It all happened quite quickly in the end. After 46 years on the stock exchange, the formal transition of Independent News & Media (INM) to a privately-held company was wrapped up in less than 72 hours this week.
In truth, the €145.6 million takeover by Belgian/Dutch newspaper group Mediahuis looked to be in the bag on April 30th, when its bid was accepted and it acquired a 26 per cent blocking stake to deter other bidders. Once competition regulators and shareholders backed the deal in June, it became an inevitability.
That left just the formal approval of the Government and the High Court, which had to sanction the scheme of arrangement used to consummate the deal, as the only remaining hurdles.
The High Court hearing, scheduled for Tuesday morning, looked set to be the main event for INM this week. But on Monday afternoon at 3.45pm the company unexpectedly served up an amuse bouche by announcing that Richard Bruton, the Minister for Communications, had already “unconditionally” approved the deal.
One hurdle cleared, one more to go.
On Tuesday, shortly before 10.30am, INM executives and its legal team gathered in the Round Hall of the Four Courts outside court number two. Chief executive Michael Doorly smiled and joked with lawyers.
In hindsight, his levity was that of a man who knew he was on his penultimate day in the job – one of the most demanding roles in corporate Ireland in recent years, given the conveyor belt of scandals in which INM became embroiled.
Doorly sat at the back of the court with INM chairman Murdoch MacLennan as INM’s lawyers put the case for the scheme to Mr Justice Robert Haughton.
The judge was widely expected to sanction the deal as it had such overwhelming shareholder backing, but the slim chance of a plot twist remained if an objector, such as a disgruntled shareholder, were to show up in court.
Court registrar Niamh Dermody called out for any third parties with an interest in the case to make themselves known, much as a priest officiating at a wedding would ask if anybody present knew why the marriage should not go ahead. There was no reply.
In the end, the hearing took only about 20 minutes. Mr Justice Haughton nodded his head throughout and affirmed that “everything seems to be in order”.
“The scheme has been well thought out,” said the judge as he leafed through the legal papers. “With more than 90 per cent shareholder support, the court is slow to interfere in any way . . . I am quite satisfied the conditions [for approval] have been met.”
INM’s lawyers dived for the line. Its barrister told the court that he knew Dermody was busy, but was there any chance she could have the paperwork ready the same day? That way, the barrister said, INM’s lawyers could drop the papers down to the Companies Registration Office the next morning.
Dermody smiled, nodded her head, and the judge made the order. Outside the court, Doorly and MacLennan thanked its barristers and solicitors, before walking out into the sunshine and a new beginning for INM.
Shares suspended
Shares in the company were suspended from trading on the stock market at 7.30am on Wednesday. The scheme legal papers were deposited at the Companies Office later in the morning, giving full legal effect to the takeover, even though it will take a further month for Mediahuis to formally mop up all of INM’s outstanding shares.
Then, shortly after noon, Doorly announced his exit to INM staff. As news of this filtered out of the building, the company announced at 12.34pm that the takeover had been completed.
Mediahuis formally took the tiller. In a nod to the commercial war zone in which newspaper companies now operate, Mediahuis group chief executive Gert Ysebaert thanked Doorly for running the company “during what has been a challenging transitional period”.
That challenge, vested in how to get the readers of INM’s titles to pay for digital content online, now belongs to Mediahuis. It has set up a three-man kitchen cabinet, or executive committee, to meet the task.
INM already has a plan for the digital age, known as INM@21, which sets aside €5 million to kick off its digital transformation. The executive committee will be responsible for “accelerating” this transformation, said a company source.
The committee is led by Doorly’s replacement as chief executive, Dutch media executive Marc Vangeel. He was already effectively installed weeks ago, joining INM as part of a transition team.
Peter Vandermeersch, the former editor-in-chief of Dutch paper of record NRC Handelsblad, will also sit on the committee as INM’s new “publisher”. This will be a crucial role in the pivot to digital of the group’s titles.
Mediahuis said he “will be responsible for the long-term strategy of [the] news titles . . . the digital transformation of the INM news brands, the continued development of its print titles as well as their overall brand positioning”.
Mediahuis has previously said that it prefers to blend group management with local leaders when it buys a new business. The Irish representative on INM’s kitchen cabinet triumvirate is long-serving Belfast man Richard McClean, who takes on the role of chief operating officer, a crucial bridge between commercial and editorial.
