The substance behind the Photon gossip
One of the perks – and frustrations – of being a journalist is that you often get to hear interesting gossip.
Perk because it’s nice to hear these things first. Frustrating because you often can’t stand up for publication what you’ve heard.
For instance, long before Topia went down the tube, word was out on the grapevine that this wasn’t a company to do business with, or work for, if you wanted to get paid. But until the administrator was called in, little could be written without facing a libel risk.
There were also lurid tales swirling around Blue Freeway well before the whole thing publicly imploded.
And remember CommQuest and its expensive Bongo Virus New Year’s Eve party with Paris Hilton? That was gossiped about at the time too.
I remember chatting to a senior industry figure more than a year ago, who was highly sceptical of the Photon Group model. In particular he was cynical about the company’s debt levels.
I argued to him that they’d probably be fine – they were buying best-of-breed agencies. When you own the likes of BMF or Naked, for instance, you’ve got some pretty excellent assets. At the time, I wondered if he was just gossiping to destabilise a competitor.
But I started hearing other stories of individual companies within Photon with eyebrow-raising practices.
And at the same time as redundancies, grandiose staff events on Cockatoo Island with Empire Of the Sun performing. There were some intriguing anecdotes from that night, I can tell you.
I began to wonder.
So it’s not a big surprise to hear that the clearing of the decks at Photon has begun. At the time of writing, the company’s shares are suspended and it appears to be in the midst of a major round of capital-raising.
That – of course – isn’t just a story for the financial press. Real people, with careers to consider and families to support and kitchen appliances to buy are affected. I know a few of them, as it happens.
From now on, I suspect the stories – and anecdotes of the how the company was run by former CEO Matt Bailey and chairman Tim Hughes are going to come thick and fast. Indeed, if someone had the time and inclination, there would be an excellent business book to be written about the stories behind Blue Freeway, CommQuest and, I suspect, Photon. Rich Kids, the story of the OneTel debacle, springs to mind.
(Certainly Bailey and Hughes didn’t feel too much personal financial pain last year – I see from Photon’s 2009 annual report – page 28 of the PDF I link to here – that Hughes’ total cash compensation (whcih excludes other share perks) for his role doubled on the previous year to just over $1m, while Bailey’s rose from $900,000 to $1.1m.)
The question is whether the ending will be the same for Photon as those other companies I’ve mentioned.
There was an excellent piece of analysis by James Chessell in The Australian on Saturday. His argument is that newly-arrived CEO Jeremy Philips is the man to fix Photon.
He may well be right, although Photon is certainly in for some turbulent weeks. But there are still several strong agencies within the group which have maintained their own individual cultures, and I suspect that will be important.
Nonetheless, I expect to see job losses and more mergers at some companies within the group. But so far, the gossip seems to think that Photon will get through the storm. And the gossip is often right about these things.
Tim Burrowes
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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Blue Freeway
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Jeremy Philips
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Tim Hughes
yes, but do these accountants know a good ad from a bad one? maybe a few who do will be considering buybacks?
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Gossip as gospel truth.
Have a look at comments posted starting today (25/6) umder “Speculation…Tim Hughes”.
It is ironic that this gossip or truth was spawned by the initial posting by Sean Langdon, CEO of Precinct (a Photon company). He was naive to have not expected that spirited commentary would follow, much of it challenging his view. Especially naive when Photon includes a clutch of “new media” companies specialising in this medium as the message.
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We talked to many of these groups and it was pretty obvious that they were not going to work out. It is a shame that some of the guys I know lost their companies, but to be honest it wasn’t difficult to spot at the beginning…
It was the old story of ‘sell me your company for equity in this bigger company that you have no control over…. you will make so much money… trust us! and if you want proof just look at these projections!…. oh, and those huge salaries for the main deal-makers… well they are worth it….”
Results have proven again and again that they are not worth it…
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