Toting a yellow proxy card, this reporter attended the Nine Entertainment Company’s annual shareholders meeting to put questions to the board of directors on behalf of Nine shareholder, journalist and legendary AGM activist Stephen Mayne.
For a fleeting moment, when the chairman Peter Costello heard the name Mayne, that famous smirk flashed into a rich smile; the sort of smile you’d see on Nine Network’s Love Island.
Perhaps Peter’s fabled smiling lessons were finally paying off. Mind you these have never actually been confirmed.
Yet this was not Love Island, where contestants have rules. This was a statutory shareholders’ meeting where directors have responsibilities. Whereas Love Island is governed by a producer and bankrolled by advertisers, annual general meetings are governed by the Corporations Act and financed by shareholders.
This is hardly the place to get all pernickety about the Rules of Meeting. Suffice to say that this is the one day of the year when the chairman is required to field questions from the company’s owners, the shareholders; questions, for instance, about Nine’s bizarre decision to hold a $10,000 a head Liberal Party fund-raiser at the TV network’s Willoughby headquarters.
At this question, Peter deftly passed the buck. Notwithstanding that directors are ultimately and legally responsible for the business of a corporation, Peter lumped the blame for this $700,000 political shindig squarely onto the shoulders of the man sitting to the left of him, Nine’s chief executive Hugh Marks.
Finely drilled with a manicured answer as to why it was such a bad look for a director presiding over newspaper mastheads claiming to be “Independent. Always” to be raising money for a political party, Peter told the floor it was Hugh’s decision but it would not be happening again. Not, at least, at Willoughby headquarters.
Peter Costello vs @MichaelWestBiz on political donations and Liberal fundraisers at today’s Nine AGM. Watch the chair announce this cop out delegation to management of future Lib-Lab donations. An abrogation by the Nine board. pic.twitter.com/sGvkP39nao
— Stephen Mayne (@MayneReport) November 12, 2019
It was a “bi-partisan” thing, he said. “But if the chief executive officer, the director of communications, the company secretary and the chief financial officer consider it valuable to continue membership of those organisations (political party business forums), they will do so”.
While it is true that journalism has become the poor cousin, in profit terms, to Nine’s growth assets such as streaming service Stan, Domain and NineNow, the old Fairfax newspaper mastheads such as the SMH and The Age, which Nine took over last year, occupy a cherished place in Australian society.
As does the entire Nine institution. This is not Love Island … or maybe it is … the Government’s Love Island.
Along with networks Ten and Seven, Nine is part of a broadcast oligopoly which has enjoyed a special favour from the Government – a large drop in licence fees.
Further, under the last Communications minister Mitch Fifield, the media laws were changed to allow Nine to merge with Fairfax last year.
Unlike Love Island, where the rules can be changed for the purposes of entertainment, changing the laws of Australia requires the imprimatur of Parliament.
The consequence of this “reform” has been a consolidation of the media landscape with Rupert Murdoch’s News Corp, virtually a propaganda arm of the Government, still dominant but Nine, now much bigger, in second place with its newspapers bending to the right.
Further still, Nine and the other networks – including the ABC – have skulked out of paying rent to NSW Government for the privilege of operating their transmission towers on Crown Land.
The volunteer rescue services pay their dues, the networks don’t.
While Nine was busy broadcasting Days of Our Lives and the Young and the Restless yesterday, the volunteer rescue services were busy saving lives, and paying for their emergency communications, unlike the networks.
In light of the cherished position they hold, mollycoddled by governments while advocating the #YourRightToKnow campaign against government secrecy, it could be expected that the big media companies owe both a public duty and a duty to shareholders to be accountable on the one day a year when shareholders get to front the stewards of their capital, their directors.
In fairness to Nine’s board and management, they have performed well financially in a hostile environment for traditional media. The financials are in good shape, the debt is gone and the corporate strategy seems sound enough.
