Tuesday, July 19, 2011

The Murdoch media game-changer

Stephen Mayne | The Drum | 19 July 2011

The biggest media scandal in the modern age is exploding and the world's most powerful family is under siege, yet some key players in Australia still don't understand that the media power game has changed forever.

How can it not when News Corp shares have tanked more than 20 per cent since July 6, senior executives are being fired, the British PM is under enormous pressure, arrests are into double figures, the police chief Sir Paul Stephenson has quit and the UK is openly pursuing numerous inquiries into media conduct, ethics and ownership.

Only this morning, News Corp shares in Australia plunged another 5 per cent as investor confidence collapsed in response to all the weekend drama. A company capitalised at $44.76 billion two weeks ago is now only worth $35.8 billion. The Murdoch share of this $9 billion wipe-out is about $1.2 billion and now Bloomberg reports there are stirrings from independent News Corp directors such as Tom Perkins and Viet Dinh.

While it is the British Labour Party leading the charge against Rupert Murdoch, Conservative prime minister David Cameron also baldy called time on political kowtowing to media barons when he said the following last week:
Over the decades, on the watch of both Labour leaders and Conservative leaders, politicians and the press have spent time courting support, not confronting the problems. Well, it's on my watch that the music has stopped and I'm saying, loud and clear - things have got to change.
In future, politicians have got to stop trying to curry favour with the media, but instead regulate properly.
We were all in this world of wanting the support of newspaper groups and, yes, broadcasting organisations and when we are doing that do we spend enough time asking questions about how these organisations are regulated, the malpractices and the rest of it? No, we did not. We have to.
As part of this "new paradigm", David Cameron has already released full details of all his meetings with editors, executives and media proprietors since becoming prime minister and will continue to do so on a quarterly basis. Why don't Australia's current political leaders follow suit?

It would also help the debate if past Australian political leaders confessed to their own wheeling and dealing with the likes of Rupert Murdoch and his minions.

Ray Martin was only half joking during last night's savage 60 Minutes assault on News Corp when he described Britain as a "Murdocracy".

When it comes to Murdoch media domination, Australia is even worse - the worst in the world, in fact.

A long line of Australian politicians have had unhealthy relationships with the Murdoch and Packer families through the decades.

The connections, deals, endorsements, donations and cross-fertilisation should now be retrospectively examined. For instance, why shouldn't former federal communications minister Graham Richardson be called to appear before a parliamentary inquiry to discuss the millions of dollars he was paid by the Packer family to lobby and comment after leaving parliament?

Similarly, Rupert Murdoch's replacement for the now-arrested Rebekah Brooks as CEO of News International is Tom Mockridge, who went straight from Paul Keating's office to News Ltd in 1991.

It was Keating's 1986 media ownership changes which cleared the way for News Corp to develop its ridiculous 70 per cent Australian newspaper market share courtesy of its 1987 takeover of the Herald and Weekly Times.

The Murdoch press backed Keating at key moments in his subsequent war of attrition against Bob Hawke, yet Keating has never given a full account of his dealings with Murdoch, let alone admitted the HWT takeover was a disaster for Australia's democracy.

On Lateline last Thursday, the best Keating could do was call for tougher privacy laws and confirm the blindingly obvious that News Ltd was currently "at war with the Gillard Government".

In fact, Keating defended the 1987 HWT takeover on the basis that his cross-media ownership laws forced Murdoch to sell his interests in Channel Ten in Melbourne and Sydney.

These days, the ASX-listed Ten Network Holdings is a much bigger national network with TV licences in every mainland state capital.

And who is a 9 per cent shareholder, director and CEO of Ten at the moment? None other than News Corp director Lachlan Murdoch, eldest son of Rupert Murdoch, who was backed into the job by his great mate James Packer.

Having controversially wound back Ten's investment in sport and news - something which critics point out assists the Murdoch-associated Foxtel, Fox Sports and Sky News - Lachlan abandoned Ten's Pyrmont headquarters to attend a conference with his father in Sun Valley two weeks ago.

He has now joined his father and siblings in London managing through the News Corp crisis, which points again to the inappropriateness of his current gig running Ten.

Since taking the long handle to Murdoch, British Labour leader Ed Miliband has seen his polls ratings soar by 7 per cent. On Sunday he made his boldest pronouncement yet, suggesting that media companies be limited to no more than 20 per cent of the British newspaper market. Given News Corp has about a 40 per cent share, Labour is effectively advocating a break-up of its UK newspaper interests.

Hmmm, where does that leave News Corp's 70 per cent market share in Australia? Such a dominant position Down Under allows this New York-based company to pick and choose which voices are heard by the masses in any public debate.

For instance, on Saturday I read Andrew Bolt's column in the Herald Sun railing against Bob Brown's call for a media inquiry and submitted a letter for publication in today's paper.

