A media analyst’s clash with SCA’s board: ‘You guys cost $1.156m’
Retired analyst Roger Colman’s blistering questions at Southern Cross Austereo’s AGM; could Kerry and Ryan Stokes be (temporarily) booted off Seven’s board?
They don’t make hard-nosed analysts quite like they used to.
Case in point: former broker Roger Colman stood up in the front row before Southern Cross Austereo’s board at its annual general meeting on Friday – and unleashed. Colman, some may recall, was CCZ Stratton Equities’ main media man for decades.
As Rear Window mused upon his retirement in 2019, he was already being dubbed a “leading media analyst” back in 1986.
On Friday, he took the roving mic and noted he held 1.2 million shares, indirectly, in Southern Cross. He had been speaking to former Southern Cross staff. He wasn’t happy.
Colman started by saying the board should “vigorously” pursue a proposed takeover offer from ARN Media, which, on his calculations, would deliver a combined company with a share price of $2.42 and market cap of $1 billion by early 2025. “It’s an enormous gain to have this combine occur,” he said.
Then, he turned his focus to the board itself. Southern Cross’s cost-cutting, chief executive John Kelly said, had exceeded expectations. Instead of $10 million, some $15 million in recurring costs had been pulled out.
Colman is the sort to hand-write his calculations on a large notebook sitting on his lap. He calculated to three decimal places. “Put in place some further cost reductions in terms of board costs,” Colman bluntly said. “I mean, you guys cost $1.156 million, I think it is. Channel Nine has got $1.3 million in director costs. They’re nine times your size in EBITDA.
“I think it’s pretty important that this board gets culled down to size, rather than talk about how much it took off staff, etc, etc, during the year,” he continued. “It’s up to this board to reduce its size, expenditure, to make a demonstration to shareholders you’re on our side.”
Southern Cross chairman Rob Murray did note that the board had cut costs, choosing not to replace one member who retired.
But inspired by Colman, let’s introduce a new metric: board cost versus EBITDA. For every dollar paid to the board, how much does it generate in earnings?
According to the Colman Index, Nine Entertainment, the publisher of The Australian Financial Review, is at $539.70. oOh!media follows with $266.80 in earnings for every dollar paid the board. Then it’s Seven West Media ($215.20), ARN ($93) and Southern Cross ($66.60).