Tony O'Reilly, executive chairman of Independent News and Media, pictured in September 2000. Photo / File
COMMENT:
In the early 1990s Wilson and Horton had a bruising encounter with Brierley Investments which echoed another involvement with them in the late 1950s, early 1960s when my father refused to take Brierley's advertisements as he believed their interest rates were unacceptably high and may cause loss to Herald readers.
As Sir Ron Brierley goes to court it recalls my encounter with Brierley in November 1994. In the long history of Wilson and Horton there can have been few more dramatic moments for this publishing business than on November 3, 1994 after an Air NZ flight took off from Auckland to Los Angeles on the previous evening with myself and my wife Rosie on board to attend the Commonwealth Press conference in Cyprus.
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Wilson and Horton had had numerous takeover offers over the years, and the company was therefore constantly aware of corporate activity on the share register. One of the more interesting ones was instituted by Robert Holmes à Court some years before, which ultimately ended in the sale of his holding following his untimely death.
In all cases, an overriding duty of directors in such circumstances at the time was to give all shareholders the best deal which could be obtained.
The days before our departure were not without some hints of plotting, with more than a few inquiries on the exact plane and flight we were going to be on.
Some thousands of miles out over the Pacific Ocean, suspicions were aroused as the plane's Captain said he was being constantly asked to contact Auckland when the point of no return in the flight's journey had been reached, and were we (the Hortons) actually on board.
Such interest was unusual.
Around midnight NZ time, the point of no return was reached. Shortly after, the flight captain was cabled with the news that Brierley Investments Ltd had made an offer for Wilson and Horton at $9.50 a share and the board of Wilson and Horton had not opposed the offer.
All this was played out while I was on the plane to Los Angeles and out of contact. For the board to make any decisions without the managing director present whatever the circumstances baffled me then, as it does now.
The rest of the flight was a terrible time for me in which to consider the next move if there was any. On arrival in Los Angeles I phoned Auckland and contacted the chairman for more information. He confirmed the events and the unanimous decision of the board, in my absence, not to oppose the deal.
There were those who blindly accepted that bid, but I had a publisher's aversion to BIL having any influence or control of Wilson and Horton, and the New Zealand Herald with its reputation as a paper of good repute.
The Herald had also endlessly editorialised against a partial takeover regime which so disadvantaged minority shareholders. That opinion went against the AMP, BNZ, and the Treasury who solidly supported the partial takeover.
But more seriously, Ron Brierley had asset-stripped the public listed New Zealand News publishing and newspaper company in the 1980s which had in its portfolio the Auckland Star and many other smaller newspapers and well respected magazines.
Within months, published profit of New Zealand News Ltd dropped by 96 per cent and the share price moved down to $2.30, and BIL then offered $3.00 a share when the price was $2.12, which all brokers would recommend accepting.
So it was a surprise to me that the Chairman of Wilson and Horton, Peter Clapshaw could welcome the Brierley bid despite this track record in publishing.
Having witnessed such publishing carnage, I had no hesitation saying this publicly on arrival back at the Auckland Airport after the aborted Cyprus trip where Paul Holmes was waiting for my comments as I stepped into the arrival lounge.
I maintained then my view that the takeover offer was unacceptable to the Horton family at least, and I would oppose it. Let the battle begin!
Personally, I now had to come up with a strategy to beat this takeover when all the world was saying that the die had been cast. I had accepted my term of office was coming to an end so staying on was never a desire of mine and the board was not slow to tell me.
The first self-imposed regime for me was to maintain an air of calm and confidence and simply stick to the script of maintaining BIL was not an acceptable publisher of the New Zealand Herald.
So, the weeks went by hobbling from meeting to meeting and I had no sure way to bring matters to a head.
Finally, on December 2, 1995 a memorandum of understanding was agreed that BIL sell the shares at the minimum acceptable price of $11.50.
Wilson and Horton staff were told that "the nature and style of Brierley Investments Ltd operating as an investment fund are not compatible with newspaper publishing and could well lead to an erosion of the standing and respect in which the company's operations have been traditionally held throughout the 131 year life of the company".
I was charged with finding a buyer.
