The
Millionaire Factory is trying to out-Rupert Murdoch when it comes to
controlling media assets and gouging fees with minimal capital
commitment.

Rupert provides just 10% of News Corp’s capital
while enjoying total control, protected by his odious poison pill and
subservient board of cronies. But if you look at the Macquarie Media
prospectus, that looks like reasonable governance compared with
MacMedia.

As Lisa Murray reports in the SMH
today, MacBank has lifted its fee gouge game to another level for the
billion-dollar MacMedia float. This time, MacBank will continue to be
paid even it is flicked as the manager. This mob’s hide must be even
thicker than their wallets.

The Macquarie fees never end, but
where do they begin? Well, there’s an $18 million slug for advisory and
float fees, an annual “asset base fee” of 1.5% of the asset (and guess
who gets to revalue the assets any time they feel like it?) plus a
performance fee of 20% of any profits over a remarkable low hurdle rate
of just 6%. You can get 6% on deposits with BankWest.

The
prospectus forecasts a yield of between 7.5 and 8.6% in the company’s
first year, so you can see that hurdle rate isn’t even trying.

It’s
all pretty rich for bundling up 85 country radio stations they bought
for $366 million last year, stitching the Macquarie name on and talking
up blue sky about purchasing other nebulous media assets somewhere
sometime. Hey presto, those radio stations are suddenly worth maybe
$600 million in the float with the rest left over for play money.

The
real joke though is that Australian fund managers, desperate for new
plays in which to sink the rivers of superannuation funds, will meekly
go along with it.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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