Speculation over Photon Group chairman Tim Hughes’ future role
Tim Hughes, executive chairman of the troubled Photon Group which has been suspended from the ASX for approaching three weeks, may leave the company, the Sydney Morning Herald has hinted.
Photon owns some of Australia’s best known agencies including Naked, Bellamy Hayden, BMF and BWM.
The Mercedes-driving Photon Group executive chairman Tim Hughes looks set for a bad day in the office. The marketing firm was softening up the market yesterday for a potential rights issue of up to $200 million, priced at about a quarter of its last traded price of $1.02.
The paper added: “Hughes is yet to signal whether he plans to leave the company or at least take on a non-executive role.”
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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I just wanted to talk about my personal experience with Photon and especially with Tim. I joined Photon in 2001. It wasn’t part of any ‘acquisition for growth’ scenario. We had a discussion about doing something together, building a business from scratch. He backed us. We were a couple of young guys with an idea which he helped mold in to something successful. Now we are a company that holds a leadership position in the Australian market. It would be a great shame for Photon if this speculation is true.
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Sean Langdon’s comment may be careless. His company, Precinct, has been less than successful in that it has wrestled with its financial position and seen downsizing (bulk redundancies were made early 2009 including all studio typesetters and proofreaders – replaced only by freelance assistance when a project does come in) and seems to struggle to settle suppliers’ accounts within Photon Group’s avowed trading terms. As for holding a “leadership position” in the Australian market, Sean Langdon should qualify this in terms of turnover, profit, employee numbers, peer recognition, etc. His endeavours to set up a Precinct branch in New York failed entirely, and yet Precinct rather audaciously styled itself a “global” outfit.
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Like most Photon company employees, I can tell you Hughsie is one of the more involved Chairman you are likely to encounter! Hardly a day goes by without a call, an email, a text in relation to some event or other. And unlike most “interventions” of this nature by company directors these days, most of Hughsie’s queries are pretty much on the mark, and he is always helpful and constructive. In fact, I’d have to support what Sean Langdon says, in that Tim has been incredibly helpful, very motivating and – despite a gruff, knock-about sort of image he tries to project – very good to me and my staff, in many cases helping them grow wings and fly off to other, bigger opportunities. I’m not disclosing my name, cos I don’t want to be dragged into a slanging match with Tim’s business adversaries. I just thought this side of his corporate persona should get an airing!
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i think those sentiments are all really nice but this is the business world and as exec chairman he has to fall on his sword like matt bailey did, or was forced to
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They certainly helped me “grow wings and fly off to other opportunities”
The redundancy cheque wasn’t that great though.
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Surely a public company should be doing due diligence on acquisitions and not just using investors’ funds to set up businesses for spruikers and mates. Have you ever wondered why Photon Group does not report on its individual companies by employee numbers, turnover and profit? Scratch the surface and you’ll find one-man-bands and tiny little shops with business card carrying “Regional President S-E Asia” for an operation with 12 in Sydney and 3 in Melbourne. And what about those costly extravagant Christmas parties. I suppose they appealed to the wankers and the surfeit of young upstarts who (wrongly) thought they could rule the world. “Spin” is the enemy of business and brought down Wall Street. Photon needs a major revamp if it can expect to regain respect. Bring out the broom.
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*Disclosure: I have worked for a photon group agency.
Truths:
Yes, there are some debt problems caused by various factors.
Yes, some risks were taken in the spree of acquisitions some time ago.
Yes, some agencies have been unable to trade successfully enough to remain stable and profitable beyond their earn-outs.
More Truths:
There are plenty of successful agencies within the group that are performing strongly.
Sometimes you need to take calculated entrepreneurial risks, and Hughsie has provided amazingly constructive feedback on these matters.
So here we are, post GFC and Photon isn’t in the financial position they expected 3 years ago. But you don’t make money without some entrepreneurial vision. There are ALOT of talented people in Photon, and Tim and Jeremy are absolutely the men to nurture this talent and to kick Photon out of their slump.
I hardly think we need to chase the man with burning torches because some of the risks haven’t panned out as planned – that’s life and that’s business.
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I have been an employee of Photon for the past 6 years and in that time Tim Hughes has been nothing but motivating, supportive and inspirational. I wasn’t part of any business acquisition nor am I senior management yet I know our chairman well and he has always been incredibly supportive. His style might not be to the liking of all but his aptitude, energy and willingness to get involved within every rank of the organisation is to be commended. Like Sean said, if the speculation is true it would be a real shame for Photon.
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I was part of a group of people made redundant from a Photon company that extended itself financially in an ill-conceived expansion plan. Surely the CEO of that company should have been held personally responsible (by Photon) for his lack of talent in building his brand.
Those made redundant were presented with an agreement to sign that included telling us we were not to disclose to even family or friends that we had been made redundant. We did not sign. We left that self-aggrandising, two-bit company, disillusioned by the cloak of dishonesty that seemed to be the Photon corporate mantra.
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Whilst one can speculate that the Photon model has failed and needs changing, there can also be no doubt that it has, within the companies, some of the best talent this industry has to offer. As an industry we need it to survive and thrive in some shape or form or the perception that creative based businesses cannot run themselves will only grow. And if they are refinancing to this degree [from what I can recall it must be most of their debt having to be refinanced], it explains why the new CEO was offered cash rather than shares, they’d never have got him otherwise.
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It is ironic that this gossip as gospel 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.
This is a brilliant opportunity and immediacy to voice the concerns of a shareholder, and is not just about Tim Hughes. For me, it is about a public company that may be cavalier in investing in start-ups. That is unsettling to a risk-averse investor who is more comfortable with the notion of tried and true.
