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Aug 30, 2013

Election IOU: how will Rupert call in Abbott's debt to him?

The Murdochs will have a long list of obligations they will expect Tony Abbott to meet when it comes to media policy. Bernard Keane and Glenn Dyer compile the hit-list.

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We’re unlikely to see “It’s the Tele wot won it” on September 8 if Opposition Leader Tony Abbott wins the election, but News Corporation will be eager to convey the message not just in Australia but overseas as well: its newspaper might be bleeding readers, its print business model might be broken, but it can still swing elections against parties that have incurred its wrath.

It thus won’t merely be disgruntled Labor supporters who will view Abbott as Rupert Murdoch’s pick, but News Corporation itself, whether Abbott is editor Chris Mitchell’s legacy project before he moves on from The Australian, or new Telegraph editor Col Allan’s demonstration of how tabloid power and baby boomer memories of Hogan’s Heroes can still be wielded.

And with that will come expectations: expectations that Abbott will deliver for the company that helped him into the Lodge. For a company mired in red ink, with mastheads like The Australian losing tens of millions of dollars a year, those expectations may be great indeed.

The News Corp wishlist for media policy is therefore likely to be substantial, given the difficulties facing its print arm. Expect it to include:

  • A new look at anti-siphoning: changes proposed by then-communications minister Stephen Conroy in 2010 were never legislated, leaving the door wide open to an Abbott government to further amend the anti-siphoning scheme in Foxtel’s favour. Watch out for amendments to the anti-siphoning rules to reduce the capacity of major sports to deliver their own content without broadcasting. Under amendments proposed by  Conroy, internet content providers would have become subject to the anti-siphoning rules. That would be enacted and possibly extended to rights holders themselves, who even via Malcolm Turnbull’s half-baked “copper magic” broadband network would be able to deliver HD coverage of matches directly to subscribers, with the likes of Foxtel reduced to renting out cameras and outside broadcasting vans.
  • More handouts for free-to-air networks and in particular Lachlan Murdoch’s beleaguered Ten Network. The Gillard government halved television licence fees in March; watch for further licence fee cuts, possibly with the now-traditional justification of protecting local content.
  • A return of government recruitment advertising to newspapers. The Gillard government moved government recruitment advertising online, stripping The Australian and The Australian Financial Review in particular of millions of dollars of taxpayers’ money. Watch for that to be restored.
  • Curb the ABC I: expect an undoing of the Gillard government’s decision to permanently award Australia’s international television service to the ABC, with an amendment to the ABC Act removing the requirement that only the ABC operate such a service. Then, in time, another tender process would likely be commenced, one that Sky News will be in the box seat to win.
  • Curb the ABC II: as both News Corp and its main rival, Fairfax, are moving behind paywalls, the ABC remains a key competitor with its freely available online news and commentary. In his famous McTaggart Lecture in 2009, James Murdoch, before he ended up corporate roadkill in the phone-hacking scandal, attacked the BBC for “dumping free, state-sponsored news on the market”, which “makes it incredibly difficult for journalism to flourish on the internet. Yet it is essential for the future of independent journalism that a fair price can be charged for news to people who value it.” Expect a campaign from The Australian, which routinely attacks the ABC as biased, for the Abbott government to rip into the ABC budget in order to end its unfair online “news dumping” that lures eyeballs away from News Corp websites.
  • And then there’s the real prize for News Corp — 100% control of Foxtel, which can only be achieved by forcing out the other 50% shareholder, Telstra. Foxtel has gross revenues of $4 billion and gross profit of $1 billion, and while it has an estimated $2.1 billion in debt, control of the cash flows would boost the weak and dying print businesses of News Corp Australia. It would also allow Foxtel/News to emulate BSkyB in the UK and plunge deeply into offering more services, such as internet broadband, mobile telephone services and improve emerging platforms like its mobile apps.

The key to control of Foxtel is getting Telstra out. Telstra doesn’t need the cash — it has billions coming in from the NBN (although Telstra might baulk at further deals with “copper magic”). But if an Abbott government were to do a deal on the NBN with Telstra in exchange for getting it out of Foxtel, all in the name of freeing up competition, then News would be very happy and Murdoch’s support would be generously repaid.

In the meantime, there’s a somewhat more pressing regulatory problem. If News Corp doesn’t release its 2012-13 results by Monday (to take account of Friday ending early Saturday our time in US timezones), the company will be in clear breach of ASX regulations, which require all June 30 balancing companies to release their results by the end of August. The ASX won’t be happy being forced to take on News and the Murdochs with their powerful friend Tony Abbott headed into the Lodge.

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