Ken Cowley ran a very big media company for many years but now says it is wrong of shareholders to ask the tough questions at AGMs of companies like that absolute dog he still chairs, PMP. Surely it’s time you retired Ken.
Our man Hugo Kelly took on Ken in front of several hundred queasy PMP shareholders, who’ve seen their shares nearly halve during Cowley’s reign.
The confrontation – and Dinosaur Ken’s reaction – was reported by the Fin Review’s Rear Window. Read what the Fin had to say about grumpy old Ken’s clash with Shareowner.com.au. Then read on, and find out how the event unfolded.
Short on curlies: Activists get Cowley’s goat
Rear Window, Thursday 19 October
The world has changed, and Ken Cowley doesn’t like it.
Rupert Murdoch’s former right hand man Down Under didn’t even raise a sweat yesterday in seeing off an attempt by the Australian Shareholders Association to tip him out as chairman of magazine mob PMP.
But after the surprisingly docile AGM in Melbourne, Ken took a pot shot at emerging “shareholder activists” like the representatives of the shareowner.com.au website who had the audacity to ask him a couple of curly questions.
Cowley, 65, said he was “mildly” irritated by those activists who marred the environment for other shareholders.
“Their agenda isn’t about the company, their agenda is about themselves, so that irritates me,” he grumbled.
“It’s not good for the shareholders to have these people in the meetings making this noise.”
Poor old Ken’s obviously pining for a bygone era when a board of directors did not have to bother with questions from the hoi polloi.
Cowley had 98% of proxies in hand to keep the ASA at bay after two “activists” opined about the languishing share price and years of unfulfilled promises at the outfit, which produces titles such as New Idea and TV Week, not to mention that ripper of a read for young music fans in Germany, Hit Stars.
Cowley said he was quite pleased at the civil tone of the PMP meeting. But he reckoned corporate Australia might have a rethink about AGMs if the activism got out of hand.
He suggested big corporates ask themselves: “Do we really need to have a wide discourse and discussion about the company if people are going to come along with agendas.”
As for the polite, non-activist shareholders, their main agenda seemed to be the tea and biscuits afterwards and a lovely take-away pack of PMP magazine titles.
Crikey rattles Ken’s cage
By Hugo Kelly
“It’s my intention to finish the job!” – Ken Cowley frightens PMP shareholders last Wednesday.
Ken Cowley’s made a few robust outbursts in a long corporate career that includes many years as Rupert Murdoch’s Australian strongman – but this one may prove his most scary.
Scary, that is, to shareholders of PMP Communications, the sagging magazine group he chairs and which has lost 45% of its value over the past four years.
The story so far is that under Ken’s stewardship, the PMP share price has plummeted from $3.56 in 1997 to $1.90 this week.
So when he gets up at the AGM and threatens to “finish the job”, you’d better be worried.
If Chairman Ken finishes the job, just how low can PMP’s share price go? Just how many weird abnormal items can cram onto the once balanced ledger? Just how rubbery can those intangibles on the balance sheet get?
Twelve months ago, the price stood at $2.10, and that was bad enough. At the 1999 AGM Ken assured shareholders the worst was over, and a new dawn was just around the corner.
This year it was, surprise, surprise, more of the same. More bad news, more red ink on the balance sheet, more corporate restructuring and more empty promises from the head table.
But there was the added twist of further bad news ahead, in the form of a drop in first quarter earnings blamed mainly on our old friends, the Olympics.
Even the folks at the Australian Shareholders Association have had enough. Their state president Stan Mather and offsider John Currie led a sturdy attack against Cowley’s re-election. Which was just as well, because throughout the hour long meeting not one of PMP’s supine institutional shareholders got up to challenge the company’s alarming drift.
They certainly had their chance. Cowley and CEO Bob Muscat both addressed the meeting, putting their own spin on the PMP debacle and, for the first time in three years, the chairman was up for re-election.
This, surely, was a golden chance for institutions to publicly address the men who are leading PMP down the gurgler – and taking their investors’ money with it.
Cowley opened up by conceding he “continued to be very concerned by the share price” He was “taking the company through a period of very significant change”. A management restructure and massive cost cuts would make a positive impact very soon, he promised.
Or, in Cowley-speak: “We have listened to shareholders and the market and are taking the company though a very significant period of change. In practical terms, the most significant changes have been associated with massive cost-cutting and a radical shake-up of management structure. The impact of such changes will be felt towards the latter half of this financial year and into the following.”
