The shock resignation of Nine Entertainment chief executive Hugh Marks has exposed the divisions on the television, publishing and digital company’s board along historic fault lines. The members of the old Fairfax board on one side and Nine’s legacy directors on the other.
Which of the two internal Nine candidates replaces Marks, who spectacularly announced his resignation over the weekend following revelations of romantic involvement with a staff member, may largely be a function of which of the board factions prevails.
While there will be an external process conducted, it is considered far more likely that either Nine’s chief of digital and publishing Chris Janz or the head of Nine’s video streaming business Stan, Mike Sneesby will be elevated to the top job.
Sneesby, 46, built Nine’s giant-killing streaming platform Stan from scratch. It now has over 2 million active subscribers and some analysts value it as a billion dollar asset.
Janz, 40, is credited with turning around the once struggling newspapers Nine inherited from Fairfax into one of the company’s best performing divisions. Nine became the publisher of this masthead following the $4 billion Fairfax merger in 2018.
If the Fairfax board faction has its way, Janz will have the front running. Yet Peter Costello, who retained the chair at Nine after the Fairfax merger and is a Marks supporter, is considered to look more favourably on Sneesby – such is the tribalism that remains at board level.
Both of these CEO candidates were under the spotlight on Thursday at a previously scheduled Nine strategy day for investors. In what became an unofficial audition for Janz and Sneesby, both performed well according to those among the audience.
Questions do need to be asked about whether a divided board is capable of functioning properly.
Based on their presentations on Thursday, “it doesn’t make it any clearer who might be leading in that process”, according to investment analyst, Patrick Potts, from one of Nine’s largest shareholders Martin Currie.
Potts said that at this stage the firm doesn’t have a view on which internal candidate would be better.
However, Sneesby is considered to be a slick performer with better marketing skills than the quieter Janz, who is said to be more comfortable outside the public eye.
However Potts noted that the board faced the challenge of potentially losing the candidate that missed out.
Martin Currie’s chief investment officer came out earlier this week demanding answers to the circumstances surrounding Marks’ departure and has spoken with Costello, who maintained the line that Marks made the decision to leave early.
Another attendee at the investor strategy day said the company did well in its attempts to change the perception that the company was in “perennial structural decline”.
He, like Potts, makes no secret of the admiration for Marks.
Indeed the departure of Marks became the elephant in the room at the investor briefing. Marks opened the event saying “sorry for the drama earlier this week”.
Not another word was said and no questions were asked – hardly surprising given directors did not attend the briefing.
But questions do need to be asked about whether a divided board is capable of functioning properly.
More than two years after the major media groups merged – via a scrip takeover by Nine – there has remained a tension around the board table, says a one-time Nine director.
“The merger between the two business was effective but the board merger never really happened.”
Although roughly equal in size, Nine’s chairman Peter Costello and chief executive Hugh Marks retained their positions within the merged group.
However of the six non-executive directors three have come from Nine and three were formerly with Fairfax.
The issue is further complicated by an unofficially agreed understanding at the time of the merger that Fairfax’s then-chairman Nick Falloon, would take the Nine chair when Costello retired.
However just last week at Nine’s annual general meeting Costello was re-elected to another three-year term. In the meantime Falloon has needed to cool his heels and be content with the chairmanship of Nine’s digital real estate portal, Domain.
While the board is understood to have been split over the departure of Marks, a majority took the view that his failure to report his romantic relationship with a Nine manager should have consequences.
It has been speculated that former Nine director Catherine West crossed the floor.
If the board cannot unify in their support for either internal candidate, shareholders may enter the fray. Such an outcome maybe be positive for Sneesby given Nine’s largest shareholder, WIN Corp owner Bruce Gordon, and Falloon are said to have a poor relationship with each other.
As recently as last week Bruce Gordon voiced his support of Hugh Marks and Peter Costello saying he was happy with the performance of the company.
Of course any board stalemate could have been avoided had there been the appointment of fresh non-aligned directors at the time of the Nine-Fairfax merger.
Source: Thanks smh.com