Ask Us Anything: Did Disney Get Jimmy Kimmel Right? + Optus' Outage Issues + Executive Disfunction

0:00I'm Adam Schwab. I'm Adir Shifflin. And this is The Contrarians with Adam and Adir.

0:08And we are back. Episode 135. Mass confusion here for Mike, who has just got the numbering all wrong. It is episode 135. Got the chief question asker up way before usual waking up time, which I think is thrown in. So we will go straight to the CQA. All right, guys. This one is a topical one coming in from Lachlan. Lachlan asks, Hey guys, I'm a big fan of the show. Quick question. Do you think Disney handled the Jimmy Kimmel controversy the right way? Did they protect their brand or did they cave to pressure? And what was the right call? Over to you guys. So just a quick background. So Disney, this is about sort of a week and a bit ago, briefly cancelled Jimmy Kimmel's show.

0:51Jimmy Kimmel's obviously a late night host. His audience had slipped to probably a couple of million. So it had been sort of slipping as most linear TV had been. ABC had pressure from its affiliates, just the way that the US works. There's a split between the content producer and who shows it. And so the affiliates show the broadcast across different parts of the US and there's different affiliates. And there happened to be two far right affiliates, Nextar and Sinclair, which are sort of further right than Fox News, who pressured ABC to take off Jimmy Kimmel. ABC did, and then ABC brought him back about five days later.

1:27Adir, what did you make of this debacle? Whether they handled it well or not is largely dependent on what it is they're trying to achieve. I suspect what they're mostly trying to achieve right now in an era where, just to be honest, you've got a president taking, in my memory, unprecedented steps to try to control the way that media reports. I think the main job at the moment is for broadcasters to try to dodge the bullets. And I think that that's what they're largely trying to do here, I think, is dodge the bullets. And so in the time of Mao, like Mao Zedong, there was a guy, like I think it was his sidekick or something or head of the army called Joe Enlay and he's very famous because he was asked the question do you think that the French revolution was successful he was asked this in 1960 and his famous answer is it's too early to tell a great answer and so I think that's how I feel about this like basically they're trying to dodge bullets at the moment it looks like no bullets have hit them so far but I think there's still some retaliation that's going to be coming out of the White House, unbelievably.

2:39And so I'm not sure what the right way is to handle this. I mean, I think what I want to be able to say to them is, I think they should take a principled stand and not allow politicians to control the content that comedians are saying. And they should have stood up to the White House and said, we're not going to stop him saying anything that falls within the bounds of free speech because it's comedy and that's part of the job of comedians. But the consequences of saying that are just impossible to gauge right now because we're in uncharted territory of the White House interaction with the media at the moment.

3:12I mean, what's your thoughts on it? I think there's so many different elements to this story, which is interesting. I think your comment on the White House being this powerful tool of vengeance is overstated. I think Trump is the master of the bluff. And he got Brendan Carr and his lackey, who now runs the whatever it is, the FCA or whatever it's called to put pressure on ABC. But really, ABC caved because its affiliates put pressure on it. But then when you look at the commercial realities, the affiliates only, it's about 20 % of those two far right affiliates, about 20 % of ABC's audience. So ABC's content is far more important to those affiliates than the reverse.

3:52And ABC is irrelevant to Disney anyway, because it's worth virtually nothing. Disney's value is the parks, the cruises, and to an extent, Disney+. plus ABC and ESPN, whatever's left of it. ABC is virtually worthless. So why ABC chose this sort of issue to make such a fuss, what then happened is it had a bunch of Trump haters who canceled Disney +, who said, I'm never going to go to Disney Park. So Disney's audience is probably centrist. It's a centrist audience that covers all comers. I think they got no benefit from canceling him. They only got detriment, which is essentially why he was brought back.