He outlined the company’s neat PEG program – “Progress, Efficiency, Growth”. This had removed $18 million from costs. He told shareholders that since CEO Bob Muscat took over in October ’98, only one existing senior executive remained, and this year the company had chief execs of its four main businesses.
E-procurement would see the number of suppliers to the company falling from 9000 to 1000. Crikey, the way things are going, if this company stumbles further, Ken and Bob may be the only senior figures left and the number of suppliers may well fall to zero.
That would be tremendously efficient.
Anyway, Ken assured everyone the strategy was well and truly on target and would continue to bolster the company’s performance. As to the languishing share price: “Unfortunately, institutions require demonstrated performance before they invest”
But Ken was not giving up: “I intend to see this through until the share price more accurately reflects the company’s performance and value.”
The problem was that PMP keeps losing money. The outfit posted a net $3.44 million loss – with a whacking $62.5 million written off on abnormals. Some $24 million of this was associated with the closure of their German teen music mag, Hit Stars. Another $26 million was written off in the sale of DVD business Pacific Mirror Imaging.
Ken announced that the company would try to rescue something from the Hit Stars disaster by launching a German version of FHM mag jointly with Emap. Apparently those Jungenkinder aren’t into reading music magazines. They’re much more likely to buy a style/trends publication.
Ken’s big surprise was to announce that first quarter earnings would be down – apparently because people stopped reading magazines during the Olympics.
Bob Muscat – apparently the only senior executive at the outfit left standing after he waved the big scythe through upper management – could only follow up by echoing Cowley’s comments, and then launching into a staunch defence of Ken. Both these men came up through the News Ltd buddy system, and both were clinging closely to each other on Wednesday morning as the heat rose.
Then, to questions. Stan Mather told the meeting that the ASA would vote against Cowley, and that shareholders simply could not sit and wait for a turnaround “as we drift on and on.” He pointed out that many, many promises had been made by Cowley but there was “a vast difference” between what had been solemnly promised and what was being delivered.
After listening to Cowley bat away a few questions from the ASA, we felt it was time to put our own pressure on the chairman. The motion for Cowley’s re-election came up, and Ken clearly wanted this to be a formality. He had earlier announced that he had stitched up the instos – 98% of them supported all five resolutions on the agenda. (Ed’s note: this was after he utilised a large slab of votes left open to the chairman’s discretion.)
It was a brazen attempt to bully his way through the meeting, and he was clearly hoping to scare away any dissent. I pointed out to the meeting that this was the last time for three years that shareholders would have the chance to vote on Cowley’s position – Shareowner.com.au believed it was time for him to go. But if he was to be re-elected, we wanted to know when shareholders could expect to see his years of promises fulfilled.
As he was the subject of the motion, Cowley had stepped down from the chair in favour of boardmember and fellow former Murdoch minion Peter Chegwyn, who proceeded to filibuster. Not satisfied with the answer, I repeated the question, and this time asked Cowley himself to address it.
It was a pretty naive question – and Cowley took a standard tack, replying that he wasn’t in the business of guessing future share prices.
With that, a vote was taken and at least a third of those present raised their cards against Chairman Ken, as he gritted his teeth from the head table.
Ken Cowley is a former executive chairman of News Ltd and a media elder statesman. He is failing badly at PMP, and failing badly in communicating to PMP shareholders. The fact that more than a third of the mum and dad shareholders at the AGM voted against him should send that message, loud and clear.
But shareholders seeking a change of tune might be in for a long wait, given the tone of his post-meeting press conference. This is what he said when asked about the anti-Ken vote: “I understand minority and token shareholders making a bit of sport out of AGMs, but I essentially felt very strong support from the majority of shareholders.”
CRIKEY: The timing of the AGM also says a lot about what tired old Ken was expecting. Despite being on the News Corp board, he deliberately scheduled the meeting to clash with Rupert’s annual extravaganza in Adelaide. This would mean none of the media-savvy journalists would turn up at PMP and he would be able to sneak through in the shadows. Ken is responsible for plenty of disasters over the years. Super League was his baby and he failed in his task as chairman of Ansett. He’s also failed to steer PMP properly and made a right hash of pay-TV for News Corp in Australia. Put simply, he really should be put out to pasture as someone who started out as a compositor in Canberra and then oversaw the worst performing part of Rupert’s sprawling empire. His remaining board seats also demonstrate the old boys network that dominates Australian boards. The Commonwealth Bank control a slab of PMP stock but for some reason they failed to speak out against Ken or even vote against his re-election. Maybe this has something to do with the fact that Ken is a Commonwealth Bank director. Australia will never develop a decent culture of shareholder pressure as long as the same people are running the companies and representing the shareholders.