For a few days last week, Seven West Media CEO Tim Worner was no longer the “the most sackable CEO” in the top 200 ASX listed companies.
That title instead went to Commonwealth Bank boss Ian Narev after AUSTRAC made public its extraordinary 580-page legal assault detailing the bank’s industrial scale recklessness when it came to illegally assisting money launderers.
Sure enough, after a share price stumble and a blizzard of publicity, the CBA quickly folded when the board announcedthat Ian Narev would be gone by June next year.
Put a fork in them, the election is almost done.
Understand what happens next with our best ever discounts.
AsThe Australian’s Margin Call column noted today, Worner’s contract also expires next June, but there has been no such pragmatism from the foster child turned billionaire Kerry Stokes when it comes to managing expectations around his boy’s tenure.
Stokes continues to stand by his man, meaning the scandal of Worner’s affair with Amber Harrison — and more particularly, what the company did next — will continue to haunt Seven West.
From the moment Harrison went public last December, there have only ever been two outcomes which would fully bring the matter to a conclusion.
Worner needed to lose his job as CEO and the Seven West Media board needed to reach a final settlement with Harrison.
Neither has occurred, so was it any surprise the saga once again over-shadowed media coverage of the six-monthly earnings call by the company yesterday.
Harrison is a shrewd tactical participant in what should be a lopsided contest between a powerful public company and an unemployed foster mum accused of rorting her expenses and philandering with the boss.
Time and again, she has pivoted and caught Seven flat-footed as the public company stumbles along repeatedly dogged by its failure to admit it did anything wrong and its failure to understand that brutal lawfare is not a solution in 2017. Not in this situation, anyway.
After Harrison declined Seven’s $50,000 settlement offer because they played unrealistic hardball on the public apology, the company went over the top in an uncontested court case and secured the legal win which Kerry Stokes chose to write about in the following terms (see page 14) in his annual letter to shareholders yesterday:
“Among the various issues faced during the year, we were obliged to take legal action to protect our business from the release of confidential company information and defend the reputations of our people. As detailed in two separate successful NSW Supreme Court judgements, our group acted professionally and appropriately in the handling of this matter, which we trust is now closed.”
Errr, no it’s not.
It was never going to be a good look bankrupting a foster mum with a giant legal bill and Seven’s PR man Tim Allerton briefed some journalists at the time of the judgement that the company would not go all out seeking payment.
But then the situation changed. The regular flow of correspondence from Seven’s law firm Johnson Winter Slattery to Harrison continued.
Harrison had deleted her Twitter account as an offer of détente but after some hostile stories were placed in the Murdoch papers and the lawyers kept coming, she resurrected it shortly before the 30 day window offered by Twitter to bring back deleted accounts closed.
With Seven still yet to give her a precise legal bill but threatening to leave the judgment debt hanging over her for 12 years, she launched a cleverly crafted GoFundMe push to raise $200,000 on the eve of the Seven West Media results.
150 people contributed more than $5000 in the first 24 hours with plenty of accompanying public commentary from donors getting stuck into Seven West.
The fundraising push generated gossip column coverage yesterday morning which ensured the results briefing was an awkward affair. Kerry Stokes was a no show this time, but the besieged Worner had six other executives come along for the chat. As if they would attract attention.
When The AFR’s Chanticleer columnist is describing Harrison as “the elephant in the room,” you know there is a problem.
Unlike CBA, Seven West Media does not have a good financial story to distract from the reputational disaster.
With a $745 million statutory loss, Tim Worner was always going to see his bonus cut to zero. The bloke is dead lucky to still have his job.
Burdened by net debt of $730 million, it was surprising yesterday that the Seven West Media directors bravely declared a 2c final dividend which will bleed $30 million from the company. It might be their last.
Unlike all the other major Australian listed media companies — besides Ten Network Holdings of course — Seven West Media is carrying too much debt and with industry metrics in decline, the board will have to keep cutting costs to stay solvent.
One person who is yet to contribute to the cost cutting effort is former Victorian Premier Jeff Kennett who continues to compromise his independence as a Seven West Media director by double dipping as a Seven “political commentator” who is paid $200,000 a year for the easy work.
Heck, the cash hungry and super busy Kennett (he chairs five organisations!) isn’t even exclusive to Seven as he also writes a regulator column for the Herald Sun, such as an infamous effort in February excoriating Amber Harrison which also ran in The Australian and The West Australian.
Kennett was widely slammed for this over-reach, along with his inappropriate Twitter battles with Harrison — but that didn’t stop his 2016-17 board fee rising by $7,000 to a tidy $145,000.
If Stokes is so worried about Amber Harrison’s expense claims, why is he being so generous with shareholder funds on the former Victorian premier and why does he continue to spend tens of thousands of dollars every month on lawyers chasing Harrison?
You’d think a former foster child like Stokes would have softened his approach once Harrison became a foster mum last year. This statement from Harrison almost feels like it is directly addressed at Kerry Stokes’ personal history:
“Having a foster child has given me an insight into people who started life like this. Adults who are raised as foster kids will know better than anyone the need for stability. Holding the threat of bankruptcy over my head simple doesn’t do that. I’ve been overwhelmed by the support and empathy from ordinary Australians. Some of these people suggested I crowdfund to get Seven to move on. I’m not sure it will work, but people seem to want me to give it a try. There are people who love Channel 7 but hate what they are doing. I want to walk away but they are forcing me to take a stand and that stand may ultimately mean campaigning and taking this to the shareholders at the AGM to get a resolution. We need to bring this to a close one way or another.”
The key question is this: once Seven West Media presents its giant six or seven figure legal bill, will it actually cut a deal with Harrison to settle the matter once and for all? This could be a very public negotiation as the GoFundMe tally steadily rises with each passing day.
I reckon Seven should ask Harrison for 50k and call it quits — provided the Twitter account and GoFundMe campaign is also shut down.
As for an apology, forget it. They all just need to achieve closure and walk away.