NZME hires UBS in activist investor battle

NZME owns the largest newspaper across the Tasman, The New Zealand Herald. Picture: iStock

Australia- and New Zealand-listed NZME has hired a second investment bank to defend itself against activist investors who want the board sacked.

DataRoom can reveal UBS is now working with the New Zealand Herald publisher and NewstalkZB talkback radio broadcaster, in addition to Jarden.

Jarden’s role involves advising the largest listed media company across the Tasman on a potential demerger of its online real estate business One Roof to lift share price value.

However, this column understands the role of UBS involves providing advice to the $200m company’s directors, who are under threat from shareholders who want new board talent to lift performance and improve culture.

DataRoom understands NZME director and former Deutsche New Zealand investment banking co-head David Gibson is leading the move to appoint UBS after a third party public relations firm was recently hired.

Mr Gibson is also a director of New Zealand’s Contact Energy, Freightways and Goodman.

The move is likely to further inflame tensions with major shareholders, infuriated by excessive corporate costs, including the $NZ2m annual pay of chief executive Michael Boggs when journalists have been let go to save money and artificial intelligence has been introduced for some story selection on the Herald website home page.

NZME made a $NZ16m loss last year, dragged lower by the publishing division, in one of its worst results in a weak economy.

A focus is reducing corporate spending and reinvesting in editorial content for the country’s flagship paper, the NZ Herald, to lift standards.

An editorial board would also train journalists and act as a watchdog for balanced reporting.

Wealthy Auckland-based private equity tycoon and distressed company turnaround expert James Grenon is spearheading the charge after buying almost 10 per cent of NZME.

He has written to directors outlining his concerns and proposals for change.

Mr Grenon initially proposed to appoint himself as chairman and bring in three other directors including former Adairs and Trademe director Simon West.

Since then, he has offered various compromises including one existing director to remain and Mr Boggs to join the board.

However, the plan has been met with fierce opposition from existing directors, the media union, left wing politicians and rival publishing outlets who have slammed the proposals as an attempt to hijack the board and influence the editorial agenda.

Alarm has been raised over his previous investment in conservative online publishers, while the board has concerns over corporate governance.

But, Mr Grenon said the aim for the Herald would be to broaden its appeal with quality content to attract more subscribers.

He has support from Australian-based institutional investor Spheria Asset Management, holding 19.9 per cent, and Caniwi Capital, with 3.5 per cent, and is confident he has the votes to remove directors at the group’s annual general meeting, delayed from this month to June.

But, in what some consider a highly unusual move, the country’s takeovers panel is now challenging whether the trio are acting in concert, with a hearing to be conducted around May, which may result in Mr Grenon divesting less than 1 per cent of his holding.