The underlying reasons behind the brutal departure of Jeff Howard as CEO of Southern Cross Media Group are still unclear but some hints can be gleaned from a briefing of market analysts by the media group.
Howard, the former CEO of Seven West Media, was appointed chief executive of the new merged entity on January 7 and, according to the financial statements lodged with the ASX, “retired” February 23.
The abruptness of the departure is confirmed. Late last week Howard was still actively preparing for the results announcement this week, insiders said.
Drafts papers quoted him on presentations being prepared to be lodged with the ASX. All that had to be changed for the actual announcement Tuesday.
The company, which started operating as a combined SCA and Seven West Media group only last month, announced the “immediate” departure on Monday, the evening before the release of December half results.
But those results, when revealed, were unremarkable and not a reason for a CEO exit.
Southern Cross Media Group, in its first combined post-merger results, for both television and audio, reported total revenue down 1.5% to $1.008 billion in the half year to December.
Television revenue fell 2.1% to $712 million while audio was up 3.2% to $216.5 million.
Market analysts described the result as "solid," with audio slightly softer than expectation but offset by stronger than expected TV.
UBS analysts said January trading conditions look strong for TV at +3% compared to aggregated media agency numbers via SMI of -15% in January.
The first wording to come from SCA on the CEO’s departure said the company wanted to "accelerate” the delivery of its strategy with “new” leadership.
At a briefing on the results, questions were asked of Heith Mackay-Cruise, who is acting as interim executive chairman in the absence of a CEO. Mackay-Cruise became chair after billionaire Kerry Stokes stepped down, whose absence on the board may have been a factor in the CEO departure, according to one report.
“Do you mind elaborating a little more?” Brian Han, director at Morningstar, asked Heith Mackay-Cruise during the briefing.
“Was there an untenable disagreement on how to integrate the merger, or the future vision of how TV and radio businesses put together?”
The answer didn’t directly address the question
“First and foremost, the strategic intent of bringing these two businesses together to create a multimedia platform offering … that still holds true today and is the core essence of why we pulled the two businesses together,” said Mackay-Cruise.
“The key now is accelerating the delivery of that strategy and positioning our group to more quickly realise the benefits of our merger, and that culminated in changes to the leadership team, as announced.”
The first statement from SCA on the departure appeared to indicate new leadership was needed to “execute” the company’s plans.
“As the company accelerates the delivery of its strategy, SCA’s newly constituted board has determined it is the appropriate time to appoint new leadership to take the group forward and execute on our plans,” Mackay-Cruise said in a statement Monday night.
“On behalf of the board, I would like to thank Jeff for his efforts across the period of transition, with the successful implementation of the Scheme of Arrangement and creation of a market-leading, multi-platform media company now complete.”
Brian Han at Morningstar, in a note to clients post the SCA briefing, noted that the appointments post Howard's exit -- John Kelly as interim CEO and Toby Potter chief transformation officer -- were from the Southern Cross camp and not the television side of the combined group. And an outsider, Scott Butterworth, is now the CFO.
"We don't know why the seemingly sudden changes were made, less than two months after completion of the merger," Han said.
"What we do know is that, for shareholders, speed and urgency are of the essence."
The board has appointed an executive search firm to undertake a global search for SCA’s next CEO.
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