears to have close-to-majority support, according to NZME’s NZX notices, a final breakdown won’t be known until after the shareholders vote.
His support has also been bolstered by Australian-based NZME shareholder and media analyst Roger Colman who told BusinessDesk that he would be voting for Grenon. He said he was 50/50 on the other nominees and hoped to meet them first.
“I’ve notified [chair Barbara Chapman] that I’ll be voting for Jim. And I’ve notified Jim I’ll be voting for him, assuming he gets to 10% which is a standard position in Australia [for a board seat].”
Colman told BusinessDesk’s Rebecca Stevenson that he had about 9.8% of NZME’s shares owned by former clients and friends, who were likely to follow his lead and vote for Grenon to join the board. He said he owned about 5.5 million NZME shares himself.
Colman backed NZME chief executive Michael Boggs and believed that NZME’s board didn’t have the energy or knowledge to assist him in doing more. “Boggs should be on the board at a minimum, and you don’t replace him. He’s done everything to deliver best practices worldwide in a difficult economic environment. He’s 57. He’s still got another three to five years left.”
It is understood NZME will use the next 46 days to prove to shareholders its view that the company continues to be on the right track. To do that, it is understood it could use an investor relations firm to help sell the story of its progress and future.
It will also likely be aiming to counter what is understood to be a letter from Grenon which details a number of governance, operational and performance issues. Among the criticisms is likely to be an assertion of a lack of shareholder engagement by board members.
NZME has so far declined to release the letter.
Earlier this week, the Shareholders Association raised some red flags about the board moves.
NZSA managing director Oliver Mander wrote that minority shareholders “could be forgiven for feeling that this is takeover by stealth, with the personal views of Jim Grenon riding roughshod over long-term shareholder interest”.
Grenon’s proposal to transfer control to a shareholder group could be considered acting in concert, Mander said.
“Directors representing a group ‘acting in concert’ may not meet the qualification as an independent director. In this situation, the minority shareholders represented by independent directors will receive no ‘control premium’ either by way of cash or share price increase attributable to a transition of control.”
He questioned whether the moves would “manifest in greater editorial oversight by the board”.
Chapman said in her statement that further details on the director nominations and shareholder proposal would be provided in the notice of meeting for April 29.
“This will include director nominee biographies and the board’s assessment of whether the director nominees meet the NZX Listing rules’ director independence criteria.”
Grenon told BusinessDesk in an email that the Shareholders Association seemed “to have ideas that help entrench the board”.
“I will talk to NZSA in due course, once more is out in the open ... also, I don’t know why NZSA thinks issues of editorial control are in their wheelhouse.”
In a statement to the NZ Herald earlier this week, Grenon said: “Many of the shareholders supporting me are funds [that may have small investors] trying to make a profit.
“It is concern about operational aspects of NZME that is driving this change. The editorial content is very much a side issue but the quality of the journalism does impact everything else in the business and is also the board’s ultimate responsibility.
“The new board intends to improve on the journalism, with an emphasis on factual accuracy, less selling of the writer’s opinion and appealing to a wider political spectrum.”
Matt Booker’s comments on behalf of Spheria today are in contrast to a presentation he made less than three years ago at an Australian investment conference, where he was very positive about NZME’s performance.
“A few years ago it was seen as a dead-tide business,” Booker told the Pinnacle Investment Summit in September 2022. “It had $100 million of debt. People didn’t see the good qualities - I guess one man’s junk is another man’s treasure.”
He talked about the NZ Herald - the “number one masthead in New Zealand” - and its move into digital subscriptions as a relatively new revenue stream, and the importance of audio, including NZME’s licence for the iHeartRadio digital platform.
Much of his enthusiasm was focused on NZME property portal OneRoof and its number two position in the market, behind TradeMe.
He called OneRoof a “big kicker”, comparing it with the Domain real estate brand in Australia.
“We see real upside in that property digital market because that market has lagged ...
“[OneRoof] is the number two player in a market which is transforming, it’s going from print ... to digital. It’s probably five to 10 years behind the Aussie market, so there is going to be a lot of money made in that space.”
He said NZME was transforming, moving from “old world to new world”.
“It is a structural growth story.
“We think there’s lots of money to be made here. The balance sheet has gone from $100 million of debt to net cash, the risk is very low. There’s a re-rate opportunity with this business - it’s one of the companies that we like versus one that we don’t like.”
Jim Grenon has been painted in some quarters as a man of mystery and, to be fair, we still have much to hear from him.
But when he did give TVNZ a 758-word statement revealing some of his approach - including views on the media - the state broadcaster missed an opportunity to score a scoop over its rivals.
Instead, TVNZ’s Breakfast show simply read out a one-sentence summary of his statement - essentially saying he was concerned about the quality of journalism but reading into his intentions was speculation - before launching on Tuesday morning into a live interview with Michael Wood, the director of journalists union E tū.
Wood called for Grenon to give a commitment to editorial independence should he be successful in obtaining a seat on the NZME board. The union followed that up again yesterday with an open letter to Grenon.
The Herald has been seeking a full interview with Grenon since his board moves were revealed. Doubtless, other media have been lining up too.
On Tuesday, he provided the NZ Herald with the statement that he originally gave to TVNZ. Other media also picked up on it later.
