Nine Entertainment Co’s board was sent an anonymous email containing complaints about behaviour at the company in the days before outgoing chief executive Hugh Marks abruptly resigned.
Industry sources who spoke on the condition of anonymity because the matters were confidential told The Sydney Morning Herald and The Age that the correspondence was received by directors before Thursday’s annual general meeting and added to tensions about the communications of sensitive information between directors.
Mr Marks resigned from Nine on Saturday after he revealed in The Sydney Morning Herald that he had begun a relationship with Alexi Baker, who reported directly to him as managing director of commercial. Nine operates television, streaming and radio business and is the owner of the Herald and The Age.
The Australian reported on Monday the Nine board led by former federal Treasurer Peter Costello is split over whether to hold an independent investigations into Mr Marks’ relationship. The report said Mr Costello wanted the matter handled internally with Nine sources saying director Catherine West, who is the chairman of the people and remuneration committee, could conduct an internal investigation.
Nine has refused to answer detailed questions about the nature of any investigation and would not comment on on the anonymous email sent to the board. The Herald and The Age could not confirm the contents of the email but have been told it has added frustrations among directors that they have not been adequately informed about important developments inside the company.
Shareholders expressed disappointment about Mr Marks’ resignation, who oversaw the merger between Nine and Fairfax Media in 2018, overhauled the company’s sports rights portfolio and announced a 30 per cent increase to earnings forecasts last week.
Martin Currie analyst Patrick Potts said Mr Marks was leaving the company in a good shape. “We are naturally disappointed that he’s leaving,” he said. Martin Currie is Nine’s third largest shareholder and holds a 5.85 per cent stake.
“He has done a very good job over the last five years in not only resetting the TV business but also investing in growth assets like Stan, 9Now and then integrating the Fairfax acquisition.”
Mr Potts said the board needed to take its time finding the right person and expressed a preference for a candidate with digital experience rather than media or advertising expertise. The boss of streaming service Stan, Mike Sneesby, and digital and publishing boss, Chris Janz, are considered the leading internal contenders.
Mr Potts did not want to discuss the specific details behind Mr Marks’ resignation. “It happens in corporations from time to time and it’s always very tricky situation to handle as shareholders and you really rely on boards to deal with these sort of scenarios.”
Wavestone Capital principal Catherine Allfrey said whoever was appointed to the job would need to meet the benchmarks set out by Mr Marks to investors this year including a goal to boost digital revenues. Ms Allfrey’s firm, which holds Nine shares, said she is happy for the executive to continue in his role until a permanent replacement is found. Mr Marks appeared at a UBS conference that was closed to media on Monday where Ms Allfrey said he was “perfectly fine” with articulating its strategy.
“I’m disappointed about what’s happened in terms of Hugh’s departure and the sudden nature of it and the circumstances but nonetheless I think there’s a lot of talent the next layer down,” Ms Allfrey said. “I’ve got confidence in Costello and the board to make the right decision in terms of the forward focus of the group. but whoever they pick has to focus driving the business on the digital side.”
The company’s six person board, which was put together during the $4 billion million merger in 2018, is comprised of three former Fairfax Media directors and three directors from the earlier Nine board. The ex-Fairfax are deputy Chairman Nick Falloon, Patrick Allaway and Mickie Rosen, and the Nine directors are Mr Costello, Samantha Lewis and Ms West.
Mutiple sources close to the board said there are tensions between the directors that joined from Fairfax and those who came from Nine. The tensions, according to the sources, are related concerns about lack of transparency and thorough decision-making processes.
The sources have said that some directors have at times felt out of the loop with decisions made by Mr Costello and Mr Marks. Mr Allaway abruptly resigned from the board of Woolworths Holdings in February last year after it was revealed former David Jones boss David Thomas had been accused of discrimination against a staff member and was the subject of an external investigation handled by law firm Ashurst (the investigation found no evidence).
Mr Marks could not confirm whether he had the board’s full support on Sunday but criticised at what he described as a lack of calmness among some directors as they discussed “ridiculous gossip” about him. In media interviews on Monday he thanked Mr Costello for his support.
He would not go into detail about whether the directors had received any internal or external correspondence about his behaviour before his resignation but he did not deny it.
“I think it’s best that we keep some of that stuff behind the scenes because it’s not really that relevant,” Mr Marks said on Sunday. “That sort of stuff can be a trigger for things but I think it was just heightened gossip.
“Maybe there could have been calmer minds in some situations and calmer voices – that’s what I would do in this situation.”
Source: Thanks smh.com