Sam Chisholm’s return to the PBL board means that Kerry Packer finally has someone on his board who understands television.

The prodigal returns to the fold to help the man who helped make him rich. Sam Chisholm is back on the PBL board to fill the Packer’s most pressing need, someone who can understand and drive a television business.

For all the cash of Crown and the steady, remorseless market dominant of ACP magazines, PBL’s most visible and variable business is the Nine Network and it’s the one where a steady, competent management touch has been lacking since Kerry Packer capriciously sacked David Leckie back over New Year 2001.

It’s been more than three and a half years of management and staff instability, earnings pressure, questionable programming decisions and concerns that once the current advertising boom slows next year, all those huge financial gains will be lost.

Not that Nine isn’t still winning the ratings, easily. But this year in particular the cardinal sin in the eyes of the Packers has been allowed to happen. Seven, the former Fairfax-owned rival (now owned by Kerry Stokes) has been given a sniff.

And that is no more evident than in the performance of the key Nine station, TCN 9 in Sydney. That was up to the Olympics last month. Since the Games ended this week, Nine was done very well leading to hopes that it has repelled the Seven challenge in News and Current Affairs, particularly in Sydney.

It’s too early to say but you can regard Chisholm’s return to the fold as a bit of insurance to make sure it won’t happen, with a bit of foresight thrown in for the tough decisions to be made later this year in 2005 about staff, on air and off air, programs and costs.

Chisholm’s experience running Nine for 15 years (not to mention his long experience in sales) and then saving, running and creating BSkyB in London for Rupert Murdoch, means that for the first time since Leckie was flicked, there is someone on the board who has an intimate knowledge of TV.

Kerry Packer knows that while he has good instincts, Chisholm has a better grasp of the business and how to motivate staff, especially on air stars. Chisholm has already been acting as a defacto executive, helping get Ray Martin and Jana Wendt back on air. Ray in 2003, Jana in 2004.

He’s also been seen with his hand in the appointment (a disaster) of Jim Rudder as News and Current Affairs chief. That was probably the worst decision when John Alexander was running Nine and overseeing David Gyngell, Kerry Packer’s Godson.

Gyngell is Nine CEO and still takes direct control of the news and current affairs area. With Chisholm on the board, look for that to change over time. John Westacott will have his hopes up that Chisholm’s appointment gives him a chance to take Rudder’s job. But first ‘Westie” has to make sure the damage to A Current Affair is fixed and the Today Tonight Challenge from Seven is repelled.

Putting Chisholm on the board with his free to air and pay TV experience will be of considerable help to David Gyngell and to PBL CEO, John Alexander, who failed in his time running the now defunct PBL Media, which included ACP and Nine.

Alexander has continued to learn the gaming and gambling business, but unusually he wasn’t appointed to the Burswood board last week. The PBL representatives are James Packer as chairman, CFO Geoff Kleeman and Crown boss, Rowen Craigie. If Peter Yates had have been still at the helm you can bet he would have been named to the board given the Burswood deal was his baby and he has considerable understanding of casinos.

But the Chisholm appointment should be also seen as putting pressure on Alexander and Gyngell in the TV area. Alexander is still CEO of ACP, although David Gardiner, his deputy, has more day to day control. There are still reports from within ACP of unease among the senior publishers at Gardiner’s lack of editorial experience. But he does have good operational skills.

Alexander and Chisholm are mates from way back when Alexander was a business journalist at the Sydney Morning Herald and at the ACP mag, Australian Business. It is a friendship that has continued, so there won’t be any overt threat. Just pressure.

That Telstra has allowed Chisholm to remain chairman of Foxtel is nothing short of astonishing and an indictment of how little that company has invested in media-savvy executives.

Despite the public comments, News Ltd will not be happy. Seventy five per cent of the votes on Foxtel will be ranged against News, which has management control at the pay TV businesses, which despite the best hopes of some in the business, remains as far away from profitability as ever. The current huge spend on digital ensuring that the red ink will flow for another two years.

Each of the shareholders has the right of veto (which PBL has used repeatedly over the years), so News can’t be out-voted. But the impression will be there of Telstra and PBL ganging up on News.

But News and PBL do control the Premier Media Group and its major arm, Fox Sports. They make well over $30 million a year from selling Fox Sports and other channels to Foxtel, which helps offset the losses. While PBL and News have a common interest there, that is about making money, not strategy. The future share and direction of Foxtel remains the key strategic objective.

And that’s where the ACCC comes in. Pressure is slowly mounting for the pay TV business to be pushed out of Telstra. Having Sam Chisholm sitting there as chairman representing PBL and Telstra will increase that pressure. It is not a sign of true independence, no matter what Chisholm might say.

