ABC appoints Michelle Guthrie after flawed selection process
The problems facing the ABC’s incoming managing director, Michelle Guthrie, are various and substantial. There’s a bush backlash. A decline in locally made drama and programming.
The declining share of free-to-air TV and radio audiences. A now frenzied, competitive online and mobile news and video streaming market, with aggressive global players trying to dislodge and divert your eyeballs.
A prime-time TV schedule dependent on other broadcasters’ comparatively cheaper off-the-shelf drama, documentary and light entertainment shows, mainly British. Risk aversion and continuous downsizing forced by a $254 million reduction in operational base funding to 2018-19.
The closing down of the loss-making ABC retail shops around Australia from February.
And on top of all this an impecunious Turnbull government in deficit distress with three-yearly funding negotiations soon to be completed.
Guthrie, 51, formerly of News Corp UK and Asia and Google Asia, has accepted the job after a fraught ABC board selection process, with the expensive aid of headhunters Egon Zehnder.
Without detracting from her appointment, it is worthwhile examining the selection process adopted by the national broadcaster.
The appointment of a managing director for a statutory five-year term is the duty of the ABC board and not the government. It is the one time an ABC board gets to display its allegedly independent discretion.
But the merit selection process from August to December in 2015 has left many applicants, including former News Corp Australia chief executive Kim Williams, unhappy. And it was not just the demeaning psychometric testing – to assess intellect, emotional intelligence, personality and values – that put them off. Letters of complaint have been lodged on various grounds.
Some applicants complained the goalposts were moved from the time the ABC board first advertised seeking applicants for the managing directorship.
“I was told ‘you don’t scale’ – meaning I hadn’t run a billion-dollar operation employing at least 5000 employees,” said one applicant. “This wasn’t in the advertised criteria.”
To begin the process, Egon Zehnder compiled a longlist from applications and those agreeing to have their names placed on it. In consultation with the ABC board, this was culled to about seven external and internal candidates on what some candidates were told was a “scaling” elimination criterion. Egon Zehnder then invited these candidates to formal interviews with a delegated subcommittee of ABC directors, which included the ABC chairman, James Spigelman.
According to my informants, Kim Williams had been strongly encouraged by Spigelman, a close friend, to have his name placed on Egon Zehnder’s longlist. Williams initially resisted, telling Spigelman that his candidacy would likely become a controversy and in the end he would not get the job. Spigelman remained insistent. Williams, who obviously wanted the job, acquiesced. News that Williams’ name was on the longlist soon leaked, attracting adverse publicity in the Murdoch press and a tactically placed putdown in a Fairfax gossip column.
In an ethical dilemma of his own making Spigelman, appropriately, absented himself from Williams’ interview panel after having declared their friendship. This interview was conducted by ABC directors Simon Mordant and Matt Peacock. Williams found himself dropped from the next stage of the process, and did not proceed to an interview with the full ABC board. He has not spoken to Spigelman since.
Among the others eliminated in the Egon Zehnder culling processes and then by a meeting of the full ABC board called in early December to consider reports from the subcommittee interviews were: the current managing director of SBS, Michael Ebeid; the chief executive of Sky News, Angelos Frangopoulos; the ABC’s director of television, Richard Finlayson; ABC director of digital network Angela Clark; ABC chief operating officer David Pendleton; News Corp executive Brett Clegg; a former ABC executive and director, Julianne Schultz; and a former head of ABC Radio, Kate Dundas.
Complaints about the process, which go beyond bruised egos and understandably hurt feelings, still resonate among many of these applicants.
Only two people were interviewed by the full ABC board for leadership of Australia’s “most trusted and creative media organisation” and the salary of about $1 million that goes with it: Guthrie and an “impressive” internal candidate, David Anderson, a longstanding ABC executive and current director of corporate strategy and planning. Anderson had been seconded to assist with then communications minister Malcolm Turnbull’s efficiency review led by Peter Lewis, a former Channel Seven financial executive who is now an ABC board director on Turnbull’s nomination. Anderson had also been instrumental in the ABC’s restructuring following the 2014 budget cuts.
Some directors believed that appointing Kim Williams as managing director at the ABC was worth the risk of retribution from a provoked News Corp because of Williams’ demonstrated leadership in change-making and content commissioning. But it appears from my discreet inquiries that he was dropped because of “serious misgivings” held by an unquantified but clear consensus. There was no vote on dropping Williams from the process. Spigelman did not fight for him on the basis of merit. Although the friendship is expected to survive, Williams has lodged a letter of complaint to Spigelman about his merit selection methods.
