The future direction of media firm NZME appears increasingly likely to come down to the vote of its biggest shareholder. As one vocal shareholder withdraws support for Jim Grenon, Australian investment fund Spheria Asset Management – which holds just under 20% – responds with its position.
Media Insider: NZME board battle – vocal shareholder pulls support for Jim Grenon board seat; media company’s biggest shareholder outlines its position
Subscribe to listen
Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber? Sign in here
Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
Roger Colman addresses the NZME shareholders' meeting in 2024. Photo / Sylvie Whinray
AdvertisementAdvertise with NZME.
Grenon has responded to Colman’s comments here. He previously told the Herald that Colman was “not the final arbiter of the quality of the candidates I have put up. He had one meeting with them and I disagree with his assessment, obviously”.
Until now, Colman had backed Grenon for a board seat, based on the businessman’s 9.97% shareholding of the media company that owns the NZ Herald, NewstalkZB, property brand OneRoof and a suite of regional news brands and music radio stations.
Colman initially reserved judgment on Grenon’s three original board nominees, lawyer and blogger Philip Crump, private equity businessman Des Gittings and retail executive Simon West – but as the Herald revealed on March 26, Colman had updated his position to say he would not be supporting the trio.
Grenon, in the meantime, has been updating his own proposals for a new-look board, including relinquishing majority control in a bid to seek what he has described as “overwhelming support” from NZME shareholders.
AdvertisementAdvertise with NZME.
Grenon says he is unhappy about the company’s governance and financial and operational performance. And he says he wants to see an improvement in the quality of its editorial endeavour in what some – including the existing NZME board and the journalists’ union – see as an attempt to seek editorial control. The company and the union have sought assurances from Grenon that he will uphold editorial independence.
The ever-developing situation has led to the company’s annual shareholders’ meeting being delayed – from April 29 to June 3 – and the company will soon reopen nominations for board directorships.
Grenon has been confident all along of having the numbers, from an original 37% base support, lifting to almost 50% over subsequent weeks. Some of that support has fallen back – understood to be based on Roger Colman’s back-pedal – but Grenon’s confidence of having the numbers is also based on his analysis of how many shareholders voted at last year’s annual shareholders’ meeting.
Colman’s concerns
In his updated advisory distributed to NZME’s board, his own investor contacts and another NZME shareholder, Osmium Partners, Colman said the existing board had more experience than Grenon and his nominees.
NZME was also undertaking a renewal of some directors, which was likely to “widen” the skill gap with Grenon’s team, he said.
Colman said Grenon – who established private equity firm Tom Capital in Canada in 1995 – would be “learning on the job, with 1200 people who take their talent with them down the lift every day”.
“NZME is completely different to the Grenon family group hard assets operations defined by the Tom Capital website, which is US/Canadian real estate, Raywal Cabinets and the Foremost equipment production. It’s not enough to say one can hire the talent. You have to live it and love it.”
He further said Grenon’s plans to dig into the cost base, “when he is yet to understand the functions, doesn’t seem a good idea and [would be] best left to an outside consultant or bolstered CFO line-by-line look”.
AdvertisementAdvertise with NZME.
Colman said he could find little about the Grenon family and business history in his online searches.
He described it as a “quiet story”, other than the delisting of Foremost Industries in Canada. There was “very little public record upon which people can make character judgments”.
“There are no LinkedIn profiles or other write-ups. Tom Capital has minimal relevant information. This is an enormous reference gap. All there is is James’ tax matters and the treatment of minority shareholders in the Foremost Industries example.”
NZME’s biggest shareholder responds
Colman said he was awaiting the NZME board’s position and that of another NZME shareholder, Osmium Partners, which holds just over 6.5% of NZME and which has nominated two of its own directors.
Colman holds just under 3% of NZME through leveraged equities and his superannuation fund. Another almost 10% of shares are held by friends and former clients who are likely to follow his lead.
Australian fund Spheria Asset Management, NZME’s biggest shareholder, has an almost 20% stake in the company.
It has been counted in the original 37% base support for Grenon, although it has said it has reserved the right to change its position.
Spheria Asset Management portfolio manager Matt Booker said today that Colman was “of course, entitled to his opinion – and to change it, as he appears to do quite frequently”.
“While we are unsure how much stock he represents, like us, he is entitled to vote in whichever way he believes best serves his interests as a shareholder of NZME,” Booker told the Herald, in an emailed response to questions.
“We have had minimal contact with Mr Colman and are therefore surprised by the assertions he has made regarding our voting intentions.
“To clarify, we have not made any commitments to Mr Grenon. However, we have indicated our intention to support his nominations, as we currently believe they align with the best interests of our clients.
“That said, we reserve the right to reassess our position as developments unfold and we continue to follow Mr Grenon’s proposed board-reshaping with interest.
“While we do not have direct operating experience, we have been actively involved in board restructurings across several portfolio companies in recent years.
“For example, two years ago we led the board refresh at Bravura Solutions (BVS.ASX), following which the stock delivered a return of over 500% to shareholders. More recently, we have also been involved in the board restructure at Fletcher Building.”
Booker told the Herald last month that the company took its voting responsibilities seriously.
“Over the past two years, we have been deeply disappointed with NZME’s financial performance.”
Journalism concerns
Colman said he hoped New Zealanders increased their shareholding in the media company, recognising it “as a vehicle which holds a central position in the New Zealand democracy”.
“The Grenon team have no record of leading media, classifieds vertical portals at all. They have relationships with Phil Crump’s Cranmer’s Substack with c.5300 subscribers, and a previous associate of James Grenon, The Centrist. Read as you like,” Colman said.
“One wouldn’t want this journalism to become central to the New Zealand Herald as ... print or online [circulations] may suffer. The NZ Herald is already centre in a left versus right chart released by NZME.”
Colman also appeared to address the possibility Grenon might seek to buy NZME outright by saying the Government should put a 20% holding limit “on shareholdings in NZME, and defined by strong associates’ rules, to keep this company public”.
“Especially given its >50% dominance of NZ media in publishing, and equal-largest in radio. Only Government-owned media is close to the scale of NZME.
“NZME should not be run by media and classifieds portals amateurs.”
He then looked at the global success, or otherwise, of big names in media.
“Of the successful proprietors in Australasian media, Kerry Stokes has been in media since 1979, aged 39. Rupert Murdoch started at 21 in 1952 when his father died. Kerry Packer, the most successful after Rupert, was born into Sir Frank Packer’s family.”
Colman wrote “everybody else” – citing the Lowy family, Alan Bond, Christopher Skase, Bruce Gordon, Ron Brierley and the O’Reilly family – “all left wreckage behind”.
Jim Grenon’s earlier response
In an email response to the NZ Herald on March 27, in response to questions about earlier Colman comments and Colman suggesting his own new-look board, Grenon said: “Roger is trying to be constructive. I appreciate his input and have come to some compromises based on his suggestions.
“But, at the same time, he is not the final arbiter of the quality of the candidates I have put up. He had one meeting with them and I disagree with his assessment, obviously.
“Also, he seems to ignore the shares I have backing me, yet counts the shares in his much less committed sphere of influence when he suggests how many votes he might be able to influence. Of shares actually owned, I have well over three times what he does, as I understand the numbers.
“I will not be following all Roger’s suggestions, but will have something in it that I hope he can find palatable.”
Grenon’s latest proposal for the composition of the media company’s board was revealed in an NZME letter to the NZX on Monday last week.
Grenon told the Herald last week his latest plan was drawn up in the hope of a compromise with existing directors and to prevent the company from having to go through a drawn-out fight and more instability.
Grenon said it was clear to him the NZME board “have no interest in that”.
The plan is significant in the sense of the numbers – the proposed board of seven would comprise three members of Grenon’s group, rather than four. In two earlier proposals, Grenon and his team held a majority position.
“My appointees would have been in the minority on that board,” Grenon told the Herald, referring to the third proposal.
Grenon says the proposal was “to try to give the board something to work with, if they were legitimately interested in compromise to save the company having to go through a longer fight”.
In a response to questions from the Herald at the time, NZME board chair Barbara Chapman said the board was “open to further engagement with Mr Grenon and we have communicated this to him accordingly”.
“We note that, under Mr Grenon’s latest proposal, any directors would need to pre-agree certain matters, including acknowledging editorial policy as the responsibility of the NZME board,” Chapman said.
“We have clearly outlined our concerns regarding the risks of Mr Grenon gaining editorial control, of having no alternative plan, of minority shareholder control of the boardroom and poor governance.”
Editor-at-Large Shayne Currie is one of New Zealand’s most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor and has a small shareholding in NZME.