Alas, as occurs every time I submit a letter to the Herald Sun, the editor refused to publish. So, here it is:
Letter to the editor of the Herald Sun responding to Andrew Bolt column
Why is Andrew Bolt railing so hard (July 16) against Bob Brown, distorting his comments by claiming the Greens leader espouses views which represent a "first step to totalitarianism"?
Senator Brown is primarily concerned about the concentrated media power held by this paper's owners, News Ltd - a power that can enable the company to nationally promote and distribute a right wing reactionary commentator like Bolt, who the Herald Sun proudly declares is "Australia's most read columnist".
As a former business editor of the Herald Sun who spent eight years at News Ltd, I'm concerned about the global ethics of News Corporation after the British phone hacking scandal, and that the company has excessive and ever-growing power in Australia.
No other western democracy has a foreign-domiciled company which controls 70 per cent of the newspaper market. If British politicians can oppose News Corp moving to 100 per cent ownership of BSkyB, why aren't we having a debate as to whether News Corp managed Foxtel should be allowed to take over Austar for $2.7 billion and create an Australian pay-TV monopoly?
Similarly, I'm concerned that Rupert Murdoch's eldest son Lachlan Murdoch has been appointed a director and Acting CEO of Channel Ten whilst remaining a News Corp director.
This unhealthy concentration of media ownership and power is the core of the debate advanced by Senator Brown, not some desire to compulsorily acquire all privately owned media to create a government media monopoly, as occurs in totalitarian societies.
Stephen Mayne
The events in Britain make it blindingly obvious that the Federal Parliament should review both media regulation and media ownership, just as News Ltd is commendably reviewing all payments over the past three years to check if News Corp's UK tabloid practices polluted its Australian division.

It was John Howard who last attacked media diversity when he secured control of the senate in 2005 and weakened ownership restrictions, triggering a wave of media takeovers.

News Corp wasn't particularly active in the consolidation, although in April 2007 it paid more than $200 million to buy the Sydney-based Hannan family's FPC stable of 25 magazines and 13 community newspaper, including The Wentworth Courier in Malcolm Turnbull's affluent seat.

However, the past two years has seen a sudden burst of Australian expansion activity by the Murdochs.

Firstly, in November 2009 Lachlan Murdoch paid about $120 million for a 50 per cent stake in the DMG radio business, which owns the Nova stable. This was followed by his move on Ten late last year.

You then have the long campaign that the Murdoch-influenced Sky News has run to knock the ABC off for the Government's $223 million Australia Television contract.

The biggest moves have been through Foxtel, which will grow its subscriber base substantially after agreeing to shell out almost $500 million for the live broadcast rights to every AFL game, except the Grand Final, over the next five years.

Foxtel is 25 per cent owned by News Corp which has management control and this AFL rights deal was quickly followed by the attempted $2.7 billion Austar takeover to create a pay-TV monopoly.

The ACCC is currently deliberating over this but it would be amazing if it didn't get dragged into some sort of parliamentary process as well.

Tony Abbott has predictably shown no interest in any media inquiry and why would he given that News Ltd has transformed itself into a war machine against the Gillard Government and carbon pricing.

John Howard, who remains Abbott's mentor and close adviser, made these very strong comments on Insiders yesterday:
I mean, the media has been inquired to death in this country. They'd better be careful. They might have a revisitation of that famous appearance of Kerry Packer before the media senate inquiry where he really bashed them up. I mean, heavens above. Let the media do its job. We don't want another inquiry.
Such sycophancy to media moguls is precisely what David Cameron is saying should end. British politicians are no longer afraid of powerful bullies like Rupert Murdoch, yet John Howard reckons our crop should "be careful" for fear of being "bashed up".

Such language makes you believe Hugh Grant when he told 60 Minutes last night that the Murdochs were almost running a protection racket in Britain.

British politicians have had enough, but it remains to be seen whether their Australian brethren will follow suit and openly investigate the question about whether News Corp, or anyone else for that matter, should be allowed to dominate the Australian media scene.

Perhaps the best way to focus the mind is to ask whether Coalition politicians would be concerned if someone else took control of News Corp.

Chinese government companies are buying up plenty of Australia's resource companies. Would News Corp be okay for Beijing to control?

After all, it was said to be News Corp's second biggest voting shareholder, Saudi prince Alwaleed bin Talal, who helped finish off Rebekah Brooks when he criticised her performance in an interview with the BBC last Thursday.

If King Abdullah's nephew added to his existing 7 per cent interest by buying the Murdoch family's 39 per cent voting stake, would anyone be concerned? Of course they would.

And given the revelations about the way News Corp systematically abused its power over British democracy and the police, we should also be having an inquiry as to whether this particular company is fit and proper to exert so much influence in Australia.

Stephen Mayne is a shareholder activist, business journalist, local councillor and publisher of The Mayne Report. He can be reached by email on Stephen@maynereport.com or on Twitter @maynereport.

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