BOTW: Inside the The Market Herald's civil war; winners have parties; Media agencies' $8bn year
Welcome to Best of the Week, written on Friday afternoon and Saturday morning at Sisters Beach, Tasmania. Between leaving for a trip to Sydney on Monday night and getting home on Thursday, I’m glad to report that summer got to Australia’s most beautiful beach.
I was in Sydney to speak at Financial Services Marketing Club, a new invitation-only event organised by Dianomi.
Along with marketers, were bigwigs from several of the media operations focused on the sector.
During the evening, conversation turned repeatedly to the plans of The Market Herald, which still puzzled many of those in the room. In early October, TMH - which also owns investment forum Hot Copper - bought classifieds site Gumtree, Carsguide and Autotrader. TMH Boss Jag Sanger set out his stall publicly for the first time in an interview with Unmade back in September.
He revealed plans to launch a new national weekly business newspaper alongside a push into lifestyle publishing and a 24 hour business news streaming channel.
Yesterday Sanger was ousted, in extraordinary circumstances, which I’ll be revealing for the first time below. We’ll also be covering today the big October SMI number, and Ten’s cancelled Christmas party.
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How the ASX’s fastest growing media company imploded
Back in November, a few weeks after The Market Herald completed its $87m takeover of Gumtree, CarsGuide and AutoTrader, staff were instructed to gather in the open plan kitchen area of the Sydney office.
The team had already been through upheaval with 35 of the 250 or so staff being made redundant as the new management attempted to shake up the Gumtree culture.
They were about to meet Gavin Argyle, the ASX-listed company’s biggest shareholder. One of four directors of TMH, Argyle had flown in from WA.
Managing director Jag Sanger hadn’t made the trip from the company’s Perth headquarters, but he joined the meeting by video to introduce Argyle to the team. “You’re looking very dapper today,” he complimented Argyle before completing a brisk, businesslike introduction.
Argyle, wearing tight white jeans, with his hair pulled back into a short ponytail, got up from his bar stool and began to pace the room.
He would talk for the next 80 minutes or so, without notes. As his monologue continued, shifting to one half-completed point after another, the staff began to swap messages:
“I feel like I’m watching someone processing a brain aneurysm.”
“Elon has entered the building.”
“It’s so embarrassing.”
“Three words: We. Are. Fucked.”
The appearance from Argyle was the first signal to the wider staff of a schism within the small board of a company that had ambitions to not just be a media player in Australia, but the wider world.
Based in Perth, far from the east coast media scene, The Market Herald had, mostly unnoticed, been growing steadily.
Sanger was the driving force for the ASX-listed company. His resume included media, with two years leading Fairfax Media’s mergers and acquisitions; strategy, including five years with PWC; and classified publishing, including nearly two years as director of CarsGuide and three years with the eBay-aligned Matchacar.
TMH has become a big player in the financial space. It owns Hot Copper, the unruly digital forum where small investors discuss ASX investments. And two years ago it launched The Market Herald as a video-led news operation covering the smaller end of the ASX which goes mostly uncovered elsewhere.
TMH also pushed into Germany and Canada, where the company acquired forum Stockhouse.
However, the acquisition of Gumtree, CarsGuide and Autotrader - known internally as GCA - would make the wider media world take notice.
Although Sanger was the only media person on the board, he was a relatively small shareholder in the ASX-listed company. The biggest stake sits with the Argyle family, including mining investor David Argyle, now in his mid-70s, and his son Gavin, who sits on the board. The Argyles hold about 40% between them.
The strategy for the GCA acquisition had been driven by Sanger. Vendor Adevinta, (which bought eBay for US$9.2bn back in 2020) gave generous settlement terms on the $87m. Most of the payment is due at the end of this month. TMH’s financing of that is not yet in place.
On Monday, the company held its AGM. To shareholders not in the know, things looked fine. The market capitalisation ticked upwards to $137m. Sanger presented a slide showing the rationale for the GCA acquisition and an ambitious road map for further growth.
The next stage of the plan is the launch of the TMH One network, and a weekly printed newspaper, intended to capture luxury advertising.
I can reveal that Sanger had lined up the well connected Liam Walsh to help build the TMH network, as the company looks to monetise the audience across TMH and GCA. Walsh has run big digital businesses in Australia including Microsoft Advertising, Facebook Australia and Amobee. Whether he gets involved now, remains to be seen.
Over the last three weeks, behind the scenes, the relationship between Sanger and the Argyle family fell apart. Although a non-executive director, Gavin Argyle wanted greater involvement, and perhaps more credit, for the company’s growth.
In part that explains why Argyle had shown up in the Sydney office - an unusual move for a non executive director of an ASX company.
During that meeting, Argyle opened by telling staff that although he hadn’t prepared a speech, he had Googled for information about how to prepare a speech. He had discovered quotations about ‘if you don’t prepare, prepare for failure’ before being sidelined by a Jordan Peterson self help channel, he confided.
As he continued to bounce from topic to topic, he informed staff that he would be talking about feelings, and began to question Sanger’s strategy.
While the redundancies were in response to Gumtree’s falling revenues - which had halved over the last couple of years as competition from Facebook Marketplace ramped up - they were also about trying to create a new culture within the GCA team by ousting the old guard. The new management were sceptical of Gumtree’s recent repositioning as a circular economy company rather than simply as a good place to buy and sell second hand stuff.
Argyle wanted to distance himself from those redundancies.
”My dad’s the largest shareholder, which puts extra responsibility on me in order to maintain corporate values and his values, and it struck me the severity of staff cutbacks wasn’t within the core values of out family,” Argyle told the staff.
He began to tell them about a holiday he had with his grandfather as a four-year-old boy, where they ate witchetty grubs. “There was this black boy, I think they call it, he calls it black boy, he was part aboriginal so, fuck it, call it black boy if it’s good enough for him,” he told the bemused audience. He appeared to be starting to make a point about the renewal that deliberately lit bushfires bring to the environment, but wandered away from the point before he could finish it.
Later, he tried to motivate the team. “I have lots of responsibility for it because my dad owns all the shares and who else but me is gonna come in when situations arise where it’s somewhat dark?”
More than an hour in, when he finally opened the floor to questions, Argyle was asked about what the management structure of the organisation would be. For weeks, the company had been working on Project Polaris - a five streamed exercise covering people, brand, vision, technology and advertising.
The plan, as yet unannounced, was for Sanger’s partner, Sarah Lenard, to be interim CEO for the GCA group. Lenard had come up through a strategy and communications background and was chief strategy officer of TMH. The relationship between Sanger and Lenard had been declared to the board and was no secret in the TMH office.
A questioner wanted to know when they would find out the new structure. Argyle informed them: “Everyone is their own boss. The best businesses are the ones where you come in and you don’t feel like you’re working for someone.”
He then moved on to his own management theory. “Perth has a lot of SAS people. The SAS business model is a model that moves to the optimum level because if you don’t move fast in a war you get killed. The threat of death focuses people.”
“Those SAS guys are all equal. Anyone from a private up to a sergeant can challenge anyone to a fight. You want to have the decisions made on the ground. That’s an extreme business model but that’s how you move ahead in a business organisation.”
This week, it all came to a head. Sanger took complaints about Argyle to the board, and in turn Argyle moved against him, albeit in a slightly less deadly fashion than the SAS.
On Wednesday the company called a trading halt. Exercising their rights as share holders, the Argyles issued a Section 249D notice, which obliges the company to hold a general meeting, to vote on the removal of Sanger as a director.
Yesterday there were two further notices. The company was suspended from ASX trading “pending the release of an announcement regarding an update on financing initiatives.” Those watching the company will be curious about whether it still has funding in place to complete the GCA purchase, or whether the banks will be scared off by the turmoil and the departure of the person who masterminded the acquisition.
Yesterday afternoon came a further announcement. Sanger, while still a director, had been removed as managing director and placed on leave. That was no surprise. His goodbye email to staff had already leaked to the press.
Tommy Logtenberg, previously the chief financial officer at GCA, will become acting CEO, while Argyle and chairman Alec Pismiris increase their involvement.
While Lenard’s employment status is unclear, she appears to be out of the organisation too, having not been in the office for some days. At least one other executive has resigned in protest.
A compliment for Sanger is that competitors at places like Carsales and Ausbiz must be delighted by his likely exit. TMH is likely, in the short term at least, to be a much weaker competitor.
Those involved are not publicly talking. Pismiris, Sanger and Lenard all declined to comment, while the number listed on Argyle’s Capital Investment Partners website, where he and Pismiris are listed as directors, was out of order.
The coup led to intense scenes at the company Christmas party at Manly Pavilion on Thursday night. I understand that one member of staff smashed a wine glass in anger.
For Australian media companies, there have been few weeks like it.
Losers have meetings
One of the most beloved sayings in Australian media - attributed to the late Sam Chisholm when he was boss of Nine - seemed appropriate this week.
As Chisholm liked to say: “Winners have parties, losers have meetings.”
Nine completed a big year - which included winning the key TV advertising demographic of 25-54 - with a massive party at The Ivy in Sydney.
Meanwhile, the Daily Mail reported that Ten cancelled its party.
According to analysis from TV Blackbox, Ten experienced its lowest ratings share since OzTam began.
A quote from another former Nine boss - David Gyngell - also seems relevant here: “Momentum is harder to get than it is to go away. It’s harder to get up the hill than it is to go down the other side.”
That was Ten’s problem. Early this year, it found some momentum with the launch of Hunted, which was the biggest new hit of the year. But failed commissions - like The Real Love Boat, The Traitors and The Challenge - stalled its finish to the year.
Taking a decent slice of the cricket rights seems like a key aim for Ten. Seven or Nine may try to grab the Tests, even if they don’t want Big Bash. One question will be whether Ten - with so much at stake - holds its nerve and insists that it wants everything, rather than being stuck with the leftovers.
SMI: An $8bn media agency market
Standard Media Index’s October numbers dropped this week.
For an economy supposedly on the brink of a downturn, things sure don’t seem to be stalling yet.
Overall, October was up by 4.1% year on year.
But most interesting were a couple of numbers SMI does not often share: agency spend in dollar, rather than percentage terms.
According to SMI, media agency spend for the first four months of the financial year is at an all time high of $3bn, while the calendar year has hit a high of $7bn for the first ten months. That suggests we’ll see agency spend for 2022 of well over $8bn.
Unmade Index: A crop of green
The Unmade Index crept back above 700 points on Friday, rising by 1.5%.
The best performing broadcaster was Seven West Media, which has moved around a lot in recent days. Yesterday’s 3.53% rise took Seven almost back to a $700m market cap. Meanwhile Nine is trading close to its best price in six months.
Time to let you go about your Saturday.
I’ll be back with Abe Udy on Monday for Start the Week.
Have a great weekend.