Case Study: Mai Media Limited
Introduction
Mai Media Ltd is committed to the survival of te reo Māori by providing a modern context within which to promote and extend te reo me ōna tikanga to the youth of today. Mai Media Ltd does this by operating Mai FM, arguably the most popular radio station in New Zealand. Graham Pryor is Mai Media Ltd's managing director.
Structure
Mai Media Ltd is a private company wholly owned by Te Runanga o Ngāti Whatua. The company commenced operations 1 July 1995.
Prior to this Mai was an incorporated society. The change to a company structure was made when the assets of the radio station were purchased by Te Rūnanga o Ngāti Whātua, the shareholder who made the decision to focus on fully commercialising the operations of Mai FM88.6.
Mai Media Ltd is also a holding company that owns and operates the Mai FM and Ruia Mai radio stations in Auckland, Rotorua and Whangārei. Mai Media Ltd also owns Mai Music Ltd (100% owned trading since July 2001 staffed and fully operational), Mai Publishing Ltd (100% owned trading since July 2001 fully operational but at a low level of trading), Mai Television Ltd (100% owned but not trading) and Shore FM Ltd (50% owned but trading at a very low level).
Limited liability companies were chosen for commercial reasons including limiting shareholder exposure to liability and to enable efficient borrowing and structuring of business arrangements while retaining the kaupapa of the shareholder through the representation of the board.
The decision was reached after contracting a business consultant to review the ownership structure of the business.
Core Purpose
The kaupapa of the organisation is "to promote te reo me ōna tikanga Māori as relevant and positive aspects of everyday life. This can best be achieved by owning and operating a successful and profitable communications business." Balancing the twin aspects of this kaupapa is constantly reviewed at all levels of the organisation to prevent one from undermining the other.
The major function of the organisation is the delivery of the kaupapa which requires Mai to run a commercially successful organisation. This entails operating radio stations, selling advertising, producing news and the music while promoting te reo me ōna tikanga Māori in station and on air.
Governance Board
The company is run by a seven-member board of directors appointed by the shareholder. Mai Media Ltd finds this to be an optimum number allowing for a wide skill base to be represented. Graham notes that Mai needs to address the gender imbalance on the board which has been male dominated for the last three years.
The board of directors is appointed by the shareholder and where appropriate after consultation with the chairman of the board and the managing director. The appointment of iwi representatives to the board is managed by the shareholder.
The directors sought are required to have as wide a business skill base as is possible coupled with a firm commitment to a kaupapa Māori organisation. Mai has not found it easy to find individuals with skills in the media business but has managed to attract some very successful business people.
The Mai Media Ltd board has regular strategy planning and strategy review sessions using an independent facilitator with and without staff present. This is in addition to the regular monthly board meetings and Graham notes these are effective in educating the board about the media business.
There is also an audit committee chaired by a board member that meets quarterly with management and sometimes auditors to highlight and resolve areas of risk for the company. In terms of the directors governance role there is no specific strategy in place.
The Board includes five iwi members from the runanga (shareholder) including the CEO of the runanga occupying the chairman's position which provides a connection to the beneficiaries. The company's monthly board papers are included in the rūnanga's monthly board meeting.
The board also reports directly to iwi at the runanga AGM where iwi members are free to attend and directly request information from directors.
The management team's performance is measured against a set of annually agreed objectives included in the strategy document. The board also has a written agreement with the CEO. His performance is assessed against measurements including staff development, kaupapa and financial elements.
The governors have recently been involved in the establishment of an audit committee which will amongst other things form the basis for the directors reporting on their performance to the shareholder. In terms of an ideal board member Graham would expect the individual to be a politically astute professional director with wide experience in the media business and iwi organisations.
Business Environment
Mai Media Ltd's business environment has been described by media professionals as the most competitive radio market in the world. Risk analysis is undertaken regularly in conjunction with the company's strategy sessions. This informs Mai's strategy by highlighting go/no-go areas and how the company does business.
Graham explained that Mai Media Ltd's operating environment is only lightly regulated and therefore does not have much effect on how the company operates. The areas of risk that do exist are actively managed as part of everyday business, such as ensuring no obscene language, or defamation.
In terms of strategic planning, the management team members present to each other on strengths and weaknesses and opportunities and threats scenarios which might confront the company. This process involves giving and seeking solutions, which are refined and presented to the board and staff for agreement. Once agreed these strategies are implemented according to an agreed plan. Outside consultants' opinions are also sought and used as hui facilitators and to prepare the strategy document.
The main mechanisms for governance interaction with management are the regular board and strategy hui. Graham believes this is largely effective but relies on the competency of the CEO to highlight these issues. There is also some informal interaction between managers and board members which helps these processes.
Conflict has not happened in the last 10 years of operations but any potential issues are pre-empted through the processes described above with full reciprocal access between shareholder and management. Mai Media Ltd conducts full monthly reporting including financials and an independent annual audit. All staff have written performance agreements which are measured annually with the board.
Mai FM is very careful to ensure it maintains a good relationship with its audience. This is assisted by using comprehensive audience research carried out twice per year. An outside research firm conducts these surveys. Mai's clients are the subject of ongoing processes to maintain healthy relationships such as using tools like post analysis of campaigns and focus group results.
Possible Changes
In terms of possible changes to the regulatory system, Graham believes it is better for government to leave the organisation to deliver on its kaupapa without interference. Graham believes it would be better for government to "stay completely away from us."
Internally, Graham sees possible improvements being made with direct interaction with staff to establish their desires, needs and wants to fulfil their own personal development aspirations while delivering on the shareholders' kaupapa.
Graham believes government's first priority should be devoting resources to kōhanga reo and promoting the early childhood education for Māori. With this support Graham believes "we will breed our own successes." Graham believes the second priority is the rest of the education system.
Māori Organisational Characteristics
Graham describes a successful Māori organisation as one which operates a sustainable business that has a Māori kaupapa. It would be totally Māori owned, predominantly Māori staffed and targeting a Māori audience. Graham believes Mai Media Ltd fits this description.
Financial Summary - Mai Media Limited
| MAI FM LTD | MAI MEDIA LTD | |
|---|---|---|
| Consolidated | ||
| Actual 1998 | Actual 2002 | |
| Revenue | 4,188,778 | 5,236,290 |
| Operating surplus before tax | -70,801 | 79,184 |
| Net Surplus (NPAT) | -70,801 | 80,193 |
| Average Total Assets | 928,475 | 1,267,843 |
| Average Shareholders’ funds | 81,775 | 20,357 |
| MAI FM LTD | MAI MEDIA LTD | |
|---|---|---|
| Consolidated | ||
| Actual 1998 | Actual 2002 | |
| Operating Surplus (%) | -1.69% | 1.51% |
| Return on average equity after tax (%) | -86.58% | 393.93% |
| Return on assets (EBIT)/average total assets) (%) | -7.63% | 6.25% |
| MAI FM LTD | MAI MEDIA LTD | |
|---|---|---|
| Consolidated | ||
| Actual 1998 | Actual 2002 | |
| Current Ratio | 0.69 | 0.79 |
| Quick Ratio (equity ratio) | 0.69 | 0.79 |
| MAI FM LTD | MAI MEDIA LTD | |
|---|---|---|
| Consolidated | ||
| Actual 1998 | Actual 2002 | |
| Debt to average equity (%) | 1087.41% | 5931.08% |
| Gearing (%) | 91.48% | 95.23% |
| Proprietorship (%) | 8.52% | 4.77% |
Page last updated: Thu, 12 May 2005