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quite a picture to imagine tim hughes chased by the village with burning torches…
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I’ve witnessed the lack of depth in the executive at Photon first hand. I left because the further up the chain I looked, the less I saw. Financially the company is very poorly served. I hope, for our super funds’ sake, Photon restructures and thrives under its new leadership. There’s a lot of creatives in the business assuming the executive knows what’s going on – hope they don’t get let down.
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Our company is part of Photon. They have been great to be a part of, and will continue to be I’m sure.
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Sean Langdon opened a can of worms! Who knew that Photon was backing folks on a wing and a prayer. Time for full disclosures, eh ASIC. It seems “Hughsie” was quite the cult of personality. Not hard to win mates when you’re acting like Croesus. Next Christmas party, Hughsie can turn on the snags at Cloud Valley. Hey, wasn’t that Lawsie’s joint? Must be lovely living in a $7m joint. Perhaps Hughsie can mortgage the farm and back start-up upstarts with his own dough.
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Sean Langdon shared his floor space with two now defunct “sound investments”. One was a few blokes and a chick trying to be e-medium kings; the other was a “company” named Public Insight whose sole operator, Mark Sutton, gave it his all to no avail.
On what premise were these short-lived ventures thought to be worthy of Photon’s interest? Did Photon fund these people? Were they paid salaries from Photon? What about their earn-outs?
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Agree with a lot said and disagree. At the end of the day Hughs was probably an inspiration and motivator and served employees well, but also he was primarily responsible for getting rid of them and the current share price, so see it as much as you do, but I wrap it all up in the fact that:
Some businesses have failed, true
they took on too much debt and the model probably wasnt sustainable, true
they have left a lot of people despondent, shareholders, employees, owners, corporate investors by putting out a lot of spin about caring for employees, then sacking them, talking about cost control, but driving around fast cars and having expensive christmas parties, talking about cutting admin people like finance and then having criticisms about lack of due diligence, corporate governance, talking about restraint and fiscal responsibility and then the directors giving themselves payrises when their profits decline.
At the end of the day, as cold as you might see it, running companies is about maximising shareholder wealth. You’re not there to lose money but to make it, and you’re there to drive up the share price. Photon have failed everywhere and now they’re in damage control.
I saw Tim on some audio stream a year or so and he says photon doesn’t buy companies, they buy people, and now they are selling out those same people who made the money.
Clean the whole lot out including the division CEOs and tell them to start again, and send them on their happy way in their BMWs
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Tim Hughes in an unbelievably smart operator. I work with him directly. There is no way anyone should write him or Photon off,enjoy the banter but not much of it is true. if anything, put some money into the currently undervalued shares and watch this space……..
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Thanks for the advice, anonynmous for a reason. I’ll buy some shares immediately. Oh wait, trading of the shares has been suspended by the ASX.
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My tip is that they will announce a rights issue at 25cents, the shares will come back on and take a dive, but then the company will only be worth about $80m and someone like Singleton will come in and have a takeover.
There is no strategy with the shareprice. Why cant they offer options instead, they still get money now, you can trade them if you want, if the shareprice goes up, people will exersise the options and they get money later, and it allows the big super funds a ticket in without the upfront cost; also you don’t have to pay dividends on them either until they become shares.
Still though, Tim seems a smart bloke but he’s still dished out payrises to directors and himself while net profits fell. That’s what p!sses me off, and no doubt, they will be in there and do it again. You’re only as good as your last job. I reckon he should go and let Jeremy do it.
Still, I dont know why I have been doing this blogging. I suppose I bought my shares at $5.30 and sold at $1.30 so i got out, but while it was my decision to sell, a lot has to change in that company to make me want to get back in and make back the $80k i lost.
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anonymous for a reason: I hope you’re not part of the executive team otherwise you’d be anonymously breaking ASX listing rules. If you are then I think your naive comment is a symptom of what’s wrong at Photon – no one willing to think about the company of Tim. It’s a public company, you know, not Tim’s company.
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I think I will buy back in at 12 cents or something. They will be at 25cents rights, they will announce their big losses after writing down all the goodwill and the shares will fall further, and then next year come out with a better result which won’t be better EBITDA, it will be better NPAT as they will have no interest, and that is meant as a metaphor as well
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I worked for both “Hughesy” and “Singo” for several years each and wow was it fun, extravagent parties and freebies galore. But now I’m out I wouldn’t go back, fun can only get you so far before it bites you in the rear.
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Just picking up on a few points above. I know the business intimately including some of the directors both working in the business and non execs. The business model was floored as there was no integration and too many ridiculously bad financial decisions with a poor acquisition plan without strategy. Imagine buying digital businesses but noone at photon understands digital. What do you think Tim and Matt knew about digital? Noone knew what they were buying. A former CEO with prior experience managing a $30m private company in trade marketing then catapulated with no experience into managing a listed business and an international one at that with an acquisition strategy. I think his only prior experience at buying anything was cars and then appointing his brother with equally poor management credentials to run one of the silos. There actually nice guys to chat too, a bit dodgy but charming and with big smiles but a bit dumb at the same time. The new guy Jeremy may well make a positive impact but you will be waiting a long time. Look at the financials of the company. Anyone who could have sold last month should have done so. The Baileys sold a big chunk…got to wonder why? The banks would love to close Photon down but they would loose too much so instead they are forced to prop it up. The last Bailey will be leaving the business soon. Speculation rife among employees about a new agency or to buy the bailey group out of Photon.
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Cynthia Cato’s comments are born from personal (self-percieved) injury. Redundancies were unavoidable and Precinct’s new model of operating with a select group of freelancers closely follows the strategy of many other studios in Sydney. Perhaps she wasn’t part of that ‘select group’ and this public grievance is a case of sour grapes or a bruised ego on her part.
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