4:28And then if you look at who made the call, ultimately this is Bob Igros, call. And if you look at Bob Iger, if Bob Iger had resigned in 2016, he would have gone down as one of the greatest ever media executives who wasn't a proprietor. He unfortunately stayed around, bought Fox for 70 billion, which was an absolute disaster, destroyed a bunch of shareholder value, then resigned, put his acolyte in, who was a disaster, came back, and it has been a disaster himself. So this is a guy who didn't know. I think what this is a reflection of is just how bad Bob Iger's become and how much he's gone from absolute sort of God of Hollywood to walking disaster and has just gotten so many things wrong and just shows that how you talk about golden windows of when you sell a business.

5:17There's also a golden window of when an executive, be it a sort of hired gun or a founder should resign. And Bob Iger absolutely missed his golden window and has destroyed his legacy. And this is just like sort of icing on the cake of that, I think. I agree with that. I agree with that. But in the simplest sense, in terms of the question, I have to say, beyond business, I think comedy is actually being able to have comedians free to tell jokes about current events and things that are going on, even jokes, some jokes that you might find unpleasant and I might find unpleasant, as long as they're not deliberately insightful against groups in the population.

5:58I think that's fundamental to Western liberal democracy. And so I thought it was a terrible decision on that basis. And the idea that media caves to government in liberal democracy, especially forcing comedians, it's terrible, terrible. I think it was absurd. The whole notion of it that Charlie Kirk's memory is being insulted. Charlie Kirk was a free speech absolutist. The last thing he would have wanted was somebody been cancelled for this. I think the reason why Trump was so offended is that the subsequent comment, not the Charlie comment, it just shows Trump sort of talking about something else after he was asked a question on Charlie Kirk.

6:32So he made Trump look like a fool. That's why Trump got offended. Nothing to do with Charlie Kirk. Charlie Kirk was just a vessel to try and enrage sort of right-wing activists. You listen to All In podcast, which has just always completely lost the plot in recent years, and they spent half an hour saying how important free speech was and then spending half an hour saying how he should have been cancelled. The right on this has just completely lost the plot. And it's just outrageous to see him. And shame on Iger for caving in so flippantly. Like ultimately the right, Kimmel's come back. He's got record ratings now.

7:03The irony is probably saved. Kimmel's show probably should have been cancelled anyway because just because it was struggling commercially. It's probably given Kimmel another couple of years is the irony of it. Yeah, I think, you know, like I've got a simple view. Like unless not a brilliant bit, it's asked me anything which is anything I get. So my view is, let comedians tell jokes. That's it. Let comedians tell jokes. Sometimes they're going to bomb. Sometimes they're not going to be appropriate. There's a long history in America. This is not new. I just want to be super clear. There is a long history of arresting comedians in America.

7:37And there's a long history of prosecuting comedians for saying words they shouldn't say or delivering jokes on topics they shouldn't deliver. and basically I think it's been bad all the way through and it's bad now and hopefully it gets better in the future. I hate it. I absolutely hate it. Lenny Bruce, one of the great comedians, was famously put in jail like multiple times in the 60s. You're right about Lenny Bruce and also George Carlin. You know, George Carlin, I don't know if you know who that is. I'm not sure he's still alive. I think he's died now. He's one of the great stand-up comedians.

8:12Absolutely. I think he passed away for years. He was so offended by the idea that you couldn't say certain words in a comedy routine on TV, but you could say other words like guns, for example, that he actually had this bit that people should go and look up on YouTube. It's called the seven words you can't say on TV or the seven dirty words. They're actually not the same words every time he does a routine, which is the funniest thing about it. But like, it is so, his comedy is so biting and there's social commentary. It feels to me like, oh, comedy ages like milk, okay? But his comedy is so relevant to the current environment today.

8:51I would highly recommend people go and watch it. I couldn't agree more. He actually passed away in 2008. Rest in peace, George Carlin. On to question two. Thank you, Mark. All right. a question coming in from Alex Dunn over on LinkedIn. A MA question to you both. Given Adam's role on a medical not-for-profit board and a dears flirtation with medical practice, the Royal Australian College of Physicians is publicly imploding in our newspapers with governance disputes and political infighting. The current board has resigned en masse over the alleged conduct of the new president-elect. Have you experienced a situation of executive or board dysfunction?

