Culture clash as Nine board splits over Hugh Marks’s sex scandal

Nine Entertainment chairman, Peter Costello, is under pressure over chief executive Hugh Marks’s sexual relationship with a subordinate.

Nine CEO Hugh Marks and Chairman Peter Costello at the Nine AGM in Sydney. Picture: John Feder/The Australian.

The board of Nine Entertainment has split over chief executive Hugh Marks’s sexual relationship with a subordinate, leaving the media giant reeling in an apparent clash of cultures between the merged company’s broadcast and print divisions.

The chairman of the $4.2bn company, former federal treasurer Peter Costello, is under pressure over when and how other directors were notified of Mr Marks’s relationship, which sparked his resignation on Saturday two days after he was awarded a potential bonus of more than $2m at Nine’s annual general meeting.

Mr Marks’s relationship with the company’s former commercial director Alexi Baker, who left Nine last month, was publicly revealed on Saturday morning.

Mr Marks quit as Nine chief executive hours later following an emotional phone hook-up that split the board.

Directors formerly from Fairfax Media — which merged with Nine in December 2018 — pushed for an independent investigation into the relationship, while sources said Mr Costello wanted the matter handled within the company. While Mr Marks will stay on into the new year, his departure leaves the company searching for a new leader as the media industry faces major challenges from the COVID-19 recession and a loss of advertising to tech giants Google and Facebook.

It could not come at a worse time, with former prime minister Kevin Rudd seeking a royal commission into media diversity that would examine the merger of the Nine broadcast and Fairfax print divisions.

Alexi Baker. Picture: Jeremy Piper

Mr Marks’s departure comes as the company’s most senior broadcast executive, Nine News director Darren Wick, is facing court on a high-range drink-driving charge and has taken time off for rehabilitation.

In an interview with The Australian — in which at one point he had to pause because he broke down in tears — Mr Marks revealed he had made the choice to depart the company on his own terms after the board phone hook-up, which was held without him.

“I’m just one cog of the business, and to take the pressure off the business, I moved on,” he said.

“I communicated with the chairman, and he communicated with the board.

“The gossip about me was getting so out of control — 99.5 per cent of which was untrue — and I thought to myself: ‘What’s the right thing to do for Nine and its people?’ ”

Nine sources indicated several directors did not know about the relationship between Mr Marks and Ms Baker until Wednesday — and held concerns that Mr Costello had known for longer.

Those sources also indicated that ex-Fairfax Media directors now on the Nine board, including deputy chairman Nick Falloon, wanted potential issues investigated externally. Mr Marks has been chief executive for five years, including when Nine merged with Fairfax, the publisher of The Sydney Morning Herald and The Age.

The relationship between Mr Marks and Ms Baker has been common knowledge on the executive floor for several weeks.

Ms Baker left the company on October 1.

In a tearful interview with The Australian, Hugh Marks revealed he had departed the company on his own terms after a board phone hook-up, which was held without him. Picture: Jane Dempster

One company insider described the Saturday board meeting as “tense and filled with arguments”. A Nine spokeswoman declined to comment, and Mr Costello did not respond to requests on Sunday.

On Sunday, Mr Marks, 54, said he chose to walk away after his personal relationships became what one senior insider compared to “an episode of Days of Our Lives”.

The company, founded by Kerry Packer, last week delivered an earnings upgrade and said it was well ahead of earlier forecasts, with its streaming service, Stan, growing significantly and television advertising improving.

Speculation about a replacement centres on two senior Nine Entertainment executives. Digital and publishing boss Chris Janz and Stan boss Mike Sneesby have emerged as the frontrunners. Other Nine executives seen as an outside chance include chief sales officer Michael Stephenson and radio boss Tom Malone.

A senior media executive, who did not want to be named, said it was widely expected within industry circles that Nine’s board would opt for either Mr Janz or Mr Sneesby.

Mr Marks, when he was asked directly about his intentions for the relationship with Ms Baker, 38, became emotional.

“It’s still early days: I want to have that in my life, there’s no doubt.

“But I have to make sure to continue to care for my kids.

“I fully intend to do something that’ll be a really good next stage of my life. I really want to make this (the relationship) a success for me. But I need the kids coming along on that journey as well. Hopefully, I’ll be on a long period of gardening leave and that’ll be the case.”

Senior Nine sources who spoke on the condition of anonymity were adamant the decision to depart Nine was Mr Marks’s alone.

There were no formal grounds to remove him under Nine’s code of conduct, which contains rules against workplace relationships and states only that “people leaders must be seen as a trusted advocate of expected behaviour in the workplace”.

“(The board) didn’t ask for his resignation,” one source said.

“He wasn’t asked to do anything. He resigned of his own volition. He knew there was a meeting, and said ‘I’ll take it into my own hands’.”