DENIS O’BRIEN, the largest single shareholder in Independent News and Media, has called for the immediate removal of Gavin O’Reilly as chief executive of the media group.
Mr O’Brien said a trading update released by the company yesterday amounted to “its second profit warning in three months” and had resulted in “a further erosion” in shareholder value.
The call by the telecoms tycoon for “fresh blood” on the board follows INM’s rejection earlier this week of Mr O’Brien’s suggestion he is being “punished” in INM’s coverage of his business affairs.
Mr O’Brien said the media group was “now a company in crisis” and there was “the added risk that the company will again encounter difficulties with its bankers” – a claim denied by INM.
He said it was now incumbent on the board to address the company’s future. “The first action must be the removal of the chief executive. His position is now untenable,” he said, going on to call for “a radical overhaul” of INM’s board and a 10 per cent to 15 per cent reduction in operating costs.
“It is obvious the senior management team do not have the experience or vision to put in place a strategy that will ensure the company’s survival. For the sake of all shareholders, it is time for change.”
INM described Mr O’Brien’s statement as “ludicrous” and said it was a veiled attempt by the businessman to take control of the media group without having to finance the costs of a bid.
“For Mr O’Brien to be claiming that a media company that has just affirmed a profit range of €74 million-€78 million in the worst trading conditions in recent memory is in crisis is clearly ludicrous. Mr O’Brien’s intention here is and always has been to take control of Independent News and Media. If he wants to do this, he can make a bid for the company,” a spokesman for INM said.
The spokesman added an article written by Mr O’Brien and published in The Irish Times on Tuesday showed he had “launched a tirade against INM and the media in general” and that his motivations did not appear to be in the interest of shareholders.
“Mr O’Brien has become increasingly animated about INM’s editorial coverage since the publication of the Moriarty tribunal. This statement is just the latest instalment in his attempts to destabilise a highly profitable company for non-commercial reasons. It won’t succeed.”
The next board meeting of INM is set for December 19th. Its share price fell 10 per cent to 22 cent in Dublin yesterday, after it said advertising and circulation revenues had fallen this year amid “erratic” trading conditions since August.
Underlying revenue in the year to date was 5.6 per cent lower than last year, with advertising revenue down 6.4 per cent. Circulation revenues declined by 1.6 per cent.
An anticipated lift in advertising in the second half of the year had not “fully materialised” as a result of the European debt crisis, it said.
Irish consumers “continue to save rather than spend” in anticipation of further austerity measures, while contagion from the euro zone debt crisis was affecting consumer confidence in South Africa, where the group also has operations, it added.
INM’s net debt has fallen by €40 million since the end of 2010.
The group also said cost controls had “substantially mitigated” the impact of lower revenues. Operating costs have fallen 3.2 per cent over the year, with those incurred in Ireland down 5.9 per cent, despite a 31 per cent rise in newsprint costs.
The group said full-year operating profit would be in the range of €74 million to €78 million, with market conditions remaining challenging in Ireland and South Africa.