9:35And how do you balance subject matter expertise, i.e. members, with independent director skills and experience? I like the description of me having flirted with medical practice. I may have flirted with medical practice, but medical practice did not take the bait and there was no long-term relationship there, unfortunately. What board are you on? I've been a model of myeloma foundation for about 15 years, which is a small but growing and quite a deadly cancer. So that's a fantastic cause to be on. Good on you. I mean, we've spoken about that previously. So like North for Profit boards are different to business boards because the pool of talent that's available is much less.

10:19It just turns out that if you offer people money, more people will say yes than if you offer them work, but no money. And so it's a different kind of person that will generally sit on a not-for-profit board. But I think conceptually, and there's obviously a lot of overlap, but the thing is this, a lot of, I'm very scared to say this, Adam, because I think I'm going to get you worked up and get started on this. But basically, a lot of these very successful business people, they go on not-for-profit boards, but they select these not-for-profit boards that are very glamorous and might further develop their own business reputations or put them in fun places with other powerful people.

10:56And I think really the not-for-profit board, like the board that you sit on presumably is not the most prestigious board. I'm sure you didn't do it for those reasons. You probably did it for other personal connection or some other reason like that. And so I think these not-for-profit boards, like other boards, ultimately if you end up in the situation where board discord makes it into the media, then unfortunately I have to say that is a total and utter failure of the chair of that board. That should never be happening. Fundamentally, my view of boards is probably similar to the prime minister's view of cabinet, which is there should be as much dissent as you want to have internally.

11:35You don't want people saying yes internally and just all agreeing. You should have as much dissent as needs to be had, devil's advocate, all sorts of disagreements inside the boardroom, but everybody should be heard and everybody should feel respected. That's your job as a chair. And in the end, when you come to a decision, even those people that didn't necessarily agree with that decision should be able to support it because they feel that the process was respectful and fair and they had their chance to speak. And almost certainly, I don't know any of the ins and outs beyond what I've read in the media about this particular implosion or explosion.

12:09I don't know if I call it, inflation or explosion, but whatever it is, blow up. I think somewhere there's been a failure of the chair to manage the dynamic of the people on the board. It might be in the selection of the board. It might be in how it runs, but this should never be happening. It's a total failure. It's hard without knowing the specifics because this is not just a not-for-profit. This is almost an industry organization. So it's got an extra element of complexity. Oh, yeah. It's a union. I should have called it a union, not a not-for-profit. You're right. Yeah, exactly. So it's a bit different.

12:45So like funnily enough, I've been on multiple not-for-profit boards and for-profit boards. The My Lemon Foundation board's outstanding. It's now led by Jeff Brown, but it's had multiple other chairpersons, all been outstanding. And I was on the Save the Children Investment Committee, which was incredible, the caliber of people on that. So – and with a couple of excellent chairs as well. So I've actually been lucky enough to have incredible boards that are not for profit and some pretty decent for profit boards as well. But I agree, the chairman is by far the most critical person. The chairman makes or breaks a board.

13:18A great chairman understands people's positions, ensures there's no unnecessary discord in the boardroom. Essentially, you want to have the major disagreements done almost before the board. You're only having massive screaming fights in a boardroom. That's not productive. So a great chairman sort of understands this and balances the dynamics. Sometimes it's actually really difficult because you've got warring factions that are simply irreconcilable. So then the PM or chairwoman has to manage that as best they can. But it can be a really difficult – and I'm assuming with this specific example, because it's a union, it's an industry organisation, it's probably just rival factions that are probably irreconcilable.

13:56So comparing this to a corporate board is probably not right. I guess so. I mean, I tell you a story. I think I can tell this story because enough time has passed. I can use names. It involved me personally. So as you know, Catapult went through a period where we parted ways with a CEO and right before that, the CFO left the business. And the thing is that whether or not things are your fault, when you're the chair, you need to take responsibility and own those things. That's your job. And so I've talked about this before. To say I was deeply unpopular might be the understatement of the century.

