The Sunday Times - UK (2022-04-10)

Investors are preparing for a

war with companies over

climate change and pay, as a

string of FTSE 100 giants face

a backlash from shareholders

at this year’s annual meeting

season.

Glencore, the London

Stock Exchange Group,

Flutter and Persimmon are

on the watch list after the

Culture secretary Nadine Dorries is

hatching plans to float Channel 4 on the

stock market as an audacious alternative

to selling it to a rival broadcaster.

Officials in the Department for Digital,

Culture, Media & Sport (DCMS) are under-

stood to be working with JP Morgan on

plans for a listing in London, in case a

credible bid does not emerge after Dor-

ries confirmed last week that she would

press on with privatisation. A float would

be a way of removing the broadcaster

from the Treasury’s balance sheet, a

source said.

A float of Channel 4 would be the big-

gest listing of a public organisation since

investors were invited to buy shares in

Royal Mail in 2013. It would allow Channel

4’s keenest supporters to keep hold of a

piece of the broadcaster.

It comes as chief executive Alex Mahon

makes the case to keep Channel 4 in gov-

ernment hands for the first time since the

controversial announcement. Writing in

The Sunday Times online, she claims that

her alternative plans for the broadcaster

would put “billions more into every cor-

ner of the UK and foster the creation of

thousands more jobs”.

Mahon’s plans involve creating a joint

venture with private investors to put an

extra £200 million a year into program-

ming — another way of removing the debt

from the government’s balance sheet.

Dorries said last week that Channel 4

needed to be freed from state ownership

to invest in shows and compete with

streaming giants such as Netflix. DCMS

dismissed Mahon’s alternative.

Channel 4’s supporters claim Dorries’

plans are politically motivated because

BUSINESS

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April 10, 2022 · thesundaytimes.co.uk/business thesundaytimes.co.uk/money

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We will

put

billions

into

the UK

the broadcaster is perceived to be left-

leaning and critical of the Tory govern-

ment. Channel 4 is state-owned but funds

itself through advertising.

The privatisation process may be

lengthy. The legislation still needs to go

through parliament and competition

reviews could follow. ITV is said to be

interested in a takeover, but it and Chan-

nel 4 make up about 70 per cent of the TV

advertising market.

Other bidders in the frame include

Sky, Channel 5 owner Paramount and

Discovery.

The government hopes to extract

more than £1 billion from a sale, although

bankers fear it may only solicit bids of

£500 million. That could prompt a push

towards a stock market listing.

Mahon says her proposal “accelerates

our existing digital strategy, as well as

multiplying the secondary benefits of

public ownership, like job creation and

skills-building outside London”.

She adds: “We appreciate the ques-

tions that government has asked of us, as

it has been a creative challenge to spark

new thinking. And I believe we should

now be getting on with these plans.”

She and her supporters argue that

Channel 4 does not, and should not, com-

pete with Netflix and Amazon, which cre-

ate global hits rather than shows for

under-represented parts of the country.

Mahon said she was not “intimidated”

by the challenges ahead “because of the

fundamental strength of our business.

We have expertise and that gives us confi-

dence in the forward plan.”

The DCMS declined to comment on

the specifics of its plans.

Countdown to the big sell-off, page 2

Jamie Nimmo

Ministers eye

plans to float

Channel 4

The owner of the Cannes

Lions festival is eyeing a

break-up in which part of the

£1.5 billion business could list

in New York.

Ascential is working with

investment bankers on plans

to split off its digital

operations and float them,

Sky News reported.

The FTSE 250 company’s

most famous assets include

the world-famous advertising

event, the fintech conference

operator Money20/20 and

Retail Week, the news and

events company for the retail

industry.

The digital assets of

Ascential, formerly Emap,

include Flywheel, which

helps retail giants such as

Amazon boost online sales,

and Edge, a data-analytics

Cannes festival firm

weighs £1.5bn split

company used by Disney and

Apple. The break-up plans

are said to be driven by chief

executive Duncan Painter to

boost shareholder value.

After recovering from a hit in

the early days of the

pandemic, Ascential’s share

price has slumped by 25 per

cent since November.