Though part of that strategy, it would appear, is cross promotion. Peter was also questioned about the redemption of Karl Stefanovic. As the bushfire emergency heightened, Nine’s Sydney Morning Herald, devoted its front page image to the cracking scoop that Karl would be returning as host of the Today Show.
Nothing to see here, was the reaction of the Nine board. Karl’s column inches on page one were totally a decision of the “independent” editorial management of the newspaper. Shareholders giggled.
The rub for Nine’s shareholders and customers is that credibility, reputation and product integrity are hard-won over many years yet easily lost in a rash moment, or a retinue of rash moments.
“Peter Costello today demonstrated why he is unfit to be chairman of Australia’s second biggest media company, Nine Entertainment Company, which proudly proclaims its independence to the outside world,” said Stephen Mayne yesterday.
“Asked at today’s AGM about the notorious $10,000 a head political fundraiser which Nine hosted for the Liberal Party after the recent Federal election, Costello admitted it was a mistake but blamed chief executive Hugh Marks for making the decision.
“Mr Costello said the Board had established a new policy that Nine would no longer host political fundraisers, although future political donations were fine and decisions about the size and quantum of these had been delegated to management.
“What a cop out! The likes of Rio Tinto, BHP and even gambling giant Aristocrat Leisure have board driven policies which completely ban any political donations. Why doesn’t Nine Entertainment follow that lead, rather than delegating the decision to management?”
Nine’s journalists and many customers are disappointed the board of Nine – which controls trophy media brands such as The Age, SMH, 3AW, 2GB, the AFR, Stan, Domain and Nine – still does not appear to understand the importance of political independence. Though it should be said that CEO Hugh Marks accepted the hospital pass from chairman Peter in good grace.
“You’d expect this sort of behaviour from the partisan cowboys at News Corp,” said Stephen Mayne post meeting, “But Nine should be operating with the highest level of ethics, transparency and good governance.
“Indeed, when Mr Costello was asked if he was still a member of the Liberal Party and whether this was appropriate, the chairman scoffed, pointing out that the party had made him a life member.”
Unlike Love Island, where contestants are encouraged to use artistic licence, company directors are obliged to give straight answers.
Yet, responding to a further question yesterday, Peter appeared to misrepresent the situation of former Fairfax chairman Ron Walker, the late Ron Walker, who raised record sums for the Liberal Party as Federal Treasurer but resigned his membership before assuming the role of Fairfax chairman.
When this pointed out to Peter, he implied it wasn’t true simply saying that Ron Walker was a great Liberal Party Treasurer.
Among other Love Island-style antics, the opening question to Peter raised the view that Nine had overpaid for Fairfax. This was evident in the weakening Nine share price, which has dropped from around $2.40 shortly before the deal was announced to $1.74 yesterday, after a profit warning at the AGM triggered a 10c drop in the share price.
However, in evidence of what a good deal it was for Nine, Peter cited the overwhelming Fairfax vote in favour of the takeover. Well, yes, Fairfax shareholders would strongly back a generous takeover offer but under Australian law, Nine’s shareholders were not offered any opportunity to vote on the deal.
This often happens in mergers. The side which is overpaying becomes the nominated acquirer so that the risk of the deal being voted down is minimised. This is why we need legislative reform which gives both sets of shareholders a vote in any major merger deal as occurs in many other markets such as New Zealand, Hong Kong, South Africa and the UK.
Watch the webcast of today’s 93 minute Nine AGM and you will find the chairman regularly tried to shorten or curtail the question and answer session; on this, the one day of the year, when directors are required to respond to questions from the company owners.
I was only allowed to ask two questions during general business at the start of the meeting and then the promised Q&A session at the end was also needlessly curtained.
As the chairman of a company whose journalists rely on the unfettered right to ask questions of powerful people, this was not a good message from Peter.
It does bring to mind however the ancient Chinese proverb, “He who smirks last, smirks best”.
Editor’s Note: the author of this story has not actually watched Love Island. Apologies to cast and crew if the integrity of the program has been misrepresented.
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Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.