Crikey’s Las Vegas division loves to host a good fight and we’ve got one emerging between Seven Network chairman and Fairfax’s BRW magazine which did the billionaire over in a cover story this week.
Stokes’s gloomy Seven AGM
From the November 5 subscriber-only sealed section
Melbourne put on a typically bleak and rainy day for shareholders at the Channel Seven AGM this morning to match the air of doom and gloom expressed by chairman Kerry Stokes.
Seven’s shares dropped 10 per cent following Stokes’s gloomy forecast, but have bounced back somewhat this afternoon, with the shares down 27c to $5.73.
Despite Seven’s improved performance in the ratings of late, it has been a tough week for Stokes with a negative cover story in BRW on Wednesday, plus a profit warning announced today.
Stokes told Crikey after the meeting that he thought this week’s BRW cover story, “Seven’s Media Brawl” was nothing but “gossip and innuendo” and emphasised the fact that no one would put their name to it.
He suggested BRW should concentrate on their own masthead and their poor sales, and noted that Seven’s publishing arm could do a better job of turning around the magazine than Fairfax.
Stokes kicked off the meeting with the bad news that Seven would not meet its financial targets and that profitability would be affected.
In stark contrast to the lack of transparency and accountability at the Packer’s PBL AGM, Stokes briefed the meeting extensively on the companies shortcomings, admitted it was a disappointing performance and added a personal apology to shareholders for the outlook.
In an even more surprising move, Stokes later encouraged shareholders to question the board over their lack luster performance – a suggestion that would be unheard of at a tightly controlled PBL meeting.
With the bad news out of the way, Stokes concentrated on Seven’s sunny outlook and the programs Seven had lined up for 2005, including new series of My Restaurant Rules and Dancing with the Stars, plus two new hit shows from the US, Desperate Housewives and Lost.
Stokes said, until now Seven had not been getting their fair share of popular US programs due to the lack of outstanding products coming out of the studios they has contracts with.
As usual Stokes took question from the media during the meeting, directly after the shareholder questions. When asked about the performance of David Leckie and whether he had the full support of the board, Stokes demurred, claiming that if he stated Leckie did have full support it would sound like he didn’t, so he just said David was working very closely with the board and that they were happy with what he was achieving.
Crikey was interested to hear this endorsement of Leckie given the various rumours which have been circulating about headhunters and Leckie’s job. We will be waiting with baited breath to see what 2005 holds for the CEO.
Stokes also dispelled any suggestions that he or Seven’s overseas shareholder ITV would be selling their shares (46% and 12% respectively) and said Seven would wait to see the final form of any changes to the foreign and cross-media ownership laws before making any decisions in that area.
Gordon Cairns joins the Seven board
Don Boardwalk writes:
It’s not what you know, it’s who you know, goes the old adage. And that’s nearly always quite true of the corporate boardroom. Take the announcement today from the Seven Network of a new director.
Gordon Cairns, ex CEO (just retired) of Lion Nathan, controlled in Japan, and the smaller of our two beer duopolies. He’s joined the board of Westpac, one of banking cartel, and now on the board of Seven, one of the commercial free to air cartel (as opposed to that Pay TV monopoly, Foxtel, before any Crikeyettes start sniggering about cosy clubs and the like).
But why this new director? Well, Gordon Cairns and his company would have been known to Seven during the brief sponsorship of the Melbourne Cup, for other major advertising and marketing deals.
But there’s a couple of other links, one business and one cultural.
Westpac is a long time financier of Kerry Stokes’ businesses, especially his Westrac Caterpillar and heavy equipment business which is worth an estimated $800 million. It has growing Chinese interests. And Crikey has covered other Stokes-Westpac links previously – read here.
But Gordon Cairns is an opera lover, and Seven, up till the end of this year, is the Australian Opera’s principal sponsor, putting in around $5 million in cash, contra advertising and other support.
Gordon Cairns is a director of Opera Australia, as was Maureen Plavsic, the former sales boss and then CEO of Seven before resigning early last year and being replaced by David Leckie. She left the Opera Australia board in the middle of 2004.
So it’s a case of who you know, and another example of why Opera is still the best networking gig in Sydney. Just ask the good Senator Helen Coonan, the Federal Communications Minister. She loves the Opera!
This went out on Friday afternoon and it didn’t take long for BRW reporter Stuart Washington to fire off this response to the Kerry Stokes attack:
BRW cover story far more than gossip and innuendo
It’s interesting to see Kerry Stokes describe BRW’s cover story Seven’s Media Brawl as “gossip and innuendo”. It contained:
- Seven director Peter Ritchie on the record expressing his view that Kerry Stokes may be close to spending too much time pursuing the C7 court case.
- Corporate Governance International on the record expressing its view that the C7 court case is diverting management attention from its core business.
- A named Foxtel spokesman on the record expressing his negative view about the Federal Court orders sought by Seven in the case.
- Reference to two analysts downgrading their recommendations, partly due to Seven’s spending on the C7 court case.
I assume the on-the-record statements by a named Seven spokesman, Seven’s statement of claim, the orders it is seeking in the case and the Federal Court judgment outlining Stokes’ role as the key decision-maker in the case – all detailed in BRW’s piece – are gossip and innuendo as well.
While I share Kerry Stokes’ reservations about the use of unsourced quotes, I can also assure him BRW spoke to five of the opposing parties and quotes used were representative of views expressed about the case. The figures of the cost of the court case for other parties of between $50 million and $85 million were based on details provided by these parties, in some cases in compelling detail.
And it is undeniable that if Seven loses – whatever the costs might be – it must pay a large proportion of the other parties’ costs. This is expensive given Seven’s current performance.
The only thing that slightly embarrasses me about the piece is that, given events at today’s AGM, I may have been too upbeat about Seven’s prospects for recovery in the television market.
Thin-skinned journalist and lapsed Crikey subscriber (I was flicked your report)