Ziggy Switkowski’s evidence in the Kerry Stokes v World court case yesterday effectively put on the record
what everyone has long expected – Telstra has been played for mugs by its
partners PBL and News Corp.

It’s Telstra that lost billions on rolling
out and writing off the Foxtel cable while the Packer-Murdoch alliance makes
money out of the game through its Fox Sports operation – the operation that had
everything to gain by the demise of Stokes’ C7. It’s Telstra that would stand
to finally stop losing money on Foxtel if the service was as attractive as
possible, but one could form the opinion that PBL and News are more interested
in protecting their other interests.

As Liz Sexton reports in The Smage, Switkowski
told the court Telstra wanted Foxtel to carry C7, as its AFL product would
attract subscriptions in the southern states.

Dr Switkowski said he knew News and PBL would use a power
of veto in the partnership agreement to stop any deal with C7.

He believed PBL’s objection was related to its wholly
owned Nine Network: “Having regard to the competitive relationship between
channels 9 and 7, neither side would easily accept arrangements that would
benefit their rivals.”

News was motivated by “a preference for its interest
in Fox Sports”, owned 50:50 with PBL, he said.

Telstra’s justification for the Foxtel
financial black hole has always been that it was a defensive action for its
telephone business to prevent Optus getting an advantage rolling out cable. Along
the way though, the telco has been taken for a ride by News and PBL who have
made a nice little earner out of Fox Sports while Telstra bleeds.

Which brings up an aspect of the alleged
media ownership debate that has been overlooked – the unofficial alliance
between PBL and News on matters of mutual interest has already substantially
reduced media diversity. John Alexander’s assiduous cultivation of John
Hartigan as well as what used to be James Packer’s relationship with Lachlan
Murdoch and Kerry Packer’s fear of antagonising News all work to ensure the two
biggest media operators in Australia are careful not to tread too heavily on
each other’s toes.

And when their interests coincide, too bad
about those who stand in their way. Just ask Ziggy.

Peter Fray

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