COMMENTARY: By Gavin Ellis
New Zealand-based Canadian billionaire James Grenon owes the people of this country an immediate explanation of his intentions regarding media conglomerate NZME. This cannot wait until a shareholders’ meeting at the end of April.
Is his investment in the owner of The New Zealand Herald and NewstalkZB nothing more than a money-making venture to realise the value of its real estate marketing subsidiary? Has he no more interest than putting his share of the proceeds from spinning off OneRoof into a concealed safe in his $15 million Takapuna mansion?
Or does he intent to leverage his 9.6 percent holding and the support of other investors to take over the board (if not the company) in order to dictate the editorial direction of the country’s largest newspaper and its number one commercial radio station?
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Grenon has said little beyond the barest of announcements that have been released by the New Zealand Stock Exchange. While he must exercise care to avoid triggering statutory takeover obligations, he cannot simply treat NZME as another of the private equity projects that have made him very wealthy. He is dealing with an entity whose influence and obligations extend far beyond the crude world of finance.
While I do not presume for one moment that he reads this column each week, let me suspend disbelief for a moment and speak directly to him.
Come clean and tell the people of New Zealand what you are doing and, more importantly, why.
Over the past week there has been considerable speculation over the answers to those questions. Much of it has drawn on what little we know of James Grenon. And it is precious little beyond two facts.
Backed right-wing Centrist
The first is that he put money behind the launch of a right-wing New Zealand news aggregation website, The Centrist, although he apparently no longer has a financial interest in it.
The second fact is that he provided financial support for conservative activists taking legal action against New Zealand media.
When I contacted a well-connected friend in Canada to ask about Grenon the response was short: “Never heard of him . . . and there aren’t that many Canadian billionaires.”
In short, the man who potentially may hold sway over the board of one of our biggest media companies has a very low profile indeed. That is a luxury to which he can no longer lay claim.
It may be that his interest is, after all, a financial one based on his undoubted investment skills. He may see a lucrative opportunity in OneRoof. After all, Fairfax’s public listing and subsequent sale of its Australian equivalent, Domain, provided not only a useful cash boost for shareholders but the creation of a stand-alone entity that now has a market cap of about $A2.8 billion.
Perhaps he wants a board cleanout to guarantee a OneRoof float.
If so, say so.
Similar transactions
Although spinning off OneRoof could have dire consequences for the viability of what would be left of NZME, that is a decision no different to similar transactions made by many companies in the financial interests of shareholders.
There is a world of difference, however, between seizing an investment opportunity and seeking to secure influence by dictating the editorial direction of a significant portion of our news media.
If the speculation is correct — and the billionaire is seeking to steer NZME on an editorial course to the right — New Zealand has a problem.
Communications minister Paul Goldsmith gave a lamely neoliberal response reported by Stuff last week: He was “happy to take some advice” on the development, but NZME was a “private company” and ultimately it was up to its shareholders to determine how it operated.
Let me repeat my earlier point: NZME is an entity whose influence and obligations extend far beyond the crude world of finance (and the outworn concept that the market can rule). Its stewardship of the vehicles at the forefront of news dissemination and opinion formation means it must meet higher obligation than what we expect of an ordinary “private company”.
The most fundamental of those obligations is the independence of editorial decision-making and direction.
I became editor of The New Zealand Herald shortly after Wilson & Horton was sold to Irish businessman Tony O’Reilly. On my appointment the then chief executive of O’Reilly’s Independent News & Media, Liam Healy, said the board had only one editorial requirement of me: That I would not advocate the use of violence as a legitimate means to a political end.
Only direction echoed Mandela
Coming from a man who had witnessed the effects of such violence in Northern Ireland, I had no difficulty in acceding to his request. And throughout my entire editorship, the only “request” made of me by O’Reilly himself was that I would support the distribution of generic Aids drugs in Africa. It followed a meeting he had had with Nelson Mandela. I had no other direction from the board.
Yes, I had to bat away requests by management personnel (who should have known better) to “do this” or “not do that” but, without exception, the attempts were commercially driven — they did not want to upset advertisers. There was never a political or ideological motive behind them. Nor were such requests limited to me.
I doubt there is an editor in the country who has not had a manager asking for something to please an advertiser. Disappointment hasn’t deterred their trying.
In this column last week, I wrote of the dangers of a rich owner (in that case Washington Post owner Jeff Bezos) dictating editorial policy. The dangers if James Grenon has similar intentions would be even greater, given NZME’s share of the news market.
