After months of infighting led by chairman Peter Costello, the board of Nine Entertainment has opted for Mike Sneesby, chief executive of the Stan streaming video business, to lead the company after current CEO Hugh Marks steps down at the end of the month.
Sneesby was preferred over Chris Janz, the most senior Fairfax executive at Nine and the one who has overseen the stabilising of the major titles: The Sydney Morning Herald, The Age in Melbourne and The Australian Financial Review.
Investors didn’t care. The shares edged up to $3.07 and company’s market value remained above $5 billion.
For the remaining Fairfax Media board members and executives it’s a defeat that has already seen Patrick Allaway, a Fairfax director, leave Nine (he’s also the chair of Bank of Queensland which is about to swallow ME Bank in a $1.3 billion takeover that will test him and his executives).
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And the internecine board battle between the Niners and the Fairfaxers took a nasty turn this week with leaked allegations mentioning Nick Falloon, the former Fairfax chair and Nine deputy chair, and the alleged misuse of a corporate golf membership.
That was a pretty vindictive leak from within Nine’s upper management and board as the decision on a new CEO was approaching. It was designed to neutralise Falloon and Fairfaxers. How long Falloon remains on the board is now a moot point.
Another Fairfax Media director, Mickie Rosen, is also seen as possibly leaving the board.
The golf membership leak was pettiness in the extreme, especially compared with the way Nine — under Costello, a senior Liberal Party member and former Coalition federal treasurer — allowed itself to facilitate a major fundraiser for the Liberal Party via a function in its biggest TV studio at the old facilities in the northern Sydney suburb of Artarmon.
The function, in September 2019, cost $10,000 a head. That damaged Nine and Fairfax’s standing as independent media companies.
The boardroom infighting has also marred the end of the time at Nine of Marks, whose interim report last week revealed a sharp rise in earnings and solid cost control. It impressed the market and saw Nine’s share price reach record highs and its mark value top $5 billion for the first time — and clearly more than the mooted merged value of the two companies of about $4.2 billion in late 2018.
It also obscures the clear success of Sneesby at Stan. Sneesby joined at its inception on January 26, 2015, from Cudo, the group-buying website part-owned by Nine. After Stan lost millions and endured a slow build of subscribers, it now has 2.3 million (growth has slowed in the past year) and is No. 2 behind Netflix.
In the December-half results for Nine last week, Stan was the star with 28% rise in revenue to $149 million (thanks to a price rise), a smaller 10% rise in costs to $112.6 million, and a 161% surge in EBITDA to $36.5 million — a rise of $22.5 million.
Sneesby stepped up commissioning of local programming — movies and series (imitating the Netflix model) — and led Nine to approve start moving into live and recorded sport with rugby union and tennis, led by Wimbledon and the French Open.
Stan Sport will have a separate subscription model to the main offering and will be aimed at Foxtel’s Kayo and Fox Sports.
Janz’s performance in overseeing digital and publishing was also solid in the December half. In publishing, for example, earnings rose thanks to big cost cuts and despite falling revenues.
Nine said the publishing business — mostly Fairfax mastheads along with Pedestrian Group and Drive — had a 9% slide in revenues to $263 million for the half. A 17%, or $39.5 million, drop in costs more than offset the $24 million fall in revenue and as a result a 27% jump in EBITDA to $68 million.
Publishing had a 26% growth in digital subscription and licensing revenue in the half, and in broadcasting Nine had strong gains in broadcast video revenues as well.