“Murdoch called up the Mirror photographers and his sports correspondent rounded up a group of toughs. At one o’clock in the morning they surrounded the Anglican Press, attacked the Packer gang and drove them from the building. The next day the Mirror published a story under the headline, ‘KNIGHT’S SONS IN CITY BRAWL’. From Murdoch, by William Shawcross.
The “knight” was Sir Frank Packer, the sons Kerry and Clyde, and the year 1960. This was the very year when the Fairfax managing director Rupert “Rags” Henderson sold Rupert Murdoch the Mirror, giving the young Sun King his maiden entree into the Sydney media market.
The Packers and Murdochs have fought, formed friendships and fallen out again ever since. When it comes to business though, dominating media, they have pursued a mutually expedient course for 50 years.
These ancient dynastic rivalries seemed to have been aroused again this week when James Packer, in dramatic fashion, stepped down from the board of Ten Network – having enlisted only a couple of months back. Wide-eyed journalists jumped at the story – Ten’s acting chief executive, Lachlan Murdoch, poaches gun sales boss James Warburton from Kerry Stokes’s Seven Network to be his permanent successor. Packer has bitter falling out with Murdoch.
Great story, but sadly untrue. It is spin. Spin swallowed holus-bolus by many a pundit this week after the usual, breathless, deep-background briefing by sources.
The real story, as BusinessDay reported, is that Stokes was miffed at the Warburton move and Packer fell on his sword as a director to appease him. But as for the Packer-Murdoch fallout … this humble scribe would be more inclined to believe the hearsay about the lads having a good laugh over these latest high jinks over a ciggie in the back of a limo this week. For media scions, this is sport.
There is every reason for Stokes, Packer and Murdoch to manufacture a fallout and no reason for them to have one. Here is their playbook: let’s control as much media as we can so we get sporting rights and other content on the cheap. Take out the rivals. So they took out Ten Network with a 20 per cent share raid, struck an alliance or two for a voting block and promptly took over the board.
Taking out Ten is taking out a rival bidder for sporting rights; the likes of AFL, league, union, cricket, you name it – all a licence to print money if you win them at the right price.
Meanwhile, thanks to his raid on ConsMedia last year, Kerry Stokes had already picked up a stake in Foxtel alongside Murdoch and Packer. Pay TV subscriber numbers are plateauing. Time to screw down the costs and ratchet up the sales. And take out the competition, of course. Austar that is. Confirmation came this week that Foxtel was talking with pay TV’s second player with a view to a takeover. Austar shares shot into orbit.
So now we have Stokes, Murdoch and Packer interests controlling the Ten and Seven networks, and Foxtel with Austar to come. Packer’s best mate, David Gyngell, is running Nine while Murdoch controls 70 per cent of the country’s newspapers and Stokes has just moved on WA News. Nice work from the boys. Not much chop if you are a sporting body, or an elite athlete, or even a media consumer for that matter. But a heck of a play … and nary a squeak from the government.
What would you do if somebody sauntered up and said: ”Look, you’ve got a big mortgage on that house of yours. You know, that’s a bit risky if things turn bad. What say I buy that house off you with your own money, say half of the cash you have in your bank account … oh, and while I’m here I might as well have the rest of that cash anyway? How about it?”
As chronicled here last week, this is the nature of the low-ball bid for Alinta Energy proposed by private equity mob TPG, and curiously advocated by Alinta directors themselves. The bid is 10¢ a share, $80 million all up. Yet Alinta has $138 million cash in the tin, a bunch of power stations, and it’s trading cash-flow positive.
A further inspection of the financials shows that only $100 million needs to be repaid in 2011. Looking to other maturities, the whole $2.6 billion falls due on September 30 next year. Plenty of cash in the tin, plenty of time to refinance the rest.
Under the privateer’s plan it seems the company would be left with only $15 million in cash compared with $138 million now. That’s buried in the notes to the interim accounts. Interred deep in the notes to the memorandum – a document supposedly prepared by directors for the purpose of proper disclosure to shareholders – is a loan of $1.6 billion owed by Alinta Finance to Alinta Holdings (and hence shareholders).
This is critical. TPG and Alinta management (see resolution nine, page 191) have come up with a plan to equitise this loan, make it worthless. The syndicate is threatening to dump Alinta Holdings into administration, even though it sits above Alinta Finance, and edge out the current shareholders from the structure, leaving them without a zac, not even a seat at the table in that event. Wild Bill Hickok would be turning in his grave.
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.