The higher echelons of Independent News & Media (INM) are no stranger to stormy weather, and it would take a brave person to conclude that the loss to the company of chief executive Robert Pitt signals an end to the pattern of sudden corporate gusts.
The Office of the Director of Corporate Enforcement (ODCE) continues to investigate the circumstances of INM's ditched proposal to buy Newstalk, the Communicorp radio station, after Pitt made a protected disclosure to the State body.
To recap: Pitt wanted to pay the much lower price for the station as suggested by a valuation secured by INM; while INM chairman Leslie Buckley, an associate of Communicorp owner and INM shareholder Denis O'Brien, apparently favoured a higher price suggested by a valuation obtained by the radio group.
What would have happened had Pitt not taken his stand and INM gone ahead and paid the higher price? He must have thought about this hypothetical position before he took the job-ending course of action that he did.
Pitt (46) will find other employment, not that he will need to rush to do so. But what comes next for the day-to-day business of INM? The forecast is murky.
On Friday, the company told investors via the Irish Stock Exchange that it had appointed an interim chief executive: long-time INM executive Michael Doorly has become the media group's fourth chief executive in 6½ years, succeeding Pitt and, before him, Vincent Crowley and, before him, Gavin O'Reilly.
In 2014, before Pitt’s arrival, there was a period when INM had no chief executive at all and was run instead by Buckley and a trio of directors. At some point, a permanent chief executive will be appointed, the word “permanent” is used with caution given the history.
INM, it is fair to say, has been changeable of late, making it harder than it should have been to plan for the future in an already unsettled industry. Take a trip to its corporate website and you will be confronted with photographic line-ups of laughing executives. But it is the image of the Samuel Beckett Bridge on its home page that is perhaps the more apt indicator: INM’s recent trading updates have been inescapably gloomy.
Corporate drama
The company tacitly admits its corporate drama has not helped the business. Quite apart from the costs incurred, this summer it said it had curtailed its otherwise thwarted mergers and acquisitions (M&A) strategy “while certain matters pertaining to the Independent Review and the ODCE are ongoing”.
Shrinking circulation and print advertising revenues have prompted the company to state several times that consolidation is a necessity in the Irish news media market. But despite having cash on its balance sheet of more than €85 million, it has not been able to deliver this in any meaningful way for its shareholders.
This is partly because the “attractive” digital media businesses that it seeks to suck up are either unwilling to sell or don’t exist. But the fact that INM’s largest shareholder is O’Brien also brings potential acquisitions into a loop of legislative scrutiny designed to prevent further significant cross-media concentration of ownership.
If O’Brien was not INM’s largest shareholder, or if he didn’t also own Communicorp (which includes radio stations Newstalk, Today FM, 98FM and Spin), the group’s abandoned deal to buy regional newspaper publisher group Celtic Media may well have been allowed to proceed without condition.
While INM walked away from this acquisition target in June before Minister for Communications Denis Naughten made his ruling, the recommendation on the Minister's desk was that the purchase should only go ahead if all Celtic jobs were maintained. This kind of stipulation is not something that merging businesses in other sectors are usually obliged to worry about. Indeed, it is often the very blunt point of mergers that roles and functions can be "streamlined" and margin yielded from the cuts.
The regulations governing media mergers are based on the premise that the media is not just any other business and that there are wider societal issues at stake.
Alas, it would be hard to pretend that Irish media groups’ survival isn’t ultimately determined by their top and bottom lines and that, as advertising and circulation revenues wither, so too will employment. At INM, a new editorial cost review has been in production. After previous cost-slashing schemes Project Resolute and Project Quantum, newsroom veterans could be forgiven for dubbing any further cutbacks Project Not This Again.
Large “what ifs” hang over Talbot Street, the home of INM, and while some revolve around O’Brien’s next move, others are completely outside of his control.
One of Pitt's last public speaking engagements as INM chief executive was at an event co-hosted by Google at the Institute of International and European Affairs. Although it was a "very worrying world", Pitt was encouraged by flickering signs of co-operation from the tech giant, such as the idea that it might share audience data with publishers and develop payment mechanisms that might make it easier for groups like INM to charge for digital content.
His verdict on INM? “I don’t think that we’re going anywhere.”
It will be up to someone else now, or perhaps several people, to try and prove him right.