He thought it ironic TVNZ had failed to use it, and was unhappy TVNZ had not picked up on his points that, in his view, the union had misrepresented his position.
“TV1 did not, in my view, push back against Michael Wood’s obviously wrong statement on behalf of the union, even though they were fully armed to do so. Ironic that a media saying how hard it was to get comments from me didn’t really use it when provided.”
TVNZ said its Breakfast show was committed to covering “both sides”.
“An excerpt of the statement he provided us with was used,” said a spokeswoman.
“When we’re provided with a long statement or a press release, we’ll use excerpts to appropriately summarise the relevant content for viewers.
“Breakfast is a video format, and this approach ensures the programme is engaging while still informative. As a broadcaster, the majority of our newsroom produces video. We have a small team dedicated to 1news.co.nz. They work with partners to provide stories through the day opting for RNZ’s report in this instance.”
Unfortunately for TVNZ, though, it carried the RNZ story on its website on Wednesday, well after other media, and two days after getting the statement first.
Former Broadcasting Minister Willie Jackson has relinquished the broadcasting and media portfolio as part of the Labour Party’s shadow cabinet reshuffle.
Labour MP Reuben Davidson has taken the role of opposition spokesperson for broadcasting, media and the creative economy.
Jackson could always be relied upon for some colourful responses when it came to media and as minister, he helped forge the Fair Digital News Bargaining Bill. He also held strong views on public media.
Two years ago, he implored TVNZ to capture more of the “New Zealand identity” in its programming.
“I want to see some of the country stuff. Country Calendar has been brilliant for New Zealand TV, but I think our New Zealand identity, with respect, is much more than that now,” he said at the time.
“They’ve been just saying ‘oh, well, there’s the New Zealand story, it’s Country Calendar’. I think it’s wider than that. I think Kiwis are growing – this country has been changing.”
Jackson told Media Insider yesterday: “It’s been an honour to have held the broadcasting and media portfolio for close to three years for Labour including 18 months as minister.
“The time has come though for others to be given an opportunity and I am very happy to support Rueben who has a big media background now in this role.
“I will still be involved in broadcasting as the Māori Development spokesperson because Māori broadcasting is part of that responsibility. So I am still spokesperson for Whakaata Māori, iwi radio and all Māori media.
“It will be important to have a synergy between the portfolios so I will continue to make contributions to broadcasting and support Rueben in his new role.”
He said gaining the social development portfolio provided “a new opportunity to make a difference to vulnerable communities with one of the largest budget allocations of the Crown”.
Back to the NZME board battle.
The investor behind media brand The Platform, Wayne Wright, told Media Insider he had been approached by the group seeking a board cleanout at NZME.
“I was invited to join the group, but I immediately declined that offer. I didn’t see it as a strong business opportunity, quite frankly. I did the math on it in my head in about two seconds to see the amount of shares you’d need to have for board control and so I immediately declined it.
“I think the project that I’ve got under way is making the changes in New Zealand that I had hoped to see. I think I’ll stick with my partnership with Sean [Sean Plunket] on that and we’ll go on down the road that way.”
He said the approach from the group was somewhat vague. “It was just, ‘we’re looking for a group to get enough shares to have enough voice’ to make the changes [board control] that you’re starting to see in the papers now.
“I didn’t get a whole lot of detail, to be fair, because I could just see, for me, it was a non-starter. So I didn’t really go into it in any depth.”
Jim Grenon had not been involved in the discussion with Wright - he only learned later that Grenon was involved.
“I know there are several people and it wouldn’t be polite for me to mention the names of those I talked to. I learned it was Jim about two days before we saw it in the paper.
“To me, board control comes with 51% and I heard numbers floating around, sort of getting a 10 to 20%, position. And I thought, well, that’s a long way from 51%.”
An NZME notice to the NZX last week indicated support for Grenon’s group at around 47% at that point.
Wright said he and Plunket were “still here fighting away and keeping our head above water, so I’m pretty proud of that”.
“I can see what Jim and co are trying to do and the difference they’re trying to make from their perspective in New Zealand. But like I said, I think that I’m on a good track already. I enjoy my partnership with Sean very much.
“I think we’re making the changes that we had set out to do, so mission accomplished as far as I’m concerned.”
Steve Braunias is among those leaving the NZ Herald, part of around 30 job losses on the editorial floor, including frontline reporters and production staff.
“I have many years left in journalism - perhaps three, maybe four - and hoped to see them out at the Herald, and cling on there till I got too old to think,” Braunias told Media Insider.
“It’s not to be but I’ll always feel grateful to the paper for having me there for 10 years. I wrote some of the best stories of my terrifyingly long career while I was at the Herald. I loved writing for the paper and working alongside reporters as good as Caro Meng-Yee, Nick Jones, George Block, Jane Phare and my best friend in journalism, Jared Savage.”
He leaves on April 17.
Also departing, after resigning, is Wellington-based senior reporter Georgina Campbell. She is taking up a role in Lower Hutt mayor Campbell Barry’s office.
“While I am sad to say goodbye to journalism after almost a decade, I am really looking forward to this new opportunity.”
Editor-at-Large Shayne Currie is one of New Zealand’s most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor and has a small shareholding in NZME.
Nominations include billionaire, a prominent blogger and lawyer and a private equity exec.