Two major media groups have been fixed up with Telstra stories, but
both are a little narky for not been leaked the other’s info.

Don’t we all love our Telstra, the ‘magic pudding’ of the Australian
financial and political markets over the next two to three years.

A scoping inquiry announced this week by the Howard mob to start the
sale process, a carefully leaked media attack on middle management
numbers. That one was the News Ltd paper, The Australian and this is the way it was confirmed and reported by the ABC here.

And in another strategic leak, this time to The Australian Financial Review,
about the newly tough Telco board rejecting a proposal to buy the
regional Pay TV operator, Austar for $1.4 billion. That was rejected by
Austar as speculation this morning after the AFR story appeared.

Both major media groups fixed up and both a little narky for not been leaked the other’s story!

So Rupert Murdoch’s mob was ‘on the drip’ and the pesky AFR (which is close to PBL and the Packers) as well. Both “serviced” with good news leaks. Board decisions really, aren’t they?

And gee if Telstra had have paid $1.4 billion for Austar, which is
marginally profitable, it would have been Telstra ducking and weaving
to defend itself while Austar would have luxuriated in the glory of
getting Telstra to yet again pay a silly price for an asset.

But no chance of that happening under the new hard-man of Telstra –
chairman Don McGauchie. And of course, no mention of the monopoly
that Austar would bring to Telstra’s already dominant position in Pay

Telstra would control a rival delivery platform. The deal would have
had no chance at the ACCC, even with the media law changes next year.
Nor much consideration of the ACCC’s disdain for Telstra’s reluctance
to sell off its 50% of Foxtel, nor any consideration of the bolstering
of the Seven Network’s legal actions over Pay TV and sport that
were well explained in The Australian’s Media section yesterday – Stokes prepares for battle.

The sale process was being pushed by the Castle Harlan Mezzanine
Partners private equity group that features that old war horse, Bill
Ferris, as one of its driving lights.

They bailed out Austar a few years ago when the US parent was short of
loot and contracting. CHAMP got in very very cheaply and is now sitting
on profits of more than $800 million.

So rather than sell its 54 per cent stake into the market, which would
have meant fewer profits (but still very substantial) CHAMP apparently
decided to get the buyer of last resort, Telstra, to transfer some of
its semi-taxpayer loot to the CHAMP partners.

Having shafted CEO Ziggy Switkowski for a number of reasons, including
paying too much for assets, and suggesting silly possible assets(the
Fairfax purchase deal earlier in the year), you’d hardly expect the
Telstra board to turnaround the pay a very high price for a Pay TV
business that would in turn allow a bunch of private equity risk takers
cash in an enormous profit.

The board’s heads would roll if that happened, especially too, with the sale process underway.

So you have to wonder at just how smart the people at CHAMP really are
when they completely misread the lie of the land, especially the
political realities of what’s happening to Telstra at the moment.

Likewise the news of the slimming of the middle management ranks and
not the unionised work force, which has been attacked with a big stick
in recent years from Frank Blount’s days onwards, nor the levels of
upper management. But that might have to wait until the new CEO is

But middle management are the great unrepresented. And no doubt the
senior management in the various business groups will be rewarded for
cutting job numbers in their groups, or rather getting rid of those who
are least able to defend themselves.

But the most offensive ‘spin’ was the line that the move on middle
management had nothing to do with the sale process or prettying up the
telco ahead of the sale. And pigs might fly!

This company has had years to “de-bureaucratise” itself.

Will the attack include an enormous reduction in the number of in house
spinners, the investor relations, corporate affairs, government
relations and other faceless folk (and occasionally public when it’s bad
news) that number 300 by some estimates?

Telstra says it has 4,500 middle managers, just over 10% of the 40,000 employees at the company.

Getting rid of two thirds of the PR’s etc would provide a big start to the process of ‘de-layering’!

How about it Don? Don’t be an Apprentice! Do the deed!