Peter Costello ‘had to go’ and why Nine journalists are glad he did

Chris Pash
By Chris Pash | 11 June 2024
Credit: Roger Bradshaw via Unsplash

Peter Costello, who resigned as Nine Entertainment chairman at the weekend, was given an extra kick out the door as the journalists he once presided over turned on the former Liberal federal treasurer.

This follows reports he allegedly knocked a reporter to the ground at Canberra Airport while being questioned about a sexual harassment issue at Nine.

Nine’s flagship title the Sydney Morning Herald believes Costello “had to go” and not just because of a falling share price (down more than a third to $1.40 from a 12 month high of $2.215) and a sexual harassment scandal.

“It was simply untenable for the chair of a media company that employs hundreds of journalists to seemingly shove a reporter to the ground, laugh, walk off and carry on in the boardroom as if nothing happened,” the news title said in an editorial

The incident involving News Corp journalist Liam Mendes last Thursday was widely viewed in a video clip publisher by The Australian, a Nine competitor.

The headline to the Herald’s opinion: Peter Costello had to go. And thank goodness he has.

“Costello will not be mourned by the majority of those who work at Nine,” said the Herald of Costello.

“Indeed, the Herald believes his tenure is a case study in why ex-politicians often do not make good company directors. 

“As one example, Costello’s public criticism of Labor treasurer Jim Chalmers sat awkwardly with the need for a chair of a major media organisation to have a constructive relationship with such an important external stakeholder.”

Costello, Australia's longest serving treasurer, spent 11 years on the board of the media group, joining in 2013 when he was brought in to help with a capital reconstruction and listing on the ASX.

What next for Nine? The media group is well regarded by most analysts because of the spread of its assets and the value of its digital revenue at a time when the advertising dollar is shrinking.

But the media industry is undergoing deep structural change. The company is keeping costs tight, expecting more falls in advertising spend in the current June quarter, last month describing the current operating environment as "challenging".

Nine reported falls in revenue and profit in a "weak" advertising market for the half year to December. Revenue fell 2% to $1.37 billion in the six months. Net profit after tax was down 21% to $149.5 million.

However, Nine is well positioned for the advertising market rebound. 

“We believe that NEC (Nine) has great media assets with unique, hard-to-replicate data sets including over a hundred years of news library (from Fairfax),” write analysts at investment bank Jefferies in a note to clients. 

“NEC (Nine) has also transformed itself to become a digital company, with over 45% of proportionate revenue derived from digital sources. 

“However, around 65% of its revenue ex-Domain is still exposed to the ad cycle, which is challenging at the moment.”

The Paris Olympics will help with advertising revenue and with collecting data from new registered users. Nine already has 22 million registered users, all valuable assets to sell to advertisers for when Google finally kills off cookies.

In the meantime, the new chair of Nine, Catherine West, the deputy chair who has been on the board since 2016, has work to do with the company’s culture. 

She has hard choices to make. Peter Wilkinson, a crisis PR and issues management expert, said CEO Mike Sneesby is in the frame if the directors decide to continue with more change.

Costello, in his last statement as chair, supported Sneesby but that's not binding on the new chair.

West can act now or wait for an external review of its newsroom culture following allegations of abuse of power and “drunken, lecherous behaviour”. 

“If Costello is just a start, and there are other changes at the top of Nine, it’s rejuvenating for the newsroom,” Peter Wilkinson told AdNews.

“It’s an opportunity to remind folks of the critical elements that make good journalism: great stories, accuracy and balance.

“To do remarkable journalism, however, you need a remarkable culture. It may be that needs work, from the outside looking in.

“To recreate that takes time. The board and management have to have the qualities and the skills to lift morale and motivate people. A pep talk isn’t enough.

“Here is the challenge: to date, they haven’t demonstrated those skills. The Darren Wick (former news director accused of harassment) catastrophe and the Peter Costello incident are evidence of blindness or wilful blindness at the top. Is their departure sufficient?”

West, the new chair, described the events of recent weeks as extremely difficult and de-stabilising for employees and other stakeholders.

"We are committed to ensuring, through our cultural review and other actions announced last week, that issues will be appropriately addressed," she said.

“The board and management are united in focusing on the well-being of our people in all parts of our business.

"At Nine, we do work that has an important value to the community and the board and management acknowledge their responsibility to ensure all parts of business, including our newsrooms, feel supported.

"We want to ensure our people can feel proud of our company and colleagues and the work they do.”

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