The headlines said it all, “Packer returns”, and no it wasn’t the old bloke raising himself from hallowed ground at Ellerston in the Hunter Valley, but the scion, raising himself from his Melbourne Casino and trying to regain some clout in the mainstream of Australian media, politics and business for some very obvious reasons overlooked by the fawning media coverage this morning.
As of 10.30 am, Packer’s involvement in the sale of a big parcel of Ten shares late yesterday, hadn’t been confirmed. He has until Friday to do so.
Remember all those stories about how James Packer’s sale of PBL Media was the big signal that the old media was dead? Well, old time free to air broadcasting here, in the US and UK is where the rebound in advertising is really being felt.
But Packer is a year too late to be portrayed as being farsighted and a clever risk taker.
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The really clever thing would have been to buy Ten last year. Mr Packer had three chances, but missed them all.
If he had been clever, why didn’t he support the abortive issue Ten tried at the start of 2009 as its Canadian parent, Canwest struggled to survive and Ten came close to collapse? That issue was at 75c, Canwest sold its stake at around $1.30. Ten raised $138 million of new capital at $1.15 a share later in 2009 as the market and economy escaped the grip of the GFC.
Why didn’t he buy into any of these deals? He could have in fact saved Ten last year and been a hero, and reaped all the financial and political benefits. But he was sulking about the failure of his casino plays and unhappy at the nasty media pointing it out.
Right now, content is king in the US in broadcast media. The ‘new media’ understand that. Ad rates and revenues for FTA broadcasters are up at double digit rate in the past year, especially in Australia.
All these new channels, pages, pipes, gizmos, iPads, smart phones of the new media all need content. Even Apple and Google understand that and are doing deals with TV Networks and film studios for content. Attempts to buy content through takeover is out, partnerships (like Hulu) are in. The new media groups can’t produce content, despite trying to. Internet TV will need content, as Comcast in the US understands with its huge bid for NBC.
In Australia, Ten is the best single media play. The outdoor business can be sold (at a loss though) and new broadcast businesses added over time. Ten has very strong agreements with major US media groups such as Fox and CBS which continue to throw off hits such as Glee, Dr Phil and NCIS. It has Masterchef.
What wasn’t explained in all the media coverage this morning was how James Packer is going to bring super skills to improve what Ten is doing.
Let’s remember Nick Falloon was fired by James Packer nine years ago, so would he stay at Ten? There are other refugees from Nine at Ten (such as News director Jim Carroll). How does George Negus now feel about working for a TV Network where a Packer is going to be a influence? He fled 60 Minutes and Nine years ago and hasn’t looked back, or been interested in returning.
James Packer is not and has never been a positive influence in TV. He has been sceptical about the future of FTA TV and print, enthusiastic about new media. He never wanted to stay in the old media, rejecting it for gambling.
Nor is his choice of executives inspiring. John Alexander so damaged Nine that talent (on air and off