Two factions in another round of public hostilities

ANALYSIS:THREE BECAME two on the Independent News & Media board, as the group's largest shareholder, Denis O'Brien, lost one of his lieutenants.

Superficially, it was a row about the definition of an independent director, with a few digs about IN&M’s online savvy (or lack of it) thrown in. Then there was an entertaining competition to see how many times each side could label the behaviour of the other side “bizarre”.

But it was, of course, another round of public hostilities between the two factions on the board – those loyal to chief executive Gavin O’Reilly and the “affiliated directors” who are business partners of O’Brien.

One shareholder present at the company’s agm questioned why he should vote to re-elect Leslie Buckley or his allies Lucy Gaffney and Paul Connolly given that they had, astonishingly, failed to approve the group’s financial statements – officially because another director, Bengt Braun, is one of more than 100 members of the board of a trade body of which O’Reilly is the outgoing president.

“She does a great job – a great job,” enthused another shareholder, seemingly in defence of Gaffney, as he elliptically referred to a past kindness on her part.

“Better to have the enemy within,” was his punchline advice.

There was a more sober cameo from billionaire Dermot Desmond, who sent a representative with a two-page statement.

John Bateson, finance director at Desmond’s firm IIU, expressed “grave disappointment” at the speculation that Buckley was soon to be forced off the board, given that he was “the director most qualified in digital commerce” and that it “remains a company of very modest internet assets”.

Bateson described the destruction of shareholder value at the company since 2007 as “shocking”.

So it’s a good thing, then, that Desmond – unlike O’Brien – has only invested in the company very recently.

Still, it appears he is on a mission to break the record on the shortest length of time between share purchase and disillusionment. Bateson said Desmond, whose stake is somewhere below 3 per cent, had voted in favour of all resolutions, including the re-election of all directors.

“However, as far as we are concerned, today is Day Zero.”

His eyes on the verge of rolling, O’Reilly chose to ignore the admonishments and concentrate on the implied compliment of Desmond’s investment.

“We’re particularly pleased that Mr Desmond has bought into the company on value grounds,” he noted.

The more ominous alternative reading is that Desmond is stake-building ahead of a bid by O’Brien.

Digital revenues have risen 13 per cent, O’Reilly later protested, in response to very similar sniping from Desmond and Buckley.

Indeed, O’Reilly’s agm presentation devoted significant time to its intensifying digital activities.

“I’ll never get to present the Late Late Show, so here’s my one opportunity to say ‘there’s one for everyone in the audience’,” he said, offering shareholders a €25 voucher for GrabOne.ie, a Groupon-style deals website offering discounts on coffee, pizza, “even leg waxing”.

They would prefer a dividend, he acknowledged.