Spigelman’s guiding hand in the process seemed, on my inquiries, to be more focused on the ABC’s relationship with the prime minister than fear of a News Corp vilification campaign at any Williams appointment.
Both Turnbull and Spigelman had been heard talking about a “Google lady” some time before the process started. Turnbull, according to my informants, was consulted during the scoping discussion with Egon Zehnder for the selection. It is not known if Turnbull knew Guthrie, but he could well have met her through his close friend Bruce McWilliam, who worked with Guthrie at the law firm Allen Allen and Hemsley and again at BSkyB.
By all accounts, Guthrie’s interviews were compelling, persuading the full board to a reportedly unanimous view that she has the capacity to take the ABC into the next phase of the digital revolution. She was persuasive in her answers about her capacity to withstand often intimidating pressure from enraged prime ministers and sundry attack dogs. Although David Anderson was unknown outside the ABC, his potential as a future chief executive was also acknowledged.
But the flaws of the selection process have also brought to a head concerns about Guthrie’s capacities as a content creator. She had been a corporate and technology lawyer at News, BSkyB and Foxtel before replacing James Murdoch as CEO of Star TV in Hong Kong. While transforming herself in digital media after joining Google as an Asian region managing director in 2011, she has not been an industry leader in programming.
“Guthrie is Turnbull’s pick,” one failed candidate told me. “I wish her well but it [the selection process] was all about running a big business when everyone knows that content creation is the only strategy which will sustain ABC audiences and its public support into the future.”
While outgoing managing director Mark Scott has transformed the ABC into a major multi-platform player in Australian media, the ABC’s biggest creative weakness is its lack of specialisation and critical mass of original quality programming across the genres to meet its cultural obligations. Its biggest political weakness is its glaring Sydney-centrism, with constituent politicians around the country demanding government action to reprioritise resources and staffing to the state capitals and regions.
Its loss of the $220 million 10-year Department of Foreign Affairs and Trade contract to run the Asia-Pacific television service known as the Australia Network has vandalised the national interest through the withdrawal of in-situ correspondents across the region. Asia-Pacific broadcaster Radio Australia has been reduced to a rip-and-read outlet. In the bush, there is the same sense of abandonment: more than half the network’s 4300 staff and management now work in Sydney’s Ultimo Centre.
On top of this, Guthrie faces taking the top job as the ABC’s three-yearly funding negotiations with the Turnbull government are nearing completion. In an election year Turnbull, Treasurer Scott Morrison and Communications Minister Mitch Fifield are not expected to prosecute any further hostilities with the ABC following former prime minister Tony Abbott’s now infamous pre-election lie that “there will be no cuts to the ABC or SBS”.
But the best for which the ABC and SBS can hope is stasis, perhaps adjusted for the consumer price index, of its already lowered operational base funding. There is a chance for some ABC-tied funding supplementation for regional coverage to appease regional hurt. But either way, Guthrie faces constrained “survival” budgets for her five-year term.
In this context, she may be enticed to seek alternative revenue streams from the ABC’s operationally expensive but very successful iview streaming service, which in June 2015 had 31.6 million program plays. Iview distribution costs, estimated at $25 million or more a year, are coming down as technology improves and other broadcasters enter the market, but any Guthrie strategy to apply a user-pays or subscriber-only model to iview will be contentious – might it be the thin edge of the wedge to user-pays for all ABC services?
SBS is now expanding into consortium-funded television to earn more revenue, with the Food Network launched last November to add to its existing World Movies pay TV channel. It had failed in its recent bid to amend the SBS Act to double prime-time TV advertising within programs.
Also evolving is the apparent logic of merging the ABC and SBS and NITV operationally, rationalising their TV multichannels while maintaining their separate creative cultures and charter obligations, particularly SBS’s excellent multilingual radio and TV services for a now polyglot Australia. The prize for SBS through any operational savings would be to terminate its dependence on TV advertising, a prospect that would be welcomed by Australia’s struggling commercial TV networks and affiliates, competing for the same money.
Guthrie could well succeed in leading the ABC through this difficult terrain. Certainly it is hoped her appointment will be a thorough success. But the appointment process now behind her is in serious need of review.
At the very least, the full board should be required to interview all shortlisted candidates, internal and external, for high-level appointments. That way, rejected candidates can accept that “selection on merit” was fair and trustworthy, helping to eliminate any suspicion that the process was manipulated by political influence.
This piece was modified on February 2, 2016, to make clear the nature of SBS's consortium arrangements.
This article was first published in the print edition of The Saturday Paper on Jan 30, 2016 as "Inside the Spigel tent". Subscribe here.