NZME board hits back over tycoon’s rescue attempts for Kiwi media group

NZME chairman Barbara Chapman.

Directors at Australian and New Zealand listed media group NZME lack skin in the game and are struggling to rein in corporate costs, according to an activist investor.

Wealthy Canadian-born private equity tycoon James Grenon, who lives in New Zealand and has made a fortune rescuing struggling companies outside the media industry, is proposing to sack the board of the company that owns NZ’s largest newspaper, The New Zealand Herald, and nominate new directors in a quest to improve its financial performance.

He has amassed close to 10 per cent of NZME. Australian funds have also heavily invested in the company. Grenon says he has support for his proposal from investors with about 47 per cent of the stock (including his own holding) and expressed confidence he would succeed at the company’s annual general meeting on April 29 in a letter he sent to directors.

In a statement to The Australian, NZME chair Barbara Chapman said the board was assessing several areas of concern, including governance, independence, nominee suitability and editorial integrity, and was receiving independent advice.

“A broad group of our shareholders and stakeholders are also raising these concerns,” she said.

“The implication for all shareholders needs to be carefully considered and those with a vested interest should be asking questions, as we are.”

Other NZME shareholders are yet to come forward and publicly defend the company’s existing directors.

NZME’s directors own 0.15 per cent of the company’s shares – excluding chief executive Michael Boggs who has increased his holding through shares awarded through performance rights – and this is believed to be one of Mr Grenon’s concerns.

But in addition to Mr Grenon, Troy Bowker, who runs the private equity firm Caniwi Capital and owns a combined 3.5 per cent in NZME, and Australian listed Spheria Asset Management with close to 20 per cent, both support the move to refresh the boardroom.

In response to Ms Chapman’s statement, Mr Bowker said he believed the NZME board was neglecting shareholders and they had the right to vote in a new board.

“The underlying assumption behind Ms Chapman’s remarks is that the shareholders wanting change want to narrow the audience appeal and restrict the range of the content. That makes absolutely no sense and couldn’t be further from the truth,” Mr Bowker said.

Hedge fund Osminum Partners is not supporting Mr Grenon’s proposal for a full boardroom refresh but has put forward its own motion calling for two new directors from its firm, namely John Lewis and Adam Hoydysh.

NZME’s under fire board is assessing several areas of concern, including NZME’s governance, independence, nominee suitability and editorial integrity, and is receiving independent advice.

The investor activism comes after the group reported one of its worst annual results in 2024, a $NZ16m loss, as print and digital publishing’s earnings before interest, tax, depreciation and amortisation declined as the division took a $NZ24m impairment.

The group’s share price has also drifted sideways in recent years.

But Ms Chapman said NZME had outperformed all key Australasian media peers over the past five years in both share price performance and total shareholder returns.

Investors supporting boardroom change say that NZME was not comparable to media companies in Australia, which has a far more competitive environment. They said online real estate company One Roof provided the group with a higher multiple.

DataRoom understands that the New Zealand Takeovers Panel is now investigating whether the shareholders calling for change are working in concert, which contravenes listing rules.

Any co-ordination triggers mandatory takeover obligations.

Another point of contention for Mr Grenon is believed to be that head office staff costs have increased in the past year by about $NZ1m when the group’s performance had deteriorated and journalists were being offered redundancies.

Mr Grenon has also hit out at the salary of chief executive Michael Boggs, which averages more than $NZ2m annually.

But Ms Chapman said cost management remained a focus, with a $NZ4m cost savings target announced in its result and further efficiencies planned.

A review is under way to consider a demerger from One Roof.

NZME said in its full year results announcement it would “set a new tone and build positive social momentum for New Zealanders” with respect to its media business, following complaints over the quality of content in the NZ Herald, the country’s largest newspaper.

But Mr Grenon said his intention was higher quality content.

“This is needed to attract new subscribers,” he said.

He addressed concerns of the New Zealand media union, E tu, about his moves to assert editorial influence and push a right wing agenda by saying the new board intended to improve on the newspaper’s journalism, with an emphasis on factual accuracy, less opinion and broadening its appeal to a wider political spectrum.

Mr Grenon is proposing to appoint four new directors, including himself, Simon West, Des Gittings and Philip Crump.

He would be chairman under the plan, and the new board would also appoint a fifth director.

NZME owns the country’s largest radio network, including Newstalk ZB, and a raft of publications.