A savvy hand on APN's tiller
A few days before Michael Miller started as APN News & Media's new chief executive in mid-June, he took the opportunity to host the company's major shareholder, Irish telco billionaire Denis O'Brien, at a rugby union game. The risk was he was cheering on the other team.
"He supported the Lions and I supported the Waratahs. He showed his passion, as I showed mine," says Miller, grinning. The British Irish Lions thrashed the Waratahs 47-17.
Although Miller, who sits on the NSW team's board, felt the pain of defeat that night, it was a professional victory to have been able to host the combative entrepreneur and his son.
"He's enthusiastic. He's high energy. He's engaged without being directional," says Miller of O'Brien.
Miller's predecessor, Brett Chenoweth, lost the support of APN's largest shareholder, Ireland-based Independent News & Media, which O'Brien controls. This led to his abrupt resignation in February, along with then-chairman Peter Hunt and several independent directors, after they had pushed for a A$150 million capital raising that major shareholders were against.
Miller says the issue is dead, at least for the moment.
"There has been no discussion of a capital raising."
Miller followed up his rugby outing with another important meeting the next week. For less than half an hour, he had a brief introduction to APN's second-largest shareholder, Simon Marais, managing director of fund manager Allan Gray.
These two critical meet-and-greets - INM and Allan Gray combined own about half of APN's shares - were indicative of Miller's negotiating skills, and his experience in navigating around the often-volatile world of media.
Although just 44, Miller is one of Australia's most rounded media executives, following a career at News Limited (now called News Corp Australia) that spanned more than two decades.
Previously, he was managing director of Advertiser Newspapers in Adelaide, and was appointed group marketing director at 29 by Lachlan Murdoch, who was then News' local CEO.
Murdoch, a News director, told APN chairman Peter Cosgrove, when he rang to inform him of Miller's hiring, that: "You've got a good man. He's our loss, but your gain." Miller says Murdoch was "a great supporter of myself".
Miller started at News in 1991 as a research analyst in the group marketing department. By the end of his time there, he had also served on the boards of pay TV companies Fox Sports Australia (now wholly owned by News) and Sky TV in New Zealand (a former News investment).
It was this broad experience, covering newspapers, TV, and digital properties, that shot him to the top of the candidate list for the APN gig.
Miller, for his part, says he was attracted to the CEO role because APN has "leading brands in growth markets".
He cites the growth opportunities for Queensland, where APN has regional newspapers, as well as those for the radio and advertising sectors, which have been relatively resilient amid the advertising downturn.
But he doesn't underestimate the task ahead of him for the trans-Tasman media group that owns newspapers - including the New Zealand Herald - radio, outdoor advertising and digital assets, and whose market capitalisation has shrunk to A$189 million ($214.4m).
Although only six weeks into the job, Miller has identified improved advertising sales as his first priority.
"People know the [brand] names but don't actually connect them together," he says.
"We need to connect the dots a lot better." Not only for advertisers, but also ad sales staff.
Miller says APN has been under-selling its assets, and that it is also behind competitively, compared to integrated ad-sales models at News, Seven West Media and Nine Entertainment Co.
"We need a better collaboration between those wholly and part-owned APN businesses. I see that as being an opportunity, of unrealised value, for our key customer group, being advertisers, about how we operate and work together in taking a market proposition forward."
However, he does not propose an integrated sales team that is "collapsed all in together".
Miller's background working in different parts of Australia - Sydney, Melbourne and Adelaide - as well as his decade spent on the Sky TV board, have convinced him that local markets need to be serviced separately.
"You need to understand those different communities," he says. "You're serving the community first and foremost, particularly in the print businesses. I think, by bundling everything together from a commercial point of view, you're actually not always meeting the client's needs. Put the customer first. If they just want radio, don't complicate it."
This attitude also reflects his background growing up in the regional NSW town of Muswellbrook, where his father was a surgeon and his mother a high school teacher.
Miller also wants to explore working with other media companies, such as News and Fairfax. "We need to be far more flexible in improving our proposition to the market," he says.
APN previously had a deal with Fairfax to leverage its online classifieds websites in Queensland, but this has been cut back to real estate only, with APN going alone on jobs and cars.
Miller's second priority, he says, is to pay down debt with free cash flows. The board has mandated that APN's $465m in net debt last December will fall another $40m-$50m in 2013.
APN's debt has been a contentious issue, with the previous management and chairman insistent that it required a capital raising. APN's gearing is relatively high for a media company, with a net debt to earnings before interest, tax, depreciation and amortisation (ebitda) ratio of three times.
"We don't have a target ratio at the moment, but south of three," is all Miller will say on the matter.
The new APN boss pays credit to previous management for already doing a lot of the heavy lifting in cutting costs and undertaking strategic reviews. However, he is reviewing those strategies in order to understand the options, and decide on an appropriate asset mix.
He doesn't rule out asset sales. "You would have to consider every opportunity that came along."
On the other hand, he is not looking at any acquisitions at the moment.
APN has explored the options of selling its half-share of APN Outdoor to its partner, private equity group Quadrant, and selling its half-share in Adshel to its partner in that street furniture business, US-based Clear Channel.
The latter deal could result in APN receiving Clear Channel's stake in their radio joint venture. Miller is non-committal about the status of these particular options.
"There has been discussions for at least four years. It's not new."
Another challenge is to sort out the problematic online retail sale company brandsExclusive, for which APN paid $66m for an 82 per cent stake last year. It lost money up to December.
Also, oOh!media's acquisition of the Ten Network's outdoor business, Eye Corp, last year has catapulted it into the number one position in the outdoor sector, changing the competitive dynamics for APN.
"We've got to respond," says Miller.
The APN boss says he encouraged by the "strong reach" of its newspapers compared to overseas papers and thinks the industry needs to be more confident about them.
Yet papers remain APN's weak division.
A launch of digital subscriptions for the New Zealand Herald is slated for about one year - most likely a metered model - but Miller believes it is premature to introduce the same for regional Australian publications.
Another initiative is the launch of a digital streaming channel, called iHeart, through its radio businesses in Australia and New Zealand, which APN will licence from Clear Channel.
Sunday Star Times