The final outcome would be a long dinner and drinks with Tony O'Reilly at the Menzies Hotel in Sydney, with some of his associates. I wish I could have conversed in Gaelic which was their chosen code, it seemed.
However, a lot of worldwide travel was to be undertaken before that event could take place. Locally only Craig Heatley showed interest, but it was a step too far for him at that stage of his commercial development.
Approaches were made to The Straits Times in Singapore, The Daily Express, The Daily Telegraph, The Times and a few others in Britain.
I was now left with Australia. News Ltd took a cool view on the deal and decided against it. However, it was known I was talking to News Ltd and that was good for me.
Kerry Packer, a loyal printing customer of Wilson and Horton for his magazines, had always maintained with me that newspapers could not compete with TV and he hated the industry. His father had made him load and stack newspapers on trucks on the many nights affected by classic Australian trade union behaviour. In contrast he said, he could reach all the homes of Sydney from a steel tower at the top of a nearby hill for virtually nothing and with no union to stop him. Hard to better that logic, Packer was to me in other publishing respects a genius of his time, regardless of anything else. When he sold the Daily Telegraph to News Ltd, he gave me the opportunity to buy redundant plant and one beauty was a letterpress poster press which turned out daily Herald store-front posters for years to come.
In my worldwide search there was just one opportunity left and that was in the person of O'Reilly, the charismatic Dublin publisher, rugby player supremo and entrepreneur from his Heinz days. He was also a great fan of New Zealand even, perhaps, with family living there, he told us. The Dublin-based Independent was operating at the height of the classified boom in Ireland and with his old fashioned but entirely suitable letterpress plant in Dublin was making unbelievable money.
O'Reilly had very different business vibes to Packer and Murdoch, but the reality was he could sell anything to anybody and had proverbially a Rolodex of every important person in the USA. In selling Wilson and Horton as a financial proposition to Irish banks, he was still a believer in the "rivers of gold" cachet used so frequently for newspapers with large classified sections.
O'Reilly enjoyed the New Zealand commercial environment as opposed to the Australian scene which was unreservedly hostile to him in respect of their possible Fairfax takeover. His wife's connection, the Goulandris shipping family from Greece, apparently owned the vessel that took fuel from Marsden Point to Auckland so both parties had a good attitude about New Zealand.
Independent News and Media Plc borrowed the funds for the takeover from Irish banks and would sadly bring an end to the legacy of Wilson and Horton, which had to be then cut and diced, with subsidiaries, buildings and equipment leased out or sold to cope with the interest payments. I resigned and started Horton Media which is still printing today in South Auckland.
Print will survive, despite the digital age, but it will be very hard work as it was in the 1950s and 1960s when strikes, paper shortages and poor retail spending kept us all on our toes. I always remember the minutes of a board meeting during the 1930s depression, when Wilson and Horton let no one go from employment, and a decision by the board not to buy a lock for a few pounds to conserve cash.
Finally, on September 16, 1996 an offer for all Wilson and Horton shares was made by IPCL, a wholly owned subsidiary of INP of $10.50, a clear extra dollar over the price considered fair by the Wilson and Horton board nearly two years prior. According to Carolyn Holmes for First NZ Capital, this was a top price for WHO on any valuation method.
In the current world of newspapers in New Zealand, there are two major players left, NZX-listed NZME and Stuff, owned by Australia's Nine Entertainment. They may even merge to improve profitability.
One has to say that Australian publishing managers have rarely succeeded in this parochial market.
Wilson and Horton was valued at over $1 billion at its height, and INL was sold to Fairfax by News Ltd for a similar amount. The current market value of NZME is $75 million and Stuff considerably less, it is said.
There are also successful private newspaper owners, the Smith family with the Otago Daily Times, and private owners of the Wairarapa Times Age and numerous other smaller publishers throughout New Zealand who survive on hard work, value for money and good service. They understand publishing and the value of journalism for their readers.
It must be said that all things taken into consideration and in hindsight those who sold did so at the right time as digital was the future.
The full story of Wilson and Horton Ltd will probably never be told, but the legacy of all that it once stood for and delivered to its readers and advertisers will be remembered - and that perhaps is as good as it can get.
Michael Horton is the former managing director of Wilson & Horton, which once owned the Herald.
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