Howard's rewriting of the media laws could cause a shake-up Down Under
It was the Duke of Wellington who said: "publish and be damned". His sentiments are no doubt shared today by many publishers, who feel damned by falling advertising, rising costs and pesky intemperate journalists who insist on being paid salaries. On top of that, none of them has yet discovered how to make money out of the internet.
Australian Prime Minister John Howard has chosen this particular time to break the rusty 14-year chains that shackle the media industry in his country. The Byzantine regulations prevent newspaper barons from owning metropolitan TV stations and vice versa, as well as block foreigners from buying control of either. Australian TV broadcasters cannot hold radio licences. Overseas concerns can have as many radio stations as they like, but are only allowed a 25% stake in metropolitan newspapers, a 15% holding in free-to-air TV and 20% in Pay TV.
The advent of Pay TV, which carries more than 40 channels to 20% of the potential TV audience, and the international news content on the internet, are believed to give Australian seekers after entertainment and wisdom sufficient diversity of choice.
Howard plans to hurry laws repealing the regulations through parliament this month. They are likely to be opposed by elements in the opposition Labor party, and are by no means sure to pass unscathed through the senate, where independents hold the balance of power.
But if the handcuffs do come off, the permutations for corporate action are numerous. Billionaire Kerry Packer's Publishing and Broadcasting Ltd (PBL) owns Channel Nine, the leading TV broadcaster with a 30% share of the total audience, a stable of magazines and the Crown entertainment and casino complex in Melbourne. PBL recently launched an internet gaming operation in Vanuatu aimed at Asian gamblers.
Packer has long lusted after John Fairfax, publishers of the Sydney Morning Herald, The Age in Melbourne and magazines including the Business Review Weekly and Shares. The company also owns the highly regarded Australian Financial Review. Packer sold a 14.9% strategic holding in Fairfax last year, and many thought he had given up the hunt. Now he may be back.
But he could be in for an Irish stoush. The pugnacious former rugby international Sir Anthony O' Reilly has let it be known that his Australian vehicle APN News and Media could do a better job of running Fairfax than the current incumbents. The Fairfax chairman, one-time Jardine Matheson taipan Brian Powers, has indicated such overtures would be far from welcome. Fairfax is vulnerable. It depends on advertising for 80% of its profits, which CEO Fred Hilmer says will be "well down" on the A$128 million (US$67 million) earned last financial year. The group would be keen on some TV involvement to boost flagging revenue held down by its f2 online business.
The media industry is in the same boat. Advertising spending fell about 8% to A$7.5 billion in 2001 and there have only been tentative signs of a pick-up this year.
Rupert Murdoch's News Corp derives 75% of its earnings from abroad. Locally it owns national daily The Australian, and a clutch of other newspapers. News and PBL each own 15% of the Foxtel Pay TV station, together with majority holder telecommunications group Telstra. Murdoch would dearly like an Australian free-to-air TV station to bolster his Foxtel operation. The logical target would be the third ranking broadcaster, the Ten network, which has had considerable success with the youth market. Channel Ten is 57% owned by the Canadian Can West concern, which got around the foreign ownership rules by holding non-voting shares. The Seven network, the second biggest station, owned by swashbuckling Kerry Stokes, is not thought to be on the auction block. There is an outside chance Murdoch could get hold of Channel Nine. Kerry Packer, a kidney transplant recipient, is not a well man. But he remains a consummate deal-maker. He has already sold Channel Nine once. Alan Bond paid an eye-popping A$1 billion for the station a decade ago. Packer bought it back for A$300 million out of the rubble of the Bond empire.
With the Australian media on the ropes, and the local currency in the doldrums, the door is wide open to some foreign players. Conrad Black's Hollinger group in the UK, which owns the London Daily Telegraph, the Jerusalem Post and the Chicago Sun Times is certainly interested. Black briefly held 25% of Fairfax in the 1990s, but quit the stake in frustration when he could get no further.
Financial Times publisher, Pearson, is said to be a long standing suitor of the Australian Financial Review, if that was ever spun out of Fairfax. The Daily Mail and General Trust group, which owns 60 radio stations in Australia, is keen on expanding into newspapers, US giants AOL Time Warner, Disney and Viacom have also put out feelers. Stay tuned.