David Fisher is a senior reporter for the NZ Herald.

MediaWorks' revolving doors

Boss Mark Weldon quit in a week of turmoil and corporate angst at the broadcaster. David Fisher reports.

When TV3 news anchor Hilary Barry resigned, MediaWorks boss Mark Weldon's days were numbered.

Barry's decision had festered for some time but was deliberate when it was made. She was determined to go. Too many familiar faces had left MediaWork's doors in the 21 months since the former Olympic swimmer and stock exchange boss took over the company.

As a bellwether, it was telling. Barry, 46, is one of television's most recognisable faces but also a brand in her own right. There's no guile in Barry - she's a North Shore soccer mum of two children regarded as good to the core in a way which resonated with viewers. She quit on Thursday and the news took until Friday night to filter out of the building. An email went out to staff that evening but When the Weekend Herald splashed the news across the front page the next morning - a week ago - most of MediaWorks staff were still in the dark.

By Sunday, it was known among current and former staff that Weldon was key to Barry's decision-making. It wasn't the man himself, although he had rubbed plenty of staff raw in his time, but a cortege of casualties from his time in charge.

She had watched 150 members of the MediaWorks "family" leave, some she'd known for decades.

The protest which followed Barry's resignation wasn't the first. Sources have told the Herald that executives had discussed rebellion before but it never had traction.

Before Monday's board meeting there were overtures of the sort rarely made in the corporate world. One member of the executive had held the Weldon line throughout, but now that too had changed. "He had his support until the Hilary Barry incident."

The board members approached would have no doubt Weldon had suffered "the complete loss of his team" and mass resignations would follow if Weldon remained.

And yet, on Monday, Weldon left the meeting still chief executive of the company. Asked if he had the support of the board, he said: "I think so."

IMAGINE A gorilla at the front door of the building you are about to enter, says Massey University senior lecturer Dr Bill Kirkley, an expert in change management and governance. That's the culture of the organisation inside, he says, and if you're going to change that you have to consider how to deal with it.

If you challenge and confront "the gorilla is going to pulverise you. Or you make friends with the culture and use the culture to your advantage and use that to make change."

The departure of Weldon and the chaos around it is a classic case of corporate self-destruction, Dr Kirkley explains. It's such a classic he's writing an academic case study on it. Apparently, a study in the United States found an inability of chief executives to deal with culture change was the cause of their exit in 35 per cent of cases. The next highest, at half that, was incompetence.

The "mortality rate" among change agents is "incredibly high", he says. "It shows chief executives haven't really learned their lesson. They continue to deny or ignore the skills they need to bring about successful change."

THE SPINOFF had forecast the coup the morning of the board meeting. It quoted a source: "If there are no actions by the board in the next 48 hours then resignations at the executive level - and throughout the rest of the company - are expected within days."

When the board put out a statement saying Weldon had its "full support", it seemed the bumptious entertainment and news website had flubbed. As Tuesday unfolded, Weldon was secure in his role. There were those at MediaWorks baffled - all the signs were pointing to an exit which never eventuated.

That afternoon, MediaWorks unveiled a partnership with NBC-Universal and its own production of Real Housewives. Weldon's speech announcing the end of its "Four" channel referenced its waning relevance as the youth audience for which it was created discovered YouTube. In launching its replacement Bravo, MediaWorks killed a channel fatally compromised by the technology which had rendered media business models obsolete across the globe.

His speech was lacklustre and he left shortly afterwards, speaking briefly to a few people on the way out. By the next morning he was gone - The Spinoff's 48-hour timeline was near-perfect.

One former MediaWorks source has a theory to explain the link between the coup threat, the board's "full support" and Weldon's departure. "It's true there were very senior people on the cusp of walking - executive level and talent level ... the board comes out with full confidence and those people do nothing. Why is it they do nothing? Were these people told to give it a few days?

"The board had to give full support. The board can't be seen to have f***ed up, can't be seen to have picked the wrong guy."

"I SEE a great deal of culpability here in the board's direction," says Dr Kirkley. Weldon's actions were premised on a strategy devised by the board. "That's what boards do. They formulate strategy and everyone agrees to it and its a fabulous piece of work but when it comes to implementing it, they suck."

The problem? Listening to those who know the business, says Dr Kirkley. Media companies have people skilled in journalism, content-packaging (news or entertainment) and distribution.

At MediaWorks, many of those people went out the door. "They are removing all their distinct competencies. If you look at a media company and ask what makes a media company competitive, it's got to be the people in it. The intellectual property that walked out the door is enormous."

For the MediaWorks board, there was an added complication. It has a single shareholder - Los Angeles-based Oaktree Capital which bought out debt and other shareholders until June 2015 when it held 100 per cent of the company. It gets called a "vulture fund"; an investment vehicle which buys companies in trouble, straightens them out and sells them on for profit.