14:35There was a lot of consternation in the boardroom, but I have to say there was no anger directed towards me at all inside the boardroom. People understood what really happened. And I think people agreed that I just had to take responsibility for it. But it was a very stressful period because there were people running public campaigns against me. And when I say people, a person actually. And it was very stressful and I didn't know really what to do because I've been in that situation before. And so I can say your names now. I rang up Simon McKeon, who's a good friend of mine, who had previously chaired the CSIRO, obviously it was ex-Macquarie, on the NAB board, Rio, some other stuff.

15:16Australian of the Year. So accomplished, very accomplished, large public company director. And I said, this is a great year for me to talk to. He's got great advice, always has time for me. I said to him, this is the situation, what do you think? And we had a whole conversation, But the bit that I want to tell you about is he said this to me. He said, you should make sure that people inside the boardroom have the chance to express their views on what you should do and what's gone wrong. And you should take the best ideas of those and run with that as to what the solution is or the next steps. But make sure publicly that the board stays united as a united front and there's no leaking to the media, to investors.

15:58It has to be united. And he said, if you can manage to do that, everything will be fine for you. And I was very focused on following that advice. That's absolutely what happened. And I thought that was just a terrific piece of advice. And the flip side of that is the nature of what's happening now with this organization and why there's a question being asked about it. Once you lose cohesion of your directors and you start getting leaks, whether it's the government or a union or a not-for-profit board or a for-profit board, once people are no longer unified and they're just taking care of themselves, I think that's the beginning of the end for that board.

16:36I think the really important piece here, and this union surgeons thing is probably not a great example again, but I think the really critical piece is choosing the right people going in. If you pick the right people and you pick for culture and you pick for character, you probably won't have these issues. It's when you pick the wrong, be it executive or director, That's when you have your issues. So it's the buy, not the sell is the problem here. I've picked the wrong directors in the past and it's been a disaster. And the mistake is not that the issue that eventually happens, the issue is always going to happen.

17:09Same as when you hire a bad executive or bad employee. The issue is inevitable. You've got to get it right at the higher point. And then obviously when things go wrong, if you have hired the wrong person, you obviously manage it as best you can. But a board is no different to a terrible board member. is really no different to a terrible senior team member. And you've got to deal with it as best you can. It's just probably probably harder to get rid of a board member. The other bit of the question, which I'll just touch on for 30 seconds, is how do you balance technical and non-technical people on the board and specialists, et cetera?

17:41And I think my approach to that is you work out what the skills are that you need in order to do all of the jobs that you need to do as a board. So some of that's governance and ensuring that those boxes are ticked. And a lot of it is helping the CEO succeed in their role. And you work at the skills. You get people in that tick the boxes to fill those skills. And you make sure that no one comes into the organization unless they pass the bar for culture. And no matter how good they are or what their skills are. And if you do that, then what you find is, like if you just imagine it as a skills matrix, that you tick the boxes that you need in that skills matrix around the board table, but everybody enjoys being there and are working for a common good and have a shared sense of culture.

18:33And that's my approach to it. It's difficult, but I don't think it's – no, it's certainly not insurmountable. It's very achievable. I think the catapult board is a great example of that functioning really well. I agree. We will go to a super quick break and back with our final question.

18:55And we're back, Mike. Final question. All right. Final question for this week comes in from Chris Deary. Hey, Adam and Adir. Love the pod. With the recent Optus outage controversy, have either of you been involved in a critical incident or business response? and what are lessons and learnings from this outage? Can you also give perspective from board versus CEO in terms of role played? Thanks, Chris. Well, I haven't really been involved in a controversy. I mean, this is the worst controversy. When I say controversy, let's not call it controversy, let's call it crisis because really this question pertains to crisis management and I'll tell you some approaches I've got to crisis management.

19:40But this is the worst imaginable crisis because this is a crisis where there are dead people. And I can't imagine, like, you know, that is a crisis. Those are the kind of crises that you have when you're in the medical profession, right? Something goes wrong and people are dead. And they are the worst crisis because my general disposition is not that much matters in life at all. And people just kind of worry about things that aren't that important. But people dying, that's one of the things that matters. And so I think this is an absolutely horrible situation for the people that opt us to be in.