The firm can trace its roots

back to 1887 when Sir Richard

Winfrey bought the Spalding

Guardian before building up

his newspaper empire. After

the Second World War, the

journals were consolidated to

create the East Midland Allied

Press (Emap). It sold its 65

newspaper titles to Johnston

Press in 1996 before buying

Cannes Lions in 2004 and

building up a portfolio of

digital analytics companies.

Ascential declined to

comment.

Jamie Nimmo

Nadine Dorries considers a stock market listing for

broadcaster in biggest sell-off since Royal Mail

Strike threats add to

airport turbulence

Holidaymakers face further

disruption at airports this

summer after workers

warned they could strike over

pay.

Baggage handlers at

Gatwick have rejected the

offer of a 5 per cent pay

increase, saying that it was

“utterly inadequate” to keep

up with inflation, which

stands at 6.2 per cent.

The workers said they

were prepared to strike over

the summer to secure a

12.4 per cent pay rise, which

they claimed would return

their wages to 2019 levels.

“If we do take strike action,

it will be at the times that

cause maximum disruption

to the company,” said one

worker who was privy to

negotiations, which affect 160

staff. With the airline industry

already rocked by staff

shortages causing delays and

cancellations, baggage

handlers at Luton are set to

strike over sick pay this week.

At Heathrow, action by

baggage engineers has been

postponed for more talks.

Employers and trade

unions across different

industries have clashed over

pay amid the cost-of-living

crisis. Last week, BT workers

represented by the

Communications Workers

Union rejected a £1,500 pay

increase saying that it was

insufficient to deal with rising

prices.

BA-owned Gatwick Ground

Services, which operates

baggage handling, said pay

negotiations were ongoing.

Laith Al-Khalaf

Alex Mahon has alternative plans to a sell-off for strengthening Channel 4

FTSE giants brace for showdowns over climate and pay

shareholder adviser Glass

Lewis recommended a vote

against them, or abstention,

at meetings in the coming

weeks. Institutional investors

tend to follow notices from

advisory agencies.

Pay has been pushed up

the agenda amid the cost-of-

living crisis. Last week,

Sainsbury’s became one of

the first supermarket chains

to sign up to the Real Living

Wage, committing to paying

staff in London £11.05 an hour

and those outside the capital

£9.90. On Thursday, Tesco

increased its hourly rate by

5.8 per cent to £10.10.

Meanwhile, the Investment

Association has said climate

change will be at the front of

investment managers’ minds

— with a focus on what action

bosses will be taking.

At Glencore, where

shareholders have been

asked to provide an advisory

“yes” or “no” to the miner’s

climate strategy, Glass Lewis

has recommended they vote

against the plan. It believes a

simple “up or down” vote

lacks nuance and may

remove accountability from

Glencore’s directors.

At the London Stock

Exchange Group, Glass Lewis

said investors should abstain

urging investors to vote

against the bank’s climate

proposals at its meeting on

May 4. And a coalition of

investors with $4.5 trillion

(£3.5 trillion) of funds under

management has said it will

vote against the

reappointment of auditors if

it deems they have not

sufficiently flagged the risk of

climate-change policies on

company accounts.

Natasha Landell-Mills,

head of stewardship at

Sarasin, which manages

£21 billion of funds and is

leading the coalition, said

there was often a

“disconnect” between what

companies said they were

doing about climate change

and how they recorded its

risks in their accounts. This

could include the threat of

future carbon taxes, or net-

zero policies that would force

companies to overhaul their

business models.

At Flutter, Glass Lewis has

recommended a vote against

a 26 per cent pay increase to

£1.2 million for chief

executive Peter Jackson.

At Persimmon, the pay of

new chief finance officer

Jason Windsor is under

scrutiny. Windsor will be paid

an annual salary of £675,000.

Sabah Meddings from an advisory vote on its

climate transition plan, as the

company has not been

transparent enough about

how it will act on the result of

the vote. Investor focus on

climate has sharpened since

the Cop26 conference last

year. ShareAction, a charity

that promotes responsible

investment, has said that

Barclays’ climate goals are

not ambitious enough and is