Big Media Owners Get “Fit And Proper” Treatment

Michael Hedges April 30, 2012 Follow on Twitter

Being a media mogul is getting tougher these days. Big competitors rally opinion against them as lesser competitors fall away. That digital dividend keeps getting more expensive. So too the politicians, now more than ever worried about opinions they might shape and money they might make.

The Broadcasting Authority of Ireland (BAI) updated its policy guidelines on ownership (April 25). The new BAI Ownership and Control Policy seeks to “facilitate the continued development of a viable and diverse broadcasting sector that is characterized by a plurality of ownership.” Much of the customary “fit and proper” formalities are included, like not being a convicted criminal. But applicants for new or renewal licensing or ownership transfer will need to show no “undue” control over the “totality of communications media in the relevant area.”

Subtle it wasn’t coming but a few days after Ireland’s best known media proprietor Denis O’Brien appeared to solidify control over newspaper publisher Independent News and Media (INM). O’Brien’s broadcasting company Communicorp owns several radio stations in Ireland, including two national channels, as well as stations in nine other European countries. Communicorp is the biggest radio operator in Ireland after public broadcaster RTE. Denis O’Brien is reportedly Ireland’s richest media mogul by a leap.

Mr. O’Brien accumulated 22% interest in INM over time becoming the company’s biggest single shareholder, displacing the O’Reilly family stake, currently about 17%. INM is a widely diversified media holding company mostly known for its newspapers in Ireland and, once, the UK. It’s footprint falls on four continents and spans newspapers, radio stations, outdoor advertising companies and more.

All of that expansion, which took place under the leadership of Sir Anthony O’Reilly and his son Gavin, mounted the company’s debt. As a significant shareholder Mr. O’Brien became vocal in his criticism. And with several INM board members on his side those criticisms were acted upon. Sir Anthony stepped down as CEO, replaced by Gavin in 2009 and something of a truce was declared between the O’Reilly’s and Mr. O’Brien. It didn’t last long. In 2010, after another round of haggling from Mr. O’Brien, the loss making UK newspapers Independent and Independent on Sunday were sold to Alexander Lebedev.

After issuing profit warnings in later 2011 on weak market conditions, INM reported (March 22) 8.6% lower profit for 2011, barely hitting its lower range target at €75.5 million. INM chairman James Osborne, appointed by the O’Reilly’s, switched sides and the stage was set for a boardroom coup. Notice was taken at the top levels of the Irish government, not to forget Irish media people.

Communications Minister Pat Rabbitte said (April 13) it wouldn’t be right for one person to control “vast slabs” of the Irish media landscape. “Media affects the character of public debate and public affairs, and indeed the character of democracy itself,” he offered, taking the high road. “So it wouldn't be acceptable, I think, to most people in society, if one allowed undue concentration to emerge.”

On April 19 Gavin O’Reilly resigned as INM CEO, replaced by COO Vincent Crowley. “It had become clear that recent and public shareholder tensions were proving an unnecessary distraction for both me and the company,” he said in a statement. “This was not in the best interests of the company.”

Not content with letting Mr. O’Reilly part quietly into that cold night, an INM board member who represents Mr. O’Brien’s interests took to court a complaint that the €1.87 million board approved severance package was “unduly generous” and agreed with  “indecent haste.” When Mr. O’Reilly resigned, non-executive board member Bengt Braun, vice chairman of Swedish media giant Bonnier Group, also quite the board. Others on the O’Reilly bench are expected to follow at the June AGM.

So much, so far, for this Irish drama, which will play out in several acts over the coming months. What will also play out is the reshaping of media ownership regulation. Concentration by platform is so analogue and more platform-neutral rules will be another digital dividend for media owners to contend with.

See also in ftm Knowledge

Media Laws – New and Revised

Policy makers and politicians are writing and rewiting media laws and rules at a breakneck pace. As broadcasters and publishers grapple with changes brought about by digital development, new business models and financial distress, the new media is feeling rules tightening around it. From licensing and public broadcasting to privacy, piracy and copyright this ftm Knowledge file Media Laws – New and Revised summarizes new laws and revised laws from a media perspective. 135 pages PDF (December 2010)

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