The board and Weldon, according to company documents, stood to receive a "share-based cash settlement" if the company could be floated or sold. Dr Kirkley says it creates a difficulty for the board, which is obliged to act in the best interests of the company while also meeting the needs of a shareholder seeking a return on investment. "Who are the board there to represent? And is it in the best interests of the company?"

And add the even greater complication of the sector of business. Media is suffering globally and struggling to find a solution to what technology is doing to its ways of making money. It needs to restructure, hugely.

"These companies talk about changing paradigm. They talk about it but they don't know how to do it. None of the normal answers exist. This is the area of the entrepreneur."

The answer, says Dr Kirkley, is the people in each of these organisations who know the business but don't quite fit in. They're the "black sheep", he says, who aren't usually "listened to because they have these weird ideas".

They are the people who can see five years or more into the future and understand what media - or media companies - will look like.

The board needs to get back into the company and spend time there, he says, and "make friends with the gorilla". Then proceed but "actively involve people ... instead of sending in a gunslinger, which is what they did".

WEDNESDAY 9.06AM: Weldon has resigned. The press release says he told the board the night before that he was going. "I have had the full support of my board for the strategy that we have executed at every point," he said.

Mediaworks CEO Mark Weldon. Photo / Peter Meecham
Mediaworks CEO Mark Weldon. Photo / Peter Meecham

The business had made progress - results were being delivered. "However, I have come to a decision that the personal cost is now too high to continue in this role."

Newsroom staff hugged each other. At the Glass Goose on Federal St, a small gathering of former executives and others gathered to raise a glass. It wasn't a celebration. It wasn't a wake. It was a togetherness.

Barry, mid-afternoon, rocked up to TV3's headquarters with champagne under her arm. Co-host Mike McRoberts - also said to have approached the board - carried the beer. Barry wouldn't comment but flashed V-for-Victory at the cameras.

When she left hours later, she again declined to comment to the Herald reporter outside. Then, with a nod to the cold and dark, she offered the reporter a silent ride across the city to the Herald offices.

As her colleagues had noted in the days since she quit, Barry feels the right thing to do right to her bones.

WHAT NOW for MediaWorks? In short, a serious challenge to recover its lost kudos, says 40-year journalism veteran and Auckland University senior lecturer on media, Dr Gavin Ellis.

He asks whether Oaktree Capital should ever have bought into the broadcaster. "Its sole purpose is to take on sick companies and give them a degree of health and sell them at a profit. The question is whether a media company is an appropriate vehicle for that sort of corporate takeover."

MediaWorks was not sick like other ailing companies Oaktree Capital bought, he says. "MediaWorks was not in the position it is in because it is badly managed. Media is in the position it is in (declining revenue and fragmenting audiences) because of the environment. Nobody has yet found the magic bullet."

When Oaktree Capital bought MediaWorks, it bought a company in a sunset industry. It also bought, under New Zealand broadcasting licence obligations, a responsibility to carry out some public service functions such as news and current affairs. And yet, its strategy was built around entertainment-focused programming "and low-cost entertainment at that".

News became a cost-centre, as illustrated in Weldon's final email to staff in which he wrote of it losing $15 million while entertainment earned $30 million. Dr Ellis argues that news and current affairs bring to a brand an intangible benefit and strength which "accountants can't put a value on".

"I think this was the problem. They failed to realise the very real contribution of news and current affairs. I don't think there is a news business anywhere which covers its costs. Instead, it contributes in other ways."

If Oaktree Capital is looking for dollars in news, it's looking in the wrong place. "I think news and current affairs can be self-sustaining but don't think they can be relied on to return the sort of profit investors now look for.

"I really don't think media companies are an appropriate vehicle for vulture funds to try and turn around."

And Mark Weldon? "I think he did what was asked of him."

CHAIRMAN ROD McGeoch made his way around MediaWorks in the wake of Weldon's resignation. He talked about how debt was down and ratings were up.

They were chats aimed at reassurance over the competence of the board - and its chairman.

David Chalmers, the chief financial officer, has stepped up to run the company in the absence of a chief executive. He joined the company a year ago from Australia with a background as a lead executive with an online listed business. Before then, he worked in banking. His role, apparently, is to "calm everybody down".

McGeoch was back in Australia by Thursday.

There is speculation recently appointed board member Jack Matthews could take a more active MediaWorks role. He has an expertise in change management - and a history of making significant change at news organisations in Australia.

When respected head of news and current affairs Mark Jennings resigned in February, he warned of a "tsunami of change" and the need for someone else to lead.

In a 2007 interview with Digital Media, Fairfax Digital general manager Pippa Leady said Matthews was "not afraid to kick heads when he needs to. He is absolutely not afraid of confrontation."

- NZ Herald

Get the news delivered straight to your inbox

Receive the day’s news, sport and entertainment in our daily email newsletter

SIGN UP NOW

© Copyright 2016, NZME. Publishing Limited

Assembled by: (static) on production apcf05 at 07 Dec 2016 22:29:52 Processing Time: 723ms