All other members of INM’s management will report to this three-man team.
Even before the deal was formally completed, Mediahuis was already asserting itself at INM in relation to digital strategy. Last month, about 20 open job roles at the company were listed on its website, including “digital editor”. On Wednesday last week, all those job ads were suddenly deleted.
Sources said the jobs were not being abandoned and would likely be re-advertised once the executive committee had examined the specification for the roles, especially the digital positions.
Oversight
When Mediahuis group chairman Thomas Leysen broke cover in April to talk about its bid for INM, he hinted that, if the takeover was successful, the company’s board may not be fully dismantled, leaving immediate oversight of the company in Dublin instead of Antwerp. On Wednesday, it made good on that suggestion. Mediahuis announced that MacLennan will stay on as INM chairman. It is understood he has signed up for a three-year stint.
The move surprised some observers, who saw MacLennan, a former chief executive of Telegraph Media Group, as “old school”. It was suggested by some sources that he had been testy during the negotiations with the Belgians, but they wanted to keep him on because of his network of international contacts.
Others played down any talk of tension during the deal talks, and said the mere fact of his reappointment as chairman was proof to the contrary. For his part, MacLennan said it was a “privilege” to stay on and he lauded the digital potential of INM under the stewardship of Mediahuis.
Three other members of the old INM board will stay on as directors, while four will depart.
UK former television executive Kate Marsh, who was appointed only in January, will stay on for three years, as will e-learning executive Fionnuala Duggan. The third is INM’s senior independent director, Len O’Hagan, who has been at the group throughout the Sir Anthony O’Reilly and the Denis O’Brien/Desmond years, giving him a depth of institutional knowledge that may be invaluable to the new owners.
Leysen, Ysebaert, Vangeel and Paul Verwilt, the Mediahuis group chief operating officer, will also join the INM board.
Departing are Catriona Mullane, who had links to INM’s former major shareholder Denis O’Brien; John Bateson, who was the board nominee of Dermot Desmond; Kieran Mulvey, who was a nominee of Mr O’Brien; and independent director Seamus Taaffe.
“Every market has its own peculiarities,” said Leysen when Mediahuis first announced its bid. “But in all modesty, we believe we can add more to INM [when it comes to its digital transformation].”
Senior figures in the advertising industry say Mediahuis has been “giving the right signals” to the market so far. Eddie O’Mahony is the chief investment officer of advertising buyer and consultancy Core media, which counts INM among its clients.
“Installing a paywall will be important,” he said. “These guys have experience [of that]. It is not going to be easy but it has to be done. The investment that is required in INM’s digital operation means that they have to look at other sources of income. A paywall can be one of those sources.”
One of the difficulties INM faced before its takeover was that it has not yet developed the capacity to accept online payment for its digital content. It will require significant investment and progress on it has been slow to date.
Leysen has suggested that this was a reason why the tie-up with Mediahuis made sense: “Scale is getting more important in this business. There is a need for huge investment in technology and these are very hard costs to carry for a free-standing organisation.”
INM has previously said it may be in a position to begin charging for digital content in the first quarter of 2020. Sources said Mediahuis remains fully committed to erecting a paywall at INM, but declined to put a timeline on it. It was suggested, however, that existing plans may be “accelerated”.
Court inspectors
But even as INM contemplates its future, the ghosts of its past are never far behind. At the same time that Mr Justice Haughton was rubber-stamping the takeover scheme, another judge, High Court president Peter Kelly, was delivering a judgment related to an interim report filed on the business by court inspectors.
The inspectors were appointed last year to investigate a range of allegations of malpractice at INM, including a major alleged data breach that saw its journalists’ emails secretly parsed in an operation alleged to have been paid for by a company linked to O’Brien.
The final report is due next year, and it could form the basis for a slew of lawsuits against INM from people allegedly affected by the data breach.
Mediahuis insists it has done its due diligence on the risks, but it is difficult to see how it can have calculated the company’s potential liabilities when the full extent of the alleged wrongdoing has yet to be established.
“I wonder if Mediahuis fully knows what it is getting itself into with all of this legal stuff,” said a source. “There could be court cases going on over this a decade from now.”
One way or the other, Mediahuis is in for the long haul at INM.
