Margareta Pagano: Trinity Mirror’s Simon Fox must box cleverer than this
The boss of one of biggest newspaper groups cannot afford to sound so dismissive of phone-hacking claims. Has he learnt nothing from News International?
Margareta Pagano is a former business editor of the Independent on Sunday who now writes columns and business interviews for a range of publications, including the Independent, Independent on Sunday and London Evening Standard.
Sunday 28 October 2012
Simon Fox, the new chief executive of Trinity Mirror, remarked in an email to staff last week that he was “deeply concerned” by the huge amount of publicity generated by the four new legal claims which were lodged against the newspaper group over phone-hacking. His precise words were that he was deeply concerned in the “absence of evidence how four unsubstantiated claims can attract publicity of such magnitude”.
It was a brave thing, and possibly a questionable statement, for Fox to make and I’m sure he’s havingsecond thoughts about it. If he, and his board, had done their proper due diligence, they should know that phone-hacking is alleged to have been rife at Trinity Mirror newspapers for years. According to sources, it was the Mirror’s success in getting the Ulrika Jonsson and Sven-Goran Eriksson affair story by phone-hacking, that prompted the News of the World to adopt the practice because it was so jealous of the Mirror’s success.
Investors certainly understood the full repercussions of the legal claims, selling out as fast as they could. By Friday, shares closed down 20 per cent at 53p, valuing one of the UK’s biggest newspaper groups at just £132m. If there are successful legal actions – and if the police do press charges against former employees – this could have a negative impact on the Mirror’s already difficult financial position.
While newspapers are going through their own revolution, Trinity Mirror is fundamentally a sound group with an enterprise value of £360m, double its present stock market value. It owns 260 titles and employs 6,000 staff around the country – so it’s critical that Fox gets this current crisis right before any more jobs in the industry are chopped because of appalling management.
It’s why some of the biggest investors fear more damaging news could push the share price down further, hurting its banking covenants and making it harder to service its £197m debt. More shocks could even lead advertisers to walk, another lesson from the News of the World affair.
That’s why it’s vital that Fox, and the new chairman, David Grigson, clean up this mess. Instead of moaning about negative publicity, he should have announced his own independent investigation. So he was made to look weak, and forced by investor pressure to launch an internal inquiry. What’s so troubling about Fox’s reaction is that he just doesn’t seem to get just how potentially inflammable this growing scandal could be. Or prefers to ignore it.
Ironically, Fox and Grigson are the new boys on the street so they had the chance to start with a fresh slate. Investors were ready to give them the benefit of the doubt. But not if they continue as they are. There’s lots they could do: appoint a QC to handle an inquiry, possibly put money into court ahead of any claims or set aside provisions for compensation.
Investors are sick of the phone-hacking denials, when even former staff – like James Hipwell – admitted as much to the Leveson inquiry. On past record, they are right not to believe management. Let’s not forget that it was the previous chief executive, Sly Bailey, who told Leveson she didn’t launch an inquiry because there was no evidence that Mirror Group journalists had hacked into phones. Paul Vickers, the legal director and a former barrister, is the only one so far who has investigated “editorial procedures” but he didn’t look at the past. It was unbelievable then, and is even more unbelievable now.
Has Fox asked Vickers, who has been at the Mirror for donkey’s years, what the past practices were?
Fox should show more cunning than this if he is to give shareholders greater confidence in future.
Carroll shows a maturity lacking in sniping investors
Ever since Cynthia Carroll set foot in Anglo-American six years ago, the American geologist has been subjected to vicious and misogynist sniping.
Mining is a tough industry but even for such a macho one, the ranting was offensive; specifically from ex-Anglo executives who suggested she suffered from sexual frustration. Jealousy and spite seem to be behind much of the criticism as Carroll went into Anglo to blow out cobwebs. And so she did; shaking up old-fashioned practices, making the mines more environmentally friendly and ensuring the health and safety of miners.
But this also made her enemies. The timing of her arrival didn’t help either – she took over as chief executive just before the financial crash, which saw the commodities boom burst, hitting all the world’s biggest mining groups. Anglo’s share price is down 40 per cent since then – but so are the shares of rival miners, so she hasn’t done too badly.
Yet, that hasn’t stopped investors griping to chairman, Sir John Parker, for months now. The situation hasn’t been helped by problems at Anglo’s South African platinum mines or the overspend in Brazil; events outside Anglo’s control.
Sir John has been unwavering in his support but it appears Carroll decided its better to go now rather then let revolt turn into war. Knowing when to leave a top job is a sign of maturity. Six years as boss is long by today’s standards and she’s got two teenage children going to the US for college to be closer to.
Judging Carroll’s legacy is muddied by her gender; a man in the same position would not have been treated like she has been. She cracked the glass ceiling but couldn’t cut the platinum one. Investors voted with their feet on her departure and the shares rose. Sadly, that says it all.
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