NZME declares peace, Stuff and TradeMe declare war

Newsroom

2 days ago

The battle to control NZ Herald owner NZME ended on Tuesday with shareholders endorsing a peace deal – just as major rivals Stuff and TradeMe joined forces to form an audacious new competitor.
NZME shareholders voted former National cabinet minister Steven Joyce onto its board, replacing outgoing chair Barbara Chapman, and approved corporate raider Jim Grenon as another new face. Incumbent director Sussan Turner won re-election and re-joined two continuing, existing directors.
By agreement Joyce will be made chair, and a sixth director, digital commerce expert Bowen Pan will be appointed.
The votes ended three months of a power struggle, initiated by Canadian-NZ private equity investor Grenon for what he promised to be better financial results and improved journalism at NZME's New Zealand Herald site and newspaper.
Grenon's campaign started by seeking appointment of himself plus three more of his nominees and the removal of all incumbents. But it ends with his sole accession to the board, three incumbents continuing, and Joyce as a peacemaking chair. Chapman and director David Gibson were the fall guys.
Grenon is now a 13 percent shareholder but his first push for control has been partly stymied. Curiously, he won the fewest votes for his appointment (86 percent) and most against (14 percent) of the four resolutions put to the meeting. Joyce won the backing of 93 percent of votes cast.
The new board members received a sobering trading update from chief executive Michael Boggs at the annual shareholders meeting.
Boggs' forecast for the balance of NZME's financial year was subdued, compared with relatively upbeat words as late as a results briefing in February, when he confirmed a 2024 net profit of $12m but overall loss, after write-downs on the value of newspapers, of -$16m.
'Unfortunately, the market remains volatile and economic commentators have softened their outlook from what was expected earlier in the year.'
Later, he noted: 'The market is not improving as much as we originally expected – it remains volatile and therefore we are taking a cautious yet optimistic approach.'
The business had done better in the first four months this year than last and remained 'well placed' to deliver improved full year results, but he emphasised downturns in the latest business and consumer confidence surveys.
He said NZME had made the equivalent of $12m in annualised savings already this year, including $4m saved from a round of 30 redundancies in its editorial departments.
Boggs noted a delay expected in a recovery in house prices – 'again, later than predicted' – which could be crucial to forecasts for NZME's OneRoof real estate listings portal.
In February, NZME announced a strategic review of OneRoof, possibly seeking investment, a part sale or separation in advance of a market listing. It suggested shareholders would be updated at this annual meeting, but outgoing chair Chapman said an update would now be made at the half-year results in August.
The silence on the future of OneRoof spoke particularly loudly on Tuesday because the number one property site in the market, TradeMe, chose that very morning to announce it had bought half of Stuff Digital, the nation's biggest news site.
As OneRoof has used its nzherald.co.nz partnership to promote housing and real estate content and link to its homes for sale, TradeMe will now take over Stuff's property section and leverage what is bound to be more real estate content on that site.
The deal, which is subject to standard conditions being met, will therefore pit the Herald-One Roof combo against Stuff-TradeMe. The latter partnership starts as number one in each of its component online markets.
TradeMe's investment will also be a big boost to Stuff, which while profitable according to owner Sinead Boucher, would have been pressured over the past two years in the same vein as declining print and digital ad revenues suffered by NZME.
Stuff also took on the added cost of producing 3News nightly for Warner Bros Discovery following Newshub's demise – a multimillion dollar outlay likely to have sustained reduced initially forecast margins, possibly into the red.
The sum paid by TradeMe has not been disclosed and both businesses are private companies. But for Boucher and Stuff a substantial inflow of capital right now will greatly improve prospects for the company she bought from Nine Entertainment five years ago for $1.
'This is the first time since the management buyout of Stuff five years ago that I have accepted an equity partner into the business,' she said. 'It was important to me that we found the right partner at the right time in our growth strategy, protecting our fiercely independent media business which is loved and trusted by millions of New Zealanders.'
The Stuff mastheads division, covering its newspapers, subscriber news sites The Post, The Press and Waikato Times, plus the Neighbourly and Events businesses, remain fully owned by Boucher.
For NZME, its rivals' marriage will not have been a surprise, having been publicly mooted since at least March. But it will be no less challenging, particularly if the NZME strategic review being conducted by Jarden recommends seeking separation and outside investment. The review's objective of realising OneRoof's 'full potential' just got harder.
TradeMe chief executive Anders Skoe said the Stuff deal would enable house vendors and agents 'reach an even wider pool of prospective buyers' and 'generate the highest quality property market insights.'
Stuff has an audience of 2.3m unique readers a month, 400,000 higher than nzherald.co.nz in the Nielsen online ratings for April, and One Roof, according to the Herald, trailed TradeMe by, 32,000 – 747,000 to 779,000.
While Chapman's final speech as chair saluted OneRoof for going 'from strength to strength, delivering significant year-on-year growth', at least one new board member has not always been so convinced.
New NZME board member Jim Grenon. Photo: NZME presentation
New director Grenon, in a war of words conducted by letter during his contest for board places, threw doubt on OneRoof's actual success over the past four years, saying it had achieved just 40 percent of its targets.
In a letter from March 6, Grenon said OneRoof 'missed the most relevant ebitda margin target by a significant degree' as late as the 2024 financial year.
'OneRoof's 2024 financial performance is a recent example of management over promising and ebitda confusion,' he noted, coming in at just half what he calculated should have been $4.8m in operating profit. He questioned, too, how costs for OneRoof had been allocated in NZME's books.
He joins the board now with the main competitors gearing up to push back against OneRoof.
The new NZME board is also expected to create an editorial advisory board, with blogger and lawyer Phillip Crump nominated as its first member and possible chair, to help improve the Herald's journalism.
Grenon and Crump are both of the centre right, Crump a favoured appointee by the coalition Government to both the NZ on Air board and Waitangi Tribunal.