See how the Telstra-Fairfax takeover debacle unfolded on Crikey’s daily sealed sections:

Fairfax, leaks and the Chisholm “takeover”


Sealed Section – February 18

According to The Bulletin’s Ross Greenwood, as revealed on the 6pm
Channel Nine news last night, there is division in the Telstra board
over a proposal to buy the Fairfax newspaper group.

The Bulletin: Ross Greenwood – Telstra’s failed paper chase

However, Telstra chairman Bob Mansfield has denied Greenwood’s
suggestion on ABC radio this morning saying, “no such discussion
occurred”, but he then admitted the board had discussed the possibility
of Telstra’s advertising division Sensis seeking a “structure” or
“transaction” with Fairfax.

Some might say that Mansfield was just being disingenuous because how
else could you put Fairfax and Sensis together without some form of
takeover or merger.

Read the Bob Mansfield transcript on AM this morning: Telstra Chairman denies Fairfax take over plan

The key contradictory quotes are these. First the denial:


“The basic premise of the article in The Bulletin… is that we discussed
the scenario at the board of Telstra taking over John Fairfax. That
certainly was not the case, and no such discussion occurred.”

And here’s the effective confirmation:


“But one of the things that we did want to look at, or management
wanted to bring the board up to date on, was whether it not it made any
sense for an advertising business like Sensis to see whether or not
there was a structure or a transaction in relation to doing something
with Fairfax that made sense.”

When you talk about “structure” and “transaction” involving a $3.5
billion listed publishing company and a Telstra division which turns
over $1.5 billion and makes an operating profit of about $600 million
then clearly it is a big deal and ownership is part of the equation.

Sensis is worth much more than Fairfax so putting them together would
be a company making transaction for Fairfax but it appears the Telstra
proposal would have kept the behemoth in control.

Check out this Business Breakfast story from two years back for an interesting insight into Sensis:
Switkowski talks up Sensis

Talk of a potential Telstra takeover was front-page news in the
Fairfax’s paper but it was given a slightly lesser run by most of their
News Ltd rivals.

However, Terry McCrann pumped out a stinging attack on Ziggy Switkowski
(with a still excessive 22 dashes) The Australian’s Michael West mocked
the Telstra chairman and CEO in his column with a  parody of Ziggy
and Bob preparing for retirement.

Michael West – Pipe and slip-ups time

The last thing Rupert’s powerful News Ltd empire wants is a stronger,
better-resourced competitor in Fairfax. Ziggy has long been a thorn in
the side of News Corp, which has dropped close to $1 billion in Super
League and Foxtel, so it is no surprise to see the Murdoch attack dogs
calling for his head.

Greenwood also has an anti Switkowski-Mansfield theme in his story
saying, “the fact that the board swung against the chairman and chief
executive must place enormous pressure on the pair.”

According to Greenwood, the board was split as follows on the proposal:

For buying Fairfax:

  • Ziggy Switkowski
  • Bob Mansfield  (former chief executive of John Fairfax)
  • John Ralph
  • John Stocker

Against:

  • John Fletcher
  • Catherine Livingstone
  • Sam Chisholm (Foxtel Chairman, former chief executive of BskyB, former chief executive of the Nine Network)

Isn’t that 4-3 in favour with support from the chairman?

The most interesting question from Crikey’s perspective is who leaked
to Greenwood? Could it have been the all-powerful Foxtel chairman,
Channel Nine backroom fixer, Murdoch confidante and Alan Jones
agent  Sam Chisholm?

Greenwood gives Chisholm a glowing report card in his story saying,
“his media experience and understanding of the type of content that is
suitable for Telstra was crucial in tipping the board against the
Switkowski-Mansfield proposal.”

Could this same media experience have also led him to leak the contents
of the meeting to Greenwood and fatally undermine Ziggy who got off on
the wrong foot with Chisholm three years ago when he asked “so what are
your politics?”

Crikey also hears that Chisholm may have been instrumental in the
sacking of Michael Pascoe as Channel Nine’s finance editor and his
replacement by Ross Greenwood.