After all he still hasn’t explained in public why he quit the board of John Singleton’s company despite chairing it for several years and sitting on the Telstra and Foxtel boards with conflicts of interest flickering all over the place.

News and PBL would be natural buyers of Foxtel, but a wildcard is the Seven court case involving its now defunct C7 pay TV business, Foxtel, Telstra, Nine and News. Chisholm has already rated a major role in that and when it gets to court, will be an important witness, according to Seven sources.

Having him inside the camp on the PBL board is much easier than appointing him after any nasty court case involving the hated Seven.
Chisholm’s move onto the PBL board is a recognition (the deal was done by dad and not son James) that as deputy chairman and the real ‘fat controller’ of PBL, Kerry Packer could see the major weakness.

It’s TV (free to air and pay) and it’s where he’s moved to shore up the defect, which he created more than three and a half years ago.
More than anything the problems PBL has had in Nine in an operational sense since are Kerry Packer’s responsibility. He after all determines who’s in and who’s out of the company, and owns 36%.

Terry McCrann – his master’s voice

Subscriber email – 6 September

Of course he speaks sense, but he also speaks with his master’s voice. That’s Terry McCrann. His commentary in The Weekend Australian on the move by Samuel Hewlings Chisholm to leave the Telstra board for PBL, while remaining chairman of Foxtel, has got right up the News Corp nose. And so it should.

Crikey has written on McCrann’s views on certain Chisholm related issues in the past here.

But on this one, we agree, even if we are coming at it from different motives. “Chisholm must leave weak Telstra board now” thundered the headline in The Weekend Australian.

A strapline on the column summed up Telstra’s role “Someone has to dig Don McGauchie out of his asbestos-linked bunker at the telco.”

Exactly, where is Mr Invisible? Did acting with Chisholm to remove Bob Mansfield compromise McGauchie? McCrann said Chisholm had to leave the Telstra board now and cannot remain chairman of Foxtel.

“These two statements are so obvious and so absolutely irrefutable that the failure of the recently elevated Don McGauchie to understand them places a question over his competence in that position.”

“Unless he ‘changes his mind’ he has to go the same way as his predecessor, Bob Mansfield, who, perhaps ironically, was toppled by an insurrection led by Chisholm and fellow director Catherine Livingstone.”

Good point Terry, so where is St Catherine of Telstra on this issue? The Telstra board has allowed a clear conflict of interest to occur. That means the board, less Chisholm, has no clue, whatsoever about pay-TV and how Foxtel should be run. Where is the corporate governance, the openness and transparency on this and other issues on the Telstra board?

Terry’s clarion call (on behalf of News, mind you) is in contrast to the approach in the Saturday Sydney Morning Herald as you can see here.

So very Emerald City. A bow towards the greater issue of conflicted interest, but a certain star gazing about Sambo and Kerry, but right on the fact that Chisholm will nursemaid James Packer in the TV and pay-TV area, and offset whatever influence John Alexander might be gaining.

Chisholm also adds expertise in the day to day management of free to air tv (as well as pay). That is the biggest weakness at PBL and one created by Kerry Packer and no one else.

Chisholm’s move will repair that defect. But his interference in the past couple of years hasn’t been impressive, so he has work to do to show that he is capable of understanding free to air TV 2004 style.

While Chanticleer and other Fairfax columnists have discussed the invisible McGauchie, McCrann’s attack on the man in his “asbestos-lined bunker” was the most succinct yet. Perhaps the other commentators want to maintain their access to Chisholm and PBL, as Sam is famous for cuddling up to favoured hacks with a stream of tips.

McCrann’s attack also puts paid to the notion from Fairfax, the Seven network and others that control of Foxtel has been handed to Packer and PBL. As everyone in the media should know, each shareholder in Telstra has the right of veto. PBL has exercised that for years because it feared News and Telstra ganging up on it. Issues such as the deal with Optus, bundling, digitisation were all viewed suspiciously by the Packer camp.

The media moguls do have some commonality of interest. Remember they own Premier Media Group (Fox Sports and other channels) which clips Foxtel for well over $30 million a year in pure profit to offset the losses from operating Foxtel.

All Terry McCrann is signalling is the unease at Holt Street in Sydney and in New York at news Corp HQ at the Chisholm move and his remaining as the Foxtel chairman. He goes, News backs off. Simple as that. They have no objection to Chisholm joining PBL (after all he was a director of PBL and ran BSkyB for several years).

But read McCrann. It’s entertaining, it’s subjective, but it’s right. We can’t find The Weekend Australian piece online, but McCrann had a similar message in the Murdoch tabloids on Friday as you can see here.