Why the ABC board sacked Michelle Guthrie

Confusion at management level over the ABC’s budget, low staff morale and a failed political strategy led the board to remove the broadcaster’s first female managing director, Michelle Guthrie, halfway through her term.

Led by an increasingly proactive chairman in Justin Milne, the board, Guardian Australia understands, repeatedly warned Guthrie over several months that in its view she needed to improve her relationship with Canberra and give the ABC executive certainty over the budget, which was groaning from a huge redundancy bill.

After several emergency meetings the board decided on Sunday to move against Guthrie.

“It didn’t have to be so brutal,” one senior source said. “But in the end she refused to go.”

In the past few weeks there had been emergency meetings and phone hook-ups and in the months leading up to Monday there had been executive workshops and letters to discuss the issues, Guardian Australia understands.

Guthrie’s own view however suggested she was caught off guard by the decision. She released a strongly worded statement saying she had done nothing wrong and was devastated by the decision to terminate. She also threatened legal action and engaged her own public relations consultant.

“I have invested more in investigative journalism; more in ­regional journalism; more in innovative content; and increased the efficiency and effectiveness of work across the ABC,” Guthrie said.

“I believe there is no justifi­cation for the board to trigger that termination clause. I am considering my legal options.”

Sources close to Guthrie say her defence of staff and her management team contributed to tensions, but so did perceptions that she didn’t understand the public broadcasting culture and she wasn’t prepared to take on the ABC’s enemies.

A tweet by the Four Corners executive producer, Sally Neighbour, exposed the tension about budgets inside the ABC, as reported by Guardian Australia on Friday.

Despite giving the ABC enormous kudos this year, Four Corners had been dismayed to be told that a promise of money for four additional episodes was no longer on the table.

It wasn’t just Four Corners suffering from budget uncertainty. The news division was told it had to find extra money for the federal election coverage next year, an event usually funded by the corporation’s global budget.

With more than 1,000 departures since 2014, 400 under Guthrie’s watch, the ABC’s redundancy bill is enormous, with some estimates saying it is running at $50m a year.

All departments were told to find savings and projects like Guthrie’s own “Great Ideas Grant”, which encouraged all staff to pitch ideas for new content, were put on hiatus. Sources said Guthrie seemed unconcerned about the hole in the budget, so executives became frustrated and began dealing with Milne directly.

A long lead time is needed for television projects and managers were unhappy that Guthrie seemed oblivious of their need for certainty.

“The lines of reporting are unclear and have impeded decision making. There is no leadership, no strategy, no vision,” one executive said.

Like the departure of Jonathan Shier in 2001, some observers have said Guthrie’s removal could have been managed quietly, without shock announcements and legal threats, but Guthrie was an outsider to the end and refused to heed the board’s warnings.

When relations broke down and Milne finally got the numbers on the board he moved swiftly, according to multiple sources. At 9am on Monday morning she was delivered a letter about her termination. She left the building shortly afterwards.

In the end Guthrie had few allies and had outsourced so many of her duties to the people around her that she was considered dispensable.

She seemed to hate the spotlight and rarely gave media interviews.

Milne had already become the public defender of the ABC in the press. This year he responded to a sustained attack from News Corp with an opinion piece for Fairfax Media calling out “fringe political interests, populists and commercial media” for trying to weaken the ABC.

It was the head of entertainment and specialist, and now the acting managing director, David Anderson, who gave media interviews about ABC content and the chief financial officer, Louise Higgins, stepped in when Guthrie declined to speak to politicians or the media.

Guardian Australia has talked to some who say that what has unfolded is a story that has more of the elements of a classic boardroom power play than a tale of political interference from the government.

Milne, a former telco executive, has made no secret of his desire to raise $500m for digital infrastructure for when the ABC is fully digital and no longer has to broadcast television and radio. Guthrie is said to have been less than enthusiastic about the plan, dubbed Project Jetstream.

“We need to embrace Jetstream wholeheartedly and move forward,” Milne told ABC News’ Joe O’Brien when he tried to explain why Guthrie had been removed. “It’s a big infrastructure project and it’s a difficult thing to decide to do because we’re building infrastructure that won’t be used for three years.”

Not everyone is supportive of Milne’s excitement about Project Jetstream – one insider even called it “nuts” – and Guthrie did have some fans on the board. But Milne had more, and in the end, he outwitted her.

However, although the disagreements over digital infrastructure were of a recent nature, the signs were there early on that Guthrie was not going to excel at dealing with another tricky area – Canberra.

She complained about the committee running late when she appeared before her first Senate estimates committee in 2016; she said it wasn’t her job to lobby for more money and she missed the crucial budget estimates hearing to fly to Singapore for a family engagement.

Her trips to Singapore are a major bone of contention between the two camps. Guthrie insists she didn’t fly out very often but multiple sources told Guardian Australia Guthrie spends more than the usual amount of time out of the office. She also attends board meetings in Singapore where she is an independent non-executive director of the telco StarHub.

Higgins, a Guthrie appointee who was more comfortable dealing with politicians and the media, stepped in for her at estimates and did well. “Lou has been effectively running the place,” one executive said.

Two years into Guthrie’s tenure the board was horrified when a staff engagement survey showed that staff satisfaction had fallen from 52% to 46%. “The leadership team treats employees as the ABC’s most valued asset,” scored just 17% and “The leadership team creates excitement about changes required for the ABC’s success,” 18%. The board told her she had to improve the scores.

But Guthrie’s championing of endless Google-style workshops and morale-lifting projects such as ABC Principles, and the Utopia-style Larry thank you cards, were a disaster, and made the ABC the subject of ridicule.

“Her style was very News Limited,” one former executive said of Guthrie, who spent much of her career as an executive for Rupert Murdoch’s global television empire. “She was a smart business person but she didn’t understand that the ABC was a complex beast that had to be managed with sensitivity and care.”