Business Sunday’s ratings have since dived so this leak has made the Chisholm-backed Greenwood look good.

Breaching boardroom solidarity is a sackable offence and if Chisholm is
indeed trying to destabilise Ziggy and Mansfield then maybe the Howard
government should force his resignation.

Afterall, as an old mate of Packer and Murdoch he surely has a conflict
of interest in opposing a Telstra deal that might benefit Fairfax.

Speaking of conflicts, what about the Fairfax director and old Packer
mate David Gonski who apparently came up with the idea in the first
place?

We trust there would have been no success fee for Gonski had it gone somewhere.


Hillary Bary on teh Fairfax deal

Can you believe the nous of these clowns? The political implications of
a government-controlled body buying Fairfax are overwhelming – yet
these supposed top businesspeople and public servants seemed blind to
this in the pursuit of content.

The deal could have been one of the largest blows to media freedom this
country has ever seen.  It would have opened up three of the
nation’s four quality newspapers to direct political interference.

What does this say about the management involved, the financial advisers Telstra dealt with and the like.

The direct contradiction between what Mansfield is saying and Darryl
Williams’ comment is also a bit of a worry. Williams is a plodder
because he is a lawyer rather than a polly.  He might obfuscate
and hide behind legalisms on some matters, but most observers would
trust him to tell the truth – absolutely.

The Telstra-Fairfax fall-out

Sealed Section – February 19

The papers are full of the Telstra-Fairfax merger bunfight today with
News Ltd predictably going all out for the heads of Bob Mansfield and
Ziggy Switkowski and Fairfax focusing more on the destructive role of
the leaker who we strongly suspect was Sam Chisholm.

Crikey believes Chisholm should go as leaks of this kind should not be
tolerated by any major company board. No-one else has openly said
Chisholm was the leak but he is the obvious candidate as he is a master
of using journalists to whip up campaigns against his enemy of the day.

As John Durie noted in today’s Fin Review Chanticleer column: “Chisholm
has roared into the public spotlight on a self-managed publicity drive
that has him single-handedly revolutionising everything from
free-to-air television to the racing industry to pay television.”

Are there other examples of Chisholm using high-profile journalists for campaigns?

Why did Alan Jones launch so viciously against Macquarie Bank last
year? We suspect it was on the urging of his “agent” Chisholm as you
can see from piece on The Telstra-Fairfax fall-out in our archive.
 
Why did Mark Westfield run such a nasty campaign against Southern Cross
Broadcasting CEO Tony Bell which eventually elicited The Australian a
defamation writ? Again, we’ve been told it was the work of the 2GB
power duo of John Singleton and Sam Chisholm.

Chisholm is said to be a huge Crikey fan but we’ve never had any
contact with the most maverick media powerbroker in Australia. Perhaps
he should have leaked the story to Crikey as we’re the only outlet bold
enough to track his Machiavellian tactics and call for his head.

With a yarn like this the terms of it would have precluded Crikey from speculating on the source.

If Chisholm wasn’t the leak he should deny it. Yesterday’s refusal to
comment spoke volumes and we note that the people running his line are
not criticising him at all. This looks like standard “protect your
source” practice.

News Ltd’s Terry McCrann and Michael West, writing for the Herald Sun
and Oz respectively, both had the identical information that Ziggy and
Mansfield were rolled 10-2 when it came to a vote on bidding for PBL in
2000. Where did that information come from? Sam wasn’t on the board at
the time but doubtless he would have been told the vote by one of his
fellow directors.

Surely it is untenable for Chisholm to be a Telstra director, Foxtel
chairman, an unofficial hirer and firer of key talent such as Ross
Greenwood at the Nine Network and also the chair of 2GB?

There is plenty of misinformation in the media today and virtually
every outlet has a huge conflict of interest. Surely a Sensis/Fairfax
merger deserves exploring given the mutuality of interest in classified
advertising and the need to tackle the threat from the internet.

