Embattled retailing giant Harvey Norman reported $391 million of marketing expenses in the 2018-19 year and is believed to be spending close to $100 million of this directly with Rupert Murdoch’s News Corporation.
Sure, the newspaper industry is struggling, but does that mean editorial independence should go out the window when one of your five biggest advertisers is also a controversial corporate governance basket-case?
Should News Corp journalists, especially those working for the “quality broadsheet” The Australian, be throwing all pretence of balance out the window when it comes to the company’s billionaire co-founder, Gerry Harvey? Harvey has long had strong support in the Murdoch press, indeed most of the mainstream media but his defence has reached a crescendo in recent days as Sky News ramped up the debate by conflating proxy advisors with “toxic” climate activists in a Culture Wars extravaganza.
This website has analysed the coverage of Harvey Norman by The Australian’s senior business reporter Eli Greenblat over the past four years and discovered there have been more than 20 different stories resulting from a direct conversation between the billionaire advertiser and the the newspaper. It should be noted that Greenblat is a reporter, not an editor, and therefore not responsible for editorial balance and decisions of the newspaper.
Prominent short-seller and Harvey Norman critic, John Hempton from Bronte Capital, told michaelwest.com.au over the weekend that he’d never been contacted by The Australian, despite being labelled a “criminal” by Gerry Harvey.
“He’s never tried to contact me,” Hempton said.
The Mayne run
Similarly, I’ve never had a conversation with Eli Greenblat and am running for the board of Harvey Norman at Wednesday’s AGM in Sydney. (See more on the platform here, plus this package on the media coverage about the issues at Harvey Norman, which include accounting irregularities, inflated and secretive property valuations, claims about fake franchisees, multiple capital raisings which disadvantaged retail shareholders, diversions into disastrous non-retail activities such as dairy and mining camps and a failure to appoint independent directors.)
Puzzled about his failure to engage, or even canvass most of these controversies, I emailed Greenblat last week on a couple of matters, including offering him an exclusive on one aspect of the upcoming Harvey Norman AGM, which was subsequently picked up by The AFR.
The only reply? A brief email message which included the sign-off: “please stop emailing me”.
Again, editorial direction at The Australian and other News Corp titles is set by editors, not reporters. It is the role of the reporter to take instructions from the editors and Harvey’s right wing views are aligned with those of the conservative media stable. Indeed, the recent spray against Harvey Norman’s sharemarket adversaries from right wing presenters at Sky News After Dark and from The Australian’s columnist Janet Albrechtsen, display a strong overall bias towards Gerry Harvey from the Murdoch media.
We evaluated 30 different stories about Harvey Norman published in The Australian over the past four years. They are largely favourable to Gerry Harvey, despite the questionable governance practices of Harvey Norman, and usually follow from a direct conversation between the reporter and the retail magnate.
Media leverage
The key governance question here is the relationship between Gerry Harvey’s $1 million+ weekly advertising spend with News Corp and the lack of balance in the newspaper company’s coverage.
If The Australian ran an opinion piece from me bagging Gerry, or just covered the governance controversies dispassionately, would this imperil the huge ad spend?
Given that about 30% of the Harvey Norman share register is opposed to the current regime, it looks as if executive chairman Gerry Harvey is using company funds to leverage up an advertising relationship into a powerful weapon in what is effectively a civil war. Of course, a company is entitled, indeed obliged, to achieve the best PR outcomes possible in the media.
It is the newspaper editors who are supposed to ensure fairness and balance for their reading customers, which clearly is not happening in this instance.
Sure, Gerry is good for a colourful quote and his side of the story should be ventilated, but if The Australian is going to adhere to its own code of conduct, along with those of the MEAA journalists’ union, they need to give the alternative view an airing.
Specifically, clause 1.5 in The Australian’s code says the following:
“Try always to tell all sides of the story when reporting on disputes and with such stories, reasonable steps should be taken to contact adversely named parties.”
Not only is Gerry always good for a self-serving interview with The Australian, in recent days Harvey Norman has been steering the reporters to supportive shareholders, such as Gerry’s mates from the billionaire Millner family and Adelaide-based listed investment company Argo Investments, whose CEO Jason Beddow proudly doesn’t buy any corporate governance advice when it comes to voting at AGMs.
Rather than focusing on the actual comments by the five different proxy advisers (ISS, CGI Glass Lewis, Ownership Matters, the Australian Shareholders’ Association and ACSI) which are highly critical of Harvey Norman’s shoddy governance and disclosure, The Australian has instead been running Gerry’s line that there is something wrong with proxy advisers, they should be regulated or they should be ignored.
This website will keep you posted on whether The Australian and other Murdoch outlets change their spots on their one-sided coverage of Harvey Norman in the period ahead but, for now, the coverage paints a remarkably one-sided story.
Here are some choice quotes:
“My belief is that Harvey Norman is a $5 or $6 share, not a $3-$4 share, and from my point of view I will sell shares I’ve got in every company in Australia and overseas for Harvey Norman at that price.”
“They (rival companies) are all after the quick quid to get their bonus and so they don’t make (long-term) decisions … but we won’t as a company. We make decisions that we think will be good that are 10 and 15 years in advance.”
When asked about the pressure coming from super funds and corporate governance activists, Mr Harvey told The Weekend Australian: “I’ve never spoken to anyone yet that runs a public company, that started the public company, that doesn’t agree with me. Now I haven’t got any problem with these people having a view, but I’ve got the right to have a view too, and my argument is they are wrong and they don’t know they are wrong.”
“All I’m trying to say is people out there with good intentions on corporate governance, and you’ve got to have what percentage of women on boards and so many independent directors and it’s best to have an independent chairman — and they have all these views, but the problem is 98.5 per cent of them have never run a public company.”
“Hopefully they will vote for us next time. I don’t see why they voted this way. It could be not enough females or independent directors on the board.”
Gerry Harvey on the Australian Shareholders’ Association: “They represent less than 1 per cent of shares in Harvey Norman. They came to the meeting and try to be disruptive, they are trying to make a name for themselves.”
Gerry Harvey complaining about being diluted when he diluted his own retail shareholders: “In the GFC most of them (companies) including all the banks were all in strife overnight and they didn’t even let all their shareholders participate in most cases in the raising, because they didn’t have time, needed the money tomorrow, and I’m still shitty about the fact that I didn’t get any shares in a lot of those banks and companies.’’
“I just think they (the market) have got it wrong, I don’t get why they do that and it makes it an extraordinary good buy for anyone,” Mr Harvey told The Australian. “So the market has just got it wrong, simple as that, they just don’t get it. The result isn’t bad, there is nothing wrong with the result at all, so if they are knocking it? Why are they knocking it, they have to give a good reason and that escapes me as to what good reason they can give.’’
“They are market manipulators, they are not short sellers, these people are market manipulators and they should be pursued to the ends of the earth.’’
“Some of these shorts are genuine shorts, others are acting as criminals and I am trying to bring the criminals undone,’’ Mr Harvey told The Australian. “And the criminals, I call them criminals, because when they short they just don’t then short, they then use all these other methods to decrease the price and manipulate the shares.’’
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For feedback on this story, Stephen Mayne can be reached on [email protected] and Eli Greenblat can be reached by email on [email protected]. If you’d like to attend Wednesday’s AGM to watch some fireworks unfold, it starts at 11am at the Tattersalls Club in Sydney. See more in the notice of meeting.
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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.