Mark Kleinman: Post Office needs a boss who can read the room
Mark Kleinman is Sky News’ City Editor and is the man who gets the City talking in his weekly CityAM column. This week he tackles the Post Office boss, The Observer sale and Afiniti.
Post Office needs a boss who can read the room
Not a moment too soon. To read the Post Office’s account of its departing chief executive’s tenure, it has been an unmitigated triumph.
Nick Read, we are told, succeeded in leading a settlement with hundreds of Group Litigation claimants, “beginning the journey to address the wrongs of the past and to reset the relationship with Postmasters that continues today”.
No reference in that to the fact that the settlements with them were derisory, with much of their compensation ultimately swallowed by litigation funders.
Read also, according to his employer, “championed the appointment of two serving Postmasters to the board and focused on increasing postmaster remuneration, investing in training, expanding field teams and supporting Postmasters as part of a broader initiative to place today’s Postmasters at the heart of Post Office”.
That’s harder to argue with, but how much tangible difference it has made to the careers and prospects of sub-postmasters is, according to some observers, debatable.
Ultimately, what the Post Office statement did not say was far more instructive. Read was, according to former colleagues and ministers, obsessive about his pay, repeatedly seeking increases to his remuneration even as the state-owned company’s balance sheet showed growing signs of strain. On more than one occasion, it was suggested to Whitehall officials that he would resign if his demands were not met.
Read’s relationship with former chairman Henry Staunton also turned out to be highly dysfunctional, with the pair descending into playground squabbling, allowing little focus on the real victims of the Horizon IT scandal.
The last government resolved the first part of that by removing Staunton; Read’s resignation offers the chance for a more comprehensive reset.
Nigel Railton, the former Camelot executive who has arrived as the Post Office chairman, is said by colleagues to have a clear vision for strengthening Post Office staff’s connection to the centre of the business, potentially including through a mutualisation in some form.
His more immediate task, though, is to appoint the right CEO to run an organisation badly in need of executive leadership. Picking one who isn’t constantly seeking more money would be a good place to start.
Will Guardian owner turn the page on The Observer?
Anna Bateson must be a brave woman. Taking on legions of Guardian journalists by pursuing a sale of The Observer, the world’s oldest Sunday newspaper, was never going to be straightforward.
The internal reaction to Guardian Media Group’s (GMG) entry into exclusive talks to sell the title to Tortoise Media, a five year-old start-up, has been predictably heated.
Bateson, GMG’s chief executive, has been accused of betraying Observer staff by holding secret discussions about offloading the title.
The bigger surprise is that such talks have not taken place before. The Observer has long been the neglected sibling of its daily sister publication, and its closure has been mooted on numerous occasions over the last decade.
“There is no security for Observer staff, freelancers or the newspaper itself once it is owned by a relatively small business with scant resources to withstand any headwinds, whether they be downturns in the advertising market or temporary lulls in news-stand sales or reader revenues,” the National Union of Journalists said.
A motion of no confidence in the Scott Trust underlines employees’ anger at the move, but it also ignores a commitment given by Tortoise founder James Harding that it will invest £25m in The Observer over a five-year period.
Such an undertaking is surely more than GMG would be willing to provide, and Harding’s journalistic credentials are hardly inferior to those of even the most venerable Guardian scribe.
Recent job cuts at The Sun and Daily Mail’s digital operations – albeit in the US, rather than on home turf – reinforce the increasingly precarious nature of British newspaper industry jobs. If GMG has not contemplated closure of The Observer as an alternative to the Tortoise Media deal, I’d be amazed.
Nevertheless, the sale is not a done deal. Whispers from within GMG headquarters suggest that an alternative structure aimed at preserving The Observer within the group may be being hatched by disgruntled employees with a view to presenting it to GMG’s board.
I suspect, though, that Harding will reach a deal in the coming weeks and The Observer will change hands for the first time in three decades. The big question, if that happens, is who’s funding it?
There’s not much Afiniti at former unicorn which employed Cameron
Lord Cameron, Princess Beatrice, Elisabeth Murdoch and Lord Browne of Madingley: the list of former executives, directors and advisers connected to Afiniti, the AI software company, is as long as it is illustrious.
Many of them quit after its founder and CEO, Zia Chishti, was engulfed by sexual misconduct allegations in 2021.
Since then, the business – which specialises in ‘behavioural pairing’ software to match customers with service agents, and which once raised funding at a $1.6bn valuation – has struggled to tread water.
Now its shareholders have been served up some even bleaker news. In a letter to Afiniti investors, which I’ve seen, insolvency practitioners from Teneo have notified them of a debt restructuring which will see its assets transferred to a newco owned by the company’s lenders.
Under the deal, $298m of Afiniti’s senior secured debt will be converted into a term loan which itself will be convertible into equity.
“The existing Afiniti preferred shares and common shares do not have any value based on the current valuation of Afiniti and therefore no cash or other property is available in the provisional liquidation for any shareholders of Afiniti,” the letter said.
Its review of financing options has been underway since last year, it added, amid growing pressure on the company’s balance sheet.
“After conducting a broad-based process to identify potential financing alternatives, we ultimately concluded that this restructuring serves the best interest of the company and its stakeholders.”Many shareholders are furious about both the outcome of the restructuring and its communication. In short, there’s not much affinity left.