If the government can be a shareholder in Foxtel and controlling
shareholder of the ABC why can’t it be a minority shareholder in a
combined Fairfax/Sensis with about 30 per cent. Fairfax has a long and
proud history of editorial independence similar to the ABC.

Telstra trades at a discount to break-up value so surely it would make sense to look at demerging parts of the business.

If the deal was announced as part of a package to also sell out of
Foxtel you can bet your bottom dollar that News Ltd and Packer
commentators would suddenly be saying it was a great deal as their
bosses would love to run Foxtel as a 50-50 joint venture.

Crikey can’t see why Telstra needs to be in the content business and
believes it should sell out of Sensis and Foxtel as part of a
deliberate strategy to break up the biggest gorilla choking corporate
Australia.

That said, Mansfield’s performance in running the board has been pretty
ordinary and yesterday’s effort on AM was blatantly misleading. He and
Chisholm should both go but Ziggy, on balance, should probably keep his
job for now.

Ironically, any board coup will have to be decided by the government.
John Howard, Peter Costello, Nick Minchin and Darryl Williams will
decide in any “them or me” shoot-out between Ziggy-Mansfield and the
destabilising Chisholm.

Don’t buy this rubbish from Howard that he respects Telstra’s minority
shareholders. The Government votes their stock on 100 per cent of the
Telstra board.

They would appoint half the board and let the public shareholders vote
on the other half if there was any respect for the minorities.

Crikey is tempted to get 100 shareholders to petition an EGM proposing
a resolution to fire Ziggy, Mansfield and Chisholm. That would force
the government to show its hand, wouldn’t it?

The best of the reading in today’s papers on this story is as follows:

SMH news wrap:  Knives out in Telstra boardroom over Fairfax plot that hit the headlines

The Australian news wrap: Foiled bid puts Ziggy in hot seat
 
The Age on Telstra’s fury over the leak: Telstra furious over Fairfax plan leak

Alan Kohler’s strongly bags the Sensis-Fairfax merger: This proposal made no Sensis

Liz Knight hones in on the motives of the leaker: Telstra leaks, just like a government

Robert Gottliebsen points out the threats to Sensis and Fairfax: Telstra, Fairfax in fatal attraction

We worry about Michael West doing the bidding of News Ltd but his
Margin Call column today has those insights into Telstra’s aborted tilt
at PBL in 2000 and is funny to boot: The nays had it, 10 to two

The Australian’s Media cover story has the best quotes from Ziggy
trying to explain the strategy although it is strangely dated February
18: Telstra’s play

The Chisholm/Mansfield shootout

Sealed Section – February 20

The Telstra board is locked down in an emergency board meeting today
with CEO Ziggy Switkowski and chairman Bob Mansfield trying to force
the resignation of Sam Chisholm, regarded as the prime suspect in the
leaking of those highly sensitive boardroom discussions to Ross
Greenwood.

The Fin Review’s John Durie clearly got a briefing from a pro-Mansfield
campaigner based on the commentary about Chisholm’s array of conflicts
in today’s Chanticleer column.

Chisholm was given plaudits for not getting paid for his Telstra
directorship but if the bloke is so wealthy why hasn’t he at least
bought a few shares so that he has some skin in the game?

You then have his friendships with Alan Jones and John Singleton. Singo
has somehow retained much of the Telstra advertising account when he is
a notorious Labor mate who used to run their advertising campaigns.

Cynical observers also believe Chisholm may have influenced the
decision by Telstra to throw cash at the Parrot in sponsoring his 2GB
Breakfast show, an arrangement which has attracted the interest of
those paper tigers at the Australian Broadcasting Authority.
 
Then you have Chisholm’s chairmanship of Foxtel, a business which, as
Durie points out, has just included a network partly owned by Chisholm
on its suite of channels.

The much talked about programming merger between Foxtel and Optus
hasn’t been too good for Telstra because it removed a noose from around
the Optus neck and Telstra’s chief rival is now firing on all
cylinders. Thank you, Sam.

