Can a big media name still “add value” to media assets? Lachlan Murdoch must be hoping so – or else he must know something that we don’t.
Ever since James Packer seemed to be departing the media stage it has been easy to think that the era of media moguls was almost over – and perhaps it is. Nevertheless the presence once again of the names Packer and Murdoch in a media deal gives pause for thought.
Have we been wrong to think that the media future was about faceless institutional investors and private equity? Perhaps.
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The answer will lie in the playing out of Lachlan Murdoch’s claim that he can add value to the assets.
He needs to do so. As Steve Allen of Fusion Media points out, for all the talk of close friendship between the two men, there is no doubt that James Packer has screwed a very high price out of his old mate.
A burning and unanswered question is how Lachlan Murdoch could borrow, in this market, substantial funds when venture capitalists lend on income and serviceability and only take into consideration asset strength as a secondary issue. Some observers are saying it is not commercially possible for that borrowing to take place based on the facts that we know – therefore, what don’t we know?
Given that Murdoch and Packer’s shareholding in the key media assets will be strategic rather than controlling, and given that Murdoch is the leading partner, how does he propose to add value?
Channel Nine already has a game plan that is finding favour in the industry, and one can imagine Kim Williams of Foxtel’s reaction to the suggestion that he needs to do much differently, when he is already doing quite nicely thank you.
Murdoch will bring in his experience, and his contact book – contacts that he can leverage like no other. In other words, even though he wants to be his own man, being a Murdoch, with all the life experience and connections that brings still counts for a lot. Is this enough “value” to explain the deal?
The alternative explanation is that this is one leg of a bigger game plan to do with News Limited’s Australian assets. For some time within News Limited people have toyed with the idea that Lachlan may one day buy the newspapers from the larger News Corp. Perhaps this is not entirely fanciful, or perhaps there is something else going on.
Regardless, it seems that being a Murdoch (or a Packer) still matters, but it is no longer a simple thing. The dance is between the power of an old name, personal track records, and the hard number crunching of venture capitalists.
Is the era of the media emperors on its last legs? I think so. These days they are not so much emperors as viceroys manoeuvring in their own interests while serving faceless money.
But watch this space.