O'Reilly quits - and Independent shares soar

Not a very sympathetic send-off for Sir Anthony O'Reilly, who's stepping down as INM boss...

Last Updated: 31 Aug 2010

Sir Anthony O’Reilly said today that he intends to step down as chief executive of struggling newspaper group Independent News & Media, handing over the reins to his son Gavin – and the company’s shares promptly jumped by 80%. Admittedly the company’s had a hard time lately, but it’s not exactly a very dignified send-off for one of Irish industry’s top business leaders. On the other hand, the peaceful succession does at least suggest there’s been a rapprochement in the group’s ongoing boardroom wrangle…

INM’s stock has been absolutely hammered this year; at one stage it was trading at €2.30, but closed yesterday at €0.10 (a fall of about 96% - which puts today’s slight bounce into context). Like most newspaper groups, INM is struggling desperately with falling ad revenues, and its flagship Independent newspaper is losing millions a year. This has led to a huge falling-out between O’Reilly and telecoms tycoon Denis O’Brien, who’s the second-biggest shareholder (with 26% as opposed to Tony’s 28.5%). O’Brien has been loudly demanding that O’Reilly should trim down the board and sell off the Indie, much to the latter’s obvious annoyance.

However, today’s statement suggested that the two warring factions may be trying to bury the hatchet. Sir Anthony remains the biggest shareholder, but Gavin (who was previously COO) is now the only O’Reilly on a slimmed-down board (from 17 to 10), which includes three O’Brien appointees. The suspicion is that the banks pushed them into this, ahead of a €200m bond repayment in May, but it’s still a step in the right direction (interestingly Tory MP Ken Clarke, who’s the cover star of next month’s MT, gets to keep his job). On Radio 4 this morning, Gavin said ‘Denis…understands what we’re trying to do’ – a far cry from his father’s often belligerent approach.

But despite the group’s recent struggles, the INM board was quick to pay tribute to O’Reilly today, pointing out that when he took the business over 36 years ago, it was worth just €12m. ‘From that starting point, he immediately applied his flair, vision and enormous energy to create a €1.5 billion worldwide communications group,’ it said. His was, they added, ‘one of the most remarkable executive careers in Irish history... Tony has been a significant business leader for more than 45 years and has been a key figure in the making of modern Ireland.’ Unfortunately this looks a bit less impressive now than it did a few years ago, but we shouldn’t forget O’Reilly’s past achievements.

What happens next is anyone’s guess. The Guardian reckons this could lead to the sale of the loss-making Indie – but either way, shareholders will hope that O’Reilly junior and O’Brien can do something to stop the rot. Given the industry’s current state, the odds are stacked against them...

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