NZME's Governance Gren(on)ade

James Grenon’s campaign to reshape NZME’s board signals more than shareholder activism — it’s a reminder of how fast governance risk can move from footnote to front page.

Fittingly for an industry built on storytelling, the media sector has spent much of the past year reporting on itself – talk about a circular economy. From Discovery’s New Zealand withdrawal to Sky’s rugby negotiations and now to NZME’s boardroom battle, the coverage has been nonstop. The latter has become particularly compelling in recent weeks, as investor James Grenon mounts an aggressive campaign to reshape the company’s board.

Media companies, including NZME’s own flagship, the New Zealand Herald, have reported extensively on the unfolding boardroom drama, turning a corporate governance issue into front-page fodder.  But for shareholders and analysts alike, this isn’t just an entertaining subplot – it’s a real-time case study into governance risk and the fragility of intrinsic value in the face of unconventional shareholder activism.



Shareholder activism or something else?

Since Grenon was disclosed as a 9.97% shareholder of NZME in early March, he has engaged in a rapid and aggressive campaign to reshape NZME’s board. In the space of a few weeks Grenon has penned three letters to the company and its shareholders. Each pointing to what he sees as a consistent decline in operating performance and calling for the removal of the existing directors and the appointment of a new board chaired by himself and filled with his associates.

Each letter, a worthwhile read, has suggested varying board structures with varying levels of support from other NZME shareholders. While Grenon has generously indicated that CEO Michael Boggs could remain in place, it’s a backhanded endorsement at best – Grenon has simultaneously criticised Boggs as egregiously overpaid and blamed him for what he describes as a “consistent pattern of overpromising and under-delivering” since Covid. On paper, the campaign may look like shareholder activism; in practice it feels Grenon wants to control the company with a 10% shareholding – it feels more like a stealth takeover, with no takeover premium in sight. 

To be clear, board renewal is not inherently negative. Companies evolve, and so must their boards. The media sector itself has been constantly evolving, striving to survive in an increasingly digital world that doesn’t value traditional print or tv news. But the pace and unilateral tone of Grenon’s proposal, combined with a lack of transparency about his long-term vision for the company, should be cause for pause to shareholders. The absence of a clear strategy or articulation of how a new board, with relatively minimal media experience, would improve NZME’s performance suggests that this is less about unlocking value and more about control.

Valuing the G in ESG

From an equity analyst’s perspective, this situation exemplifies one of the hardest challenges we face; valuing ESG risk. When investors talk about ESG, the conversation tends to gravitate towards the ‘E’ and the ‘S’ – carbon footprints, diversity metrics, supply chain ethics. However, in my career, I have found it’s the ‘G’, the governance, that too often proves the most destructive to shareholder value. How do you build a DCF that accounts for a stealth board coup? What discount rate do you apply to the risk of a governance blow-up? How do you model the erosion of management credibility, the drift in strategic focus, or the market’s response to uncertainty when the boardroom itself becomes the battleground?

These questions might sound theoretical, but they are central to the analyst's task of undertaking a risk-adjusted valuation. Yet it is hard to find frameworks that adequately quantify governance risk. Unlike cost of goods sold or net working capital, governance isn’t cleanly input into a model. It reveals itself in sudden stock price drops, shareholder revolts, or long-term underperformance that seems inexplicable through financial metrics alone.

We've seen this play out countless times before. Sometimes, as with ASX-listed Wisetech, the signs are obvious and the fallout immediate. Majority shareholder and founder Richard White let the lines between his personal and professional life blur too far, prompting the entire board to resign after failing to reach a resolution. The market reaction was swift—shares dropped 30% in a day, and the stock became effectively un-investable for many institutional funds without an independent board to steady the ship. While a new board was swiftly appointed, it has done little to restore confidence. The trust was broken; the board widely seen as a rubber stamp for White’s decisions rather than a genuine counterbalance. The lesson was clear: even well-capitalised firms with solid market positions can be thrown off-course by governance instability.

Company specific or an industry in decline?

NZME’s current position should have been relatively stable. The challenges they have faced are not business specific but indicative of a structural shift in the world of media. Discovery’s withdrawal, Stuffs sale for $1, TVNZ’s lack of profitability – these are all symptoms of the structural shifts that echo globally. NZME has largely maintained profitability, reintroduced dividends and continued to pay down debt as they execute on a strategy that requires digital media growth to eventually offset the decline of traditional print media. One Roof remaining part of the business is integral to the offset of declining legacy revenue streams.

All that operational progress now risks being overshadowed by uncertainty at the top. True minority shareholders need to think carefully about what kind of precedent this sets. If a shareholder can accumulate a modest stake, and then demand board seats without a public plan, it introduces a new risk factor into every investment decision.

In a country where capital is relatively concentrated and liquidity is limited, changes in ownership structure and governance can have outsized impacts. Activism in itself is not a problem; in fact, it can be healthy. But activism without accountability, transparency, or a clear value proposition is a different beast altogether.

The problem as I have said, is that traditional valuation tools don’t help much here. Analysts can run scenarios, adjust WACCs, and flex revenue assumptions. But when the threat is a sudden shift in governance — especially one that could change strategic direction, capital allocation, or risk tolerance — we’re in the realm of judgement, not mathematics.

So how do we manage this risk? Partly, it’s about qualitative analysis. Understanding the composition of the share register and assessing the strength and independence of the board can be as important as poring over financials. It’s also about engagement. Analysts and institutional investors have a role to play in holding boards accountable, but also in protecting them from undue influence. That might mean asking harder questions on investor calls, pushing for clearer communication around governance, or supporting board structures that preserve strategic continuity.

For NZME, the coming weeks leading into the AGM will be telling. For investors, the decision is simple in theory but difficult in practice: back the new broom, stay the course and hope the storm passes or exit in anticipation of further instability. Either way, it’s a stark reminder that governance risk is not an abstract concept.


Paige Hennessy is an Equities Analyst at Octagon Asset Management

Disclaimer: This article has been prepared in good faith based on information obtained from sources believed to be reliable and accurate. This article does not contain financial advice. Some of the Octagon portfolios own securities issued by companies mentioned in this article.

Octagon Asset Management is the investment manager for Octagon Investment Funds and the Summer KiwiSaver scheme.