20:13Obviously, it's a tragic situation for the people affected. I noticed that, I just want to be clear and say, I noticed that there was like the police came out and said that the very young infant that died was not directly linked to the fact that the system had failed. But it's horrible. And so I think crisis management, like there's a few parts of crisis management that we've seen companies get right and also get wrong. And I think if I'm honest with you, like Optus had big problems last time around in their, what was it, a cyber attack crisis? That's a more common type of crisis. And the way I think about it is pretty simple.

20:51Like there's a few elements to it. How do you fix the problem? There is, why did it happen? and there is maybe how do you stop it happening again in the future and then there's communicating. And I don't say those in order because people often get the order wrong, but the order is fix the problem and communicate. They're the two most important things. And then worry about recriminations much later down the track and how to fix it long term. And so often the mistakes you see are people are hunting for who did it, what happened, who's responsible, we want heads to roll, And there's a lot of pressure on companies to put some heads on spikes.

21:31And the thing is that you don't know what happened. And now is not the time to start investigating what happened beyond that requirement to fix the problem, right? What happened? But the other mistake that companies make is that they seem to become completely fixated on solving the problem and just have a complete communications vacuum that develops because they feel like we're busy fixing the problem. We can't turn our attention to how to get the communications with the public or stakeholders or customers. We can't turn our attention to getting that right. And that's a tremendous problem because if there's an information vacuum that has been left by the organization, it will be filled by other parties and that will just make things much worse.

22:17And so I think fundamentally, every company that I know has a crisis management plan. Every company I'm involved with in some way that's a significant size has a crisis management plan for various types of crises so that you don't have to try and think and solve these problems on the fly as they happen. They go and they practice this crisis management and do simulations. I think, if anything, the main problem that occurs in these crises in Australia is a lack of high-quality communication early in the crisis would be my summary of that. And by the way, just to finish my last bit of this, I'll say the CEO's role, the CEO is like the captain.

22:59So all of this execution coming up with the strategy is their idea. And the role of the chair is to make sure that it is being done and it is high quality and it is good to go. That's the relationship between the CEO and the chair. Yeah. I think I can synthesize. I think Scott Galloway says it really well. He talks about this a lot and he's a comms expert and obviously a great podcaster as well. And he's got three rules for something goes wrong. And whether Optus actually did this, they sort of half did it. So, but Optus obviously had some real issues going in. So, that credibility was shot. But Scott Galloway's three rules are acknowledge the issue.

23:37The top guy or girl takes responsibility, which is, as you said, the CEO gets out there and takes responsibility. Then you overcorrect. You do those three things and nothing's perfect, but that's probably the best roadmap to getting something fixed from a comms perspective. Then you can obviously work on how does this not happen again. As you said, obviously you've got to stop the bleeding in the first stage, which Optus actually did within like five minutes. As soon as they realized the problem, it was fixed. Then they kind of stuffed the communication again. And I feel a bit sorry for the CEO of Optus here because he's kind of eight months into the role.

24:06Clearly, he's not a tech expert. Like if anything, it's probably underinvestment from Singapore because it's just an investment from them. So it's hard not to feel sorry for Stephen Rue, who sort of inherited this mess. It's really hard to blame someone who's been in the role so little. But I think the comms could have been better, but I don't know if anything Optus could have done here after the last debacle when Kelly really, Kelly Bayer-Rose, when the front was CEO, really stuffed up the comms. They were kind of on a hiding to nothing here. But we've never had any, so I would touch wood, any crises.

24:36But we've never had sort of issues that arise, and whether it be sort of HCCC asking us for something or a regulator asking us for something. My view is I will tend to deal with it myself and I think that tends to be a good way to approach a regulator or whoever we're dealing with. They know they're speaking to the person who's got the ultimate responsibility and can make the call rather than delegating it to lawyers or external counsel or whatnot. I think the notion that a leader delegates these sort of things because they're messy and hard is just the wrong approach. And same with an issue with PR or comms.