So just how good a businessman was Kerry Packer? This letter from Chris Woolley in The AFR on January 3 certainly takes a different perspective from what has been spouted across the media over the past fortnight:

James Packer’s $6.9bn start

The media has
made much of Kerry Packer’s business acumen. Prime Minister John Howard
referred to him as one of Australia’s toughest and shrewdest business
operators. When Frank Packer died in 1974, his son Kerry inherited a
media empire worth about $100 million. Kerry Packer’s estimated wealth
at the time of his death this week was $6.9 billion.

Now if $100
million had been invested in the Australian sharemarket in September 1974
through a balanced portfolio of our top 200 companies, that portfolio
would be worth a lot more than $6.9 billion today. How much more is
debatable, but if we use the S&P/ASX200 Accumulation Index for that
period, such a portfolio would be worth almost $11 billion. This is all
very hypothetical, of course, but it’s a fair an reasonable comparison.
Investors would have been getting a little impatient with a fund
manager who trailed the index by that amount.

However, we need
to keep things in perspective. Kerry Packer was certainly worth a
motza. But he started with a motza too. Now we’ll see what his son,
James, can do with the $6.9 billion.

While Packer may
have been “larger than life” (in John Howard’s words), he wasn’t in the
same league as Rupert Murdoch or Frank Lowy as a businessman. That’s
because of what he inherited in 1974 – an empire which boasted a strong
stable of magazines, led by the AustralianWomen’s Weekly, Channel Nine in Melbourne and Sydney, and a smaller group of regional newspapers.

Lowy
started out with absolutely nothing in the 1950s and now controls the
world’s biggest shopping centre empire. Meanwhile in 1952 Murdoch
inherited a company that his father’s biographer, Ronald Younger,
estimates was worth $9 million in today’s dollars and is today
capitalised at about $70 billion, with the Murdoch stake worth almost
$10 billion.

That said, PBL shares are up another 19c to $16.94
this morning, valuing the Packer family’s 38% stake at $4.19 billion.
However, if Kerry Packer was such a legend, PBL shares would have
fallen far more than just 21c to $16.40 on December 28, the first day’s
trading after his death. With that sort of muted reaction, he doesn’t
even make Crikey’s list of market movers.

With the All Ords up another 30 points to yet another record this
morning, PBL shares have now surpassed the peak reached during the
dotcom boom and could yet reach the record of about $17.50 attained in the
aftermath of John Howard’s Senate election coup.

Most commentators rate Packer’s Channel Nine dealings with Alan Bond as his smartest move, but Terry McCrann reckons it was the 1998 purchase of Crown Casino that was his best deal.

However, once again this demonstrates how conservative Packer was in
some of his deal-making. Packer’s original investment in Crown was
through his private companies and he did contemplate a private takeover
at just
45c a share, which was conditional on all sorts of benefits that not
even the Kennett Government could stomach. When the asking price rose
to 60c a share, Packer
decided this was too much for his private empire, so PBL offered its
own paper. The Packer family would be at least $1 billion richer today
if Kerry had simply paid with his own cash, rather than dilute his
family’s stake in PBL.

As to his best deal, I agree with The Age’s Malcolm Maiden who wrote this about Packer on December 28:

His biggest win arguably was one of the least publicised — the 1986 purchase
of Valassis, an unfashionable American magazine advertising insert business. The
resale of Valassis in two tranches in 1992 and 1997 is said by Packer insiders
to have generated dividends and profits of more than $2 billion.

However, like with so many investments, Packer would have done better if he’d hung on to Valassis, which is today capitalised at $US1.4 billion even after a 30% share price slump over the past four months.

The same can be said of Packer’s purchase of a 10% stake in Westpac in
1992. He sold it to Lend Lease for a profit of $100 million a couple of
years later but would be sitting on a stake worth more than $3 billion
it he’d stuck with it over the years.

Packer certainly knew it was wise to accept Alan Bond’s offer for
Channel Nine, but he wasn’t always the smartest seller and this might
explain why his wealth accumulation has underperformed the broader
market over the past 30 years.