The journalists’ union, E tu, has already concluded that the Canadian’s intention is to gain right-wing influence. Its director, Michael Wood, issued a statement in which he said: “The idea that a shadowy cabal, backed by extreme wealth, is planning to take over such an important institution in our democratic fabric should be of concern to all New Zealanders.”
He called on the current NZME board to re-affirm a commitment to editorial independence.
Michael Wood reflects the fears that are rightly held by NZME’s journalists. They, too, will doubtless be looking for assurances of editorial independence.
‘Cast-iron’ guarantees?
Such assurances are vital, but those journalists should look back to some “cast-iron” guarantees given by other rich new owners if they are to avoid history repeating itself.
I investigated such guarantees in a book I wrote titled Trust Ownership and the Future of News: Media Moguls and White Knights. In it I noted that 20 years before Rupert Murdoch purchased The Times of London, there was a warning that the newspaper’s editor “far from having his independence guaranteed, is on paper entirely in the hands of the Chief Proprietors who are specifically empowered by the Articles of Association to control editorial policy”, although there was provision for a “committee of notables” to veto the transfer of shares into undesirable hands.
To satisfy the British government, Murdoch gave guarantees of editorial independence and a “court of appeal” role for independent directors. Neither proved worth the paper they were written on.
In contrast, the constitution of the company that owns The Economist does not permit any individual or organisation to gain a majority shareholding. The editor exercises independent editorial control and is appointed by trustees, who are independent of commercial, political and proprietorial influences.
There are no such protections in the constitution, board charter, or code of conduct and ethics governing NZME. And it is doubtful that any cast-iron guarantees could be inserted in advance of the company’s annual general meeting.
If James Grenon does, in fact, have designs on the editorial direction of NZME, it is difficult to see how he might be prevented from achieving his aim.
Statutory guarantees would be unprecedented and, in any case, sit well outside the mindset of a coalition government that has shown no inclination to intervene in a deteriorating media market. Nonetheless, Minister Goldsmith would be well advised to address the issue with a good deal more urgency.
He might, at the very least, press the Canadian billionaire on his intentions.
And if the coalition thinks a swing to the right in our news media would be no bad thing, it should be very careful what it wishes for.
If the Canadian’s intentions are as Michael Wood suspects, perhaps the only hope will lie with those shareholders who see that it will be in their own financial interests to ensure that, in aggregate, NZME’s news assets continue to steer a (relatively) middle course. For proof, they need look only at the declining subscriber base of The Washington Post.
Postscipt
On Wednesday, The New Zealand Herald stated James Grenon had provided further detail, of his intentions. It is clear that he does, in fact, intend to play a role in the editorial side of NZME.
Just how hands-on he would be remains to be seen. However, he told the Herald that, if successful in making it on to the NZME board, he expected an editorial board would be established “with representation from both sides of the spectrum”.
On the surface that looks reassuring but editorial boards elsewhere have also been used to serve the ends of a proprietor while giving the appearance of independence.
And just what role would an editorial board play? Would it determine the editorial direction that an editor would have to slavishly follow? Or would it be a shield protecting the editor’s independence?
Only time will tell.
Devil in the detail
Media Insider columnist Shayne Currie, writing in the Weekend Herald, stated that “the Herald’s dominance has come through once again in quarterly Nielsen readership results . . . ” That is perfectly true: The newspaper’s average issue readership is more than four times that of its closest competitor.
What the Insider did not say was that the Herald’s readership had declined by 32,000 over the past year — from 531,000 to 499,000 — and by 14,000 since the last quarterly survey.
The Waikato Times, The Post and the Otago Daily Times were relatively stable while The Press was down 11,000 year-on-year but only 1000 since the last survey.
In the weekend market, the Sunday Star Times was down 1000 readers year-on-year to stand at 180,000 and up slightly on the last survey. The Herald on Sunday was down 6000 year-on-year to sit at 302,000.
There was a little good news in the weekly magazine market. The New Zealand Listener has gained 5000 readers year-on-year and now has a readership of 207,000. In the monthly market, Mindfood increased its readership by 15,000 over the same period and now sits at 222,000.
The New Zealand Woman’s Weekly continues to dominate the women’s magazine market. It was slightly up on the last survey but well down year-on-year, dropping from 458,000 to 408,000. Woman’s Day had an even greater annual decline, falling from 380,000 to 317,000.
