The buck should stop with Lachlan Murdoch for Ten’s woes, as detailed in the annual report released yesterday. So why is he being let off so lightly?
The Ten Network’s ham-fisted attempt to bury criticism of the blood-letting in its newsrooms is part of a pattern of trying to fly beneath the radar. It’s not working.
The latest attempt to maintain a low profile in the face of adversity was seen in the 2012 annual report released yesterday. Right from the “Highlights” page at the front, the network attempted to spin the vaguely positive and avoid the embarrassing. So we saw mention of ”group revenue of $865 million” and “$94 million” of “group EBITDA”. Both facts were both true and misleading.
Missing from the page was the fact that group revenue fell 13.5%, while the EBITDA figure was down 45% from a year earlier and became a loss of $12.9 million through those mystical book-keeping entries called interest, depreciation, amortisation, tax and more than $23 million (net of tax) of write-downs (on Eye Corp assets) and the buying website, OurDeal Pty Ltd; redundancy and other one-off costs.
Also missing from yesterday’s “review” were the 116 pages of full financials for the group, released with the annual result on October 18. Not many shareholders would take a close look at those if issued with the annual review, but they do include the details of $125 million of related party transactions with directors, Lachlan Murdoch and Jack Cowin, up sharply from 2011.
What was also avoided in yesterday’s review was any profit forecast for the coming year, except that costs would be under control (and held to CPI in the present year) after the latest round of sackings. But the first half of the 2012-13 financial year looks like remaining in the red with the weak ratings and lower revenue, the cost of dud shows and another round of redundancy costs, but that forecast was absent from the report, as was any hint about when shareholders can expect a return to profitability and dividends.
Chairman Lachlan Murdoch was suitably sombre in his comments: “The Company acknowledges our ratings and revenue in 2012 were not what we expected, and that our programming schedule on the primary TEN channel did not perform as hoped. At any time this is unacceptable, let alone in a weakened advertising market. The Board believes that the Company has been responsive and is taking immediate action to address its ratings and financial performance.”
Those were all rather obvious and expected from the chairman of a company that has just lost millions and faces more losses.
But nowhere was there a sense of who has been to blame for the problems. Yes, the old management played a part (forced out by Murdoch and the board), but their impact was concentrated in the 2010-11 financial year and the early months of the 2012 year. Many of the problems Ten encountered with weak ad revenues came because of the weak economy in some sectors, but were also linked to the weak ratings performance referred to by Murdoch.
And who put that in place? Murdoch in his role as interim CEO in 2011. He also recruited CEO James Warburton who struggled to make a mark in 2012. Next year is his big test. Unlike his chairman, Warburton at least showed some compassion for the staff sacked or made redundant in the latest round of cost cutting in his annual report comments:
“To the people who departed as a result of the Review, please accept my sincere thanks for your contribution to the Ten Network. Your commitment and work has been appreciated and we wish you well.” But from the chairman, nary a word to those who have lost their jobs.
Over at News Ltd there was the usual breathless reporting of the departures from the Ten news division in the latest purge, but there was also a reluctance to try and explain why the sackings were necessary and who was to blame. Take a look at these reports this week from the Herald SunandThe Australian. This morning, The Australian had the hide to bury its story on the Ten annual report behind its paywall. The story itself quoted chairman Lachie and Warburton, but didn’t mention the recent round of bloodletting.
Some Fairfax reports have been slow to apportion blame. Fairfax though has its own crosses to bear about performance and the thinning out of staffing levels.
But nowhere in these reports did anyone finger Lachlan Murdoch and his role in Ten’s ratings annus horribilis and the job cuts. According to media industry gossip, Nine’s David Gyngell played a role in Ten’s recent strategy by recommending former Nine News executive Anthony Flannery to Lachlan Murdoch, and Paul Henry, the Kiwi host of the now abandoned Breakfast program (who is earning $333,000 a year, for $1 million over 3 years and not a million a year).
Henry is now a casualty, as are others on the program. That’s the responsibility of Murdoch. He is chairman and a leading shareholder, and effectively controls the company through the valuable output deals with Fox and Shine (both owned by News Corp, of which he is a director and shareholder).