Belfast Telegraph

INM vote to focus on serious tensions and pensions move

By Donal O’Donavan

The body-language experts will be out in force on Monday, to survey the relationship between Independent News & Media’s chairman and chief executive at a long-scheduled shareholder meeting.

Ceo Robert Pitt and chairman Leslie Buckley are expected to present a joint front when they sit down in front of investors at a shareholder meeting in Dublin.

 Both are thought to have argued over strategy and the vision for Ireland’s leading media group. After serious tensions between the two bubbled over this week, it will be their interactions with each other, as much as with shareholders, that will be closely watched by observers.

 The items formally on the agenda at the extraordinary general meeting (EGM) are likely to be passed with relative ease.

 Shareholders are being asked to back two resolutions aimed at cleaning up the media group’s balance sheet, which will mean it is potentially able to resume shareholder dividends for the first time since a financial crisis almost a decade ago.

Generally that’s the kind of thing that shareholders like to see — but the timing has been unfortunate for the board.

 As well as the attention focused on the row between Mr Pitt and Mr Buckley, the EGM looks to be in danger of being entangled in a separate INM action to wind up its defined benefit pension scheme. INM’s small shareholders include long-serving and former employees who will be directly impacted by the pension move. Some are likely to be vocal from the floor, a rare opportunity to put questions directly to directors in a public forum.

 None of that will ultimately affect the voting but pension trustees may seek to frustrate the effort to tidy up the balance sheet later, because the company will still need sign-off from the High Court to consolidate its shares.

 INM has a storied history of board and shareholder battles. Monday’s EGM is unusual though, because the chairman and chief executive must pull together to get their balance sheet restructuring over the line, when they have been privately at odds over the strategy for what is now a very attractive balance sheet.

 The company this week confirmed reports of a serious divergence of opinions between Mr Pitt and Mr Buckley, apparently over plans to look at buying radio station Newstalk. One report said the row was about the price for the station.

Complicating things, Mr Buckley, a highly-regarded corporate trouble-shooter who’s helped rescue INM’s balance sheet since taking over as chairman, is also a long-time business associate of Newstalk owner Denis O’Brien, INM’s biggest shareholder.

 INM’s other directors were called in and concluded there was no issue to be concerned over. The deal ultimately didn’t progress as far as being put to the board, it is understood.

 But something will have to be bought by INM, or alternative uses found for the cash. The company has begun springing out new digital products such as the app, farmireland.ie — which was grown in the INM Innovation Hub. All of INM’s national titles are healthy market leaders in their field and Independent.ie is Ireland’s favourite news site, growing exponentially.

 Analysts at Davy reckon that by the end of the year the business will be sitting on cash of more than €86m.

 Mr Pitt has said the strategy is to use the funds for acquisitions that will diversify the business, ideally making it more digital and international. Buying Newstalk would have made it possible to sell advertising packages straddling print and broadcast, but it also means doubling down on traditional Irish media.

 The company has promised a digital future but other than buying the remaining half of carsireland.com it did not already own it has not yet bought any other digital businesses.

 A lengthy M&A trawl has yet to throw up anything other than a bolt-on acquisition of a small Northern Ireland publishing business and mid-sized regional newspaper group, Celtic Media.

 One question some shareholders may ask on Monday, is whether making it possible to pay a dividend is a curtain-raiser for a strategic change of tack.

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