If you believe News Corp, its recently acquired 7.5% stake in long-time enemy Fairfax Media is “entirely friendly to the existing Fairfax board”. And if you believe Fairfax, not only is the stake “friendly”, but the two bitter rivals want to “work together to make both companies more efficient” by sharing transport and other back-office functions.
Both comments are unadulterated rubbish. News has invested in Fairfax to inflict maximum damage on its competitor – as it has always done for the most obvious of reasons for almost half a century – or at least to ensure that it has the primary seat at the table if the dilapidated Fairfax is sold, merged or carved up like an old horse.
Writing in the Financial Review today, former chairman of the Australian Competition and Consumer Commission Allan Fels says “there is a strong case for the ACCC to take court action forcing News Corp to divest” its interest in Fairfax. He continues:
News’s 7.5% in Fairfax is widely seen as positioning Murdoch at the table as Fairfax is either sold or its valuable mastheads, such as The Age, The Sydney Morning Herald and The Australian Financial Review, are carved up among players. News has become one of the largest Fairfax shareholders, ensuring Murdoch has a strong say in the future ownership and perhaps running of the company.
That is an extraordinary prospect. Between The Age, SMH and AFR, Fairfax is News’s sole competitor in the big Sydney, Melbourne and national newspaper markets.
The possibility of Murdoch influencing the future ownership of a competitor has obvious trade practices concerns.
Fels – who as ACCC chief was himself the victim of several duplicitous News Corp corporate manoeuvres, one of which resulted in the unintended death of the Adelaide News – notes that “sleight of hand has featured in the media asset game in the past” and that “News Corp has form when it comes to directing future control and ownership of competitors”.
Now News is at it again, this time with the apparent collusion of its unworldly arch competitor. Fairfax is a company run by a board of dunderheads whose combined experience and knowledge of the newspaper industry would barely add up to 1% of the experience and knowledge of Rupert Murdoch, arguably the most successful media owner in history who has a habit of playing even his most accomplished competitors off a break.
The saddest part about naïve dunderheads being “friendly” to their arch rival isn’t that they and their shareholders will get snookered by a the shrewdest operator in the game. The saddest part is that they will drag three of Australia’s finest newspapers down with them.