Then you have the fact that News Corp and PBL are recovering some of
their Foxtel losses by selling programs and channels to the pay-TV
monopoly at inflated prices. This leaves Telstra and the taxpayer
subsidising the media moguls and Sam Chisholm, the man who has worked
in high powered position for Murdoch and Packer over two decades,
sitting there supposedly representing Telstra.

The last bloke with major conflicts on the Telstra board was Steve
Vizard and he resigned rather than face a Crikey campaign against his
re-election at the 2000 AGM.

It is time for Chisholm to go too.

Interestingly, Durie did carry the following line today:

“For the record, Chisholm has reportedly repeatedly denied being the
source of the leak that was the basis for The Bulletin article this
week on plans for Sensis.”

Crikey would love to know who Sam reckons was the leak and, for the
record, we have been leaked material from high-powered directors before
who say “if I’m asked I’ll deny it”.
 
Then again, Chisholm is a respected businessman so his denials should be noted.

It certainly wasn’t Coles Myer CEO John Fletcher as he’s one of the
most secretive bloke in corporate Australia. Speaking of which, Coles
Myer shareholders can’t be happy with their man wasting his company’s
time on Telstra turf battles

The same applies with Fred Hilmer remaining deputy chairman of
Westfield Holdings whilst running Fairfax. Hilmer was particularly
bitter yesterday about David Gonski being named as the man who brought
the Sensis-Fairfax merger to the Telstra boardroom. David Gonski has
almost as many conflicts as Sam Chisholm and the two-person Westfield
audit committee comprises, wait for it, Fred Hilmer and David Gonski.

The closeness of their relationship was reflected in the crazy Fairfax
decision to try and ban Ross Greenwood’s Channel Nine cameras from
yesterday’s profit briefing. It looked churlish but Nine can hardly
claim the high ground when James Packer banned our man from last year’s
PBL profit briefing.

This is what Hilmer said to those same Channel Nine cameras about the
naming of Gonski by Greenwood: “That is one of the nastier and lower
quality pieces of reporting that I’ve seen out of The Bulletin. I don’t
know where they got that from. It’s absolutely untrue and they didn’t
call us before they wrote the article.”

For the record, Greenwood departed as BRW editor not long after Hilmer
became CEO and appointed Michael Gill to run Fairfax Business
Publications.

Inside the Telstra power struggle

Sealed Section – February 22

Alan Kohler stuck his neck out when writing in The Age and the SMH
about Telstra director and prime leak suspect Sam Chisholm on Saturday
with this line:

“Who was the leaker? Well, if Al Capone were chairman, Sam Chisholm
would be lying in a pool of blood already. He’s a friend of the
reporter who broke the story, a known opponent of the chief executive
and well connected with Telstra’s enemies. But he denies it.”

Check out his full interesting column here: Alan Kohler

However, there is another possibly scenario here. Could Chisholm have
blabbed about the deal to an associate who then leaked it to Greenwood?

Afterall, go back and read the Greenwood exclusive in The Bulletin again:

It makes no mention of Sensis at all when the proposal was all about
putting Fairfax and the Telstra  Sensis operations into a separate
structure, rather than a straight out takeover proposal. Surely a
direct leak from the boardroom would have covered this rather large
part of the proposal.

It is easier to imagine a director such as Sam Chisholm blabbing to
another “mate”, say PBL Media boss John Alexander, “those idiots
Mansfield and Ziggy had us waste half the board meeting over a proposal
to takeover Fairfax for god’s sake” without mentioning Sensis.

That then gets fed directly to Greenwood by his boss as a sure thing
shortly before The Bulletin’s print deadline. Did you notice the story
was not plugged on the cover or in the Bully’s index? It was obviously
a last minute job.

We also hear another fascinating snippet from a Telstra insider.
Apparently Sam Chisholm was briefed about the deal before the board
meeting last Wednesday and was strongly supportive.

Come the meeting, barely a few hours later, and he comes out all guns
blazing against it! Apparently Mansfield and Ziggy were rocked and
could not believe their ears – particularly as they had told others he
was in favour of it!

The big question is who did Chisholm talk to in the hours leading up to
the board meeting which prompted his spectacular about face? Was it the
same person or persons who subsequently told Greenwood about the
boardroom bust-up?

Finally, we have one other controversial name to throw into the
equation. Ziggy is being advised through this process by none other
than Peter Barron – the long-time Packer fixer.

Why would you hire a Packer loyalist of 20 years to advise you on a
huge Fairfax deal. Ziggy really does need some better political advice.
Maybe it’s time to get Natasha’s better half Ian Smith back into the
fold.


Robyn Hookes dances with the Sydney Devils

Sealed Section – February 24

What a strange combination of colourful Sydney media identities got
together with Robyn Hookes yesterday to launch the David Hookes
foundation and promote organ donation.

Kerry Packer was understandable because he was loyal to Hookes after
World Series Cricket and is also a donor recipient. The hand-holding
and cuddling was particularly touching.

Sam Chisholm seems to love any sort of media publicity and is also a
donor recipient so he took some time out from the Telstra boardroom
wars to sit next to his great mate Kerry Packer and talk about his two
new lungs.

But why on earth were John Singleton and Alan Jones also at the launch?

Hooksey disliked people from NSW and became a Melbourne media
personality working for 3AW and Southern Cross Broadcasting, a company
that hates Alan Jones and John Singleton.

Ironically, this launch was the Farmhand cabal, minus Bob Mansfield who
has obviously fallen out big time with the rest of the
Packer-associated crew.

Check out this Media Watch piece from two years ago on the politics and agendas of Farmhand and its key promoters:

Media Watch, Oct 2002: Telstra & Jones Water Australia

It will be interesting to hear what Derryn Hinch says about it on 3AW
this afternoon because the Murdoch splashes around the country made no
mention of the fact that David and Robyn had separated and Hookes had
taken up with a Cricket Victoria marketing assistant.

The Sunday Telegraph didn’t even give Sunday Herald Sun columnist Robyn
Riley a by-line for her Robyn Hookes interview. It made the piece look
like a News Ltd corporate statement.

It was very disappointing that no journalist successfully pinned Sam
Chisholm down over his speculated role in the Telstra-Fairfax leak at
the Hookes launch in Sydney yesterday. What a gutless pack of wimps.

No Murdoch journalist would be game given that News Ltd CEO John
Hartigan was present and the Murdoch papers have thrown their full
weight behind the Hookes campaign with front page stories across the
nation on Sunday and Monday.

We’ve always known that editorial independence is a sick joke at News
Ltd but what about the Fairfax journalists and ABC reporters?

The Murdoch and Packer families are Australia’s two richest and most
powerful empires. They are also ruthless and unsentimental – just look
at the way News Corp has creamed every last dollar out of the Ansett
sale without offering a jot of support to the thousands of
long-suffering former employees.

We were pleased to see Stephen Long follow up our Sunday sealed section
about this scandal on The World Today and the transcript should be up
on the ABC’s website shortly: http://abc.net.au/worldtoday/

The first law of finance journalism is to ask who is benefiting from a
deal and where the money is going. Apply that to the whole Telstra
bunfight and the party with by far the most to lose from the
Telstra/Sensis proposal is PBL.

On one hard, it would take Fairfax out of its reach forever. On the
other, it would mean Telstra wouldn’t be in a position to give the
Packers an exit strategy from Channel 9. Faced with that, PBL would
pull out all stops to kill the idea and keep it killed. So who ran the
story?  The Bulletin and Channel Nine.

As John Howard and Bob Mansfield contemplate moves to shove old Packer
mate Sam Chisholm from the Telstra board, they would have noted
yesterday’s show of strength in the name of David Hookes and organ
donation.

Ross Greenwood told Business Sunday viewers on Sunday morning that
Telstra directors were likely to be gathering for a crisis meeting in
Melbourne. Instead, Sam Chisholm was surrounding himself in a blaze of
publicity with his powerful friends.

Would the Government really risk the wrath of these people by taking on Sam? Don’t hold your breath.

Peter Fray

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