DMG Radio has condemned the corporate governance standards of rival Austereo group in a war of words that centres on the release of what DMG says is “misleading and inaccurate information” about the company to investors in London.
Paul Thompson told radioinfo Austereo’s actions are “unethical” and that it is not the first time Austereo has acted unethically against DMG.
It all started with the appearance in the UK of a 13-page report printed on Austereo letterhead. The report, which Austereo says was prepared for one private individual and was not publicly released, is critical of DMG Radio Australia’s financial performance and hints that the UK parent company might withdraw from its investment in the Australian operation.
Austereo CEO Michael Anderson admitted in the Australian Financial Review that he is responsible for the document. “We looked at how much DMG has spent buying licences here and how much it would need to spend to get the next three licences… We then projected DMG’s returns over the next five and 10 years, which would be abysmal. I wanted to make sure DMGT understood that,” Anderson told the Financial Review.
Disappointed DMG CEO Paul Thompson told radioinfo: “The document is not only misleading with regard to DMG’s present and future performance, but is both factually and arithmetically flawed.”
He believes the report is designed to put pressure on DMG’s parent company DMGT to discourage them from funding bids for the three new capital city FM licences which will be auctioned after Easter.
radioinfo: Have you seen/do you have a copy of the report that was released?
Thompson: Yes, I have. It is significantly misleading and inaccurate. Whilst some of its content can be explained away by sloppy workmanship, other elements appear more Machiavellian.
radioinfo: Are you angry about it?
Thompson: I am disappointed more than anything else. After the “bogus letters” scheme was exposed, I thought that would be the end of this sort of behaviour.
radioinfo: What was the reaction on UK financial markets to this report?
Thompson: I don’t know.
radioinfo: What has DMGT been doing in the UK to counteract the impact of the report?
Thompson: I think DMGT’s reaction combined astonishment at the report’s arrogance, and amusement at its author’s incompetence. They are taking no action that I am aware of.
radioinfo: Has this made you more determined to win the bidding for the new licences?
Thompson: It will have no bearing on our investment decisions.
radioinfo: What is your opinion of Austereo CEO Michael Anderson?
Thompson: I don’t have any comment.
Referring to the ‘Bogus Letters’ case Thompson says: “This behaviour is particularly regrettable because it is not the first time that DMG has been the victim of an unethical Austereo related attack.”
In the two years leading up to the acquisition of the Sydney 96.9 FM frequency, DMG was the target of more than 50 ‘bogus letters’ which were sent to the media and regulators criticizing DMG’s regional radio operation. An investigation later found that the letters had been sent by an employee of Austereo’s PR agency and were designed to “denigrate and injure” DMG and “advance the interests of Austereo.” (Click below for details of 2001 bogus letters case)
Thompson says he hoped the exposure of the ‘Bogus Letters’ case in 2000 would have “led to a change in culture at Austereo and seen the end of dirty tricks and unethical behaviour.”
“This rogue activity is not consistent with what the business community today considers to be acceptable principles of corporate governance.”
Thompson is taking advice on whether the matter should be brought to the attention of the Australian Stock Exchange.
A spokesperson for The Stock Exchange told radioinfo it had no jurisdiction to investigate a corporate governance matter such as this because it did not appear to affect the continuous disclosure requirements regarding Austereo’s share price, but The Australian Companies and Securities Commission told radioinfo that, as a matter of principle, it may be interested in corporate governance matters such as this.
Austereo CEO Michael Anderson told radioinfo he has little to say about the matter except: “Paul needs to chill out a little bit. There’s been no unethical behaviour.”
Austereo declined to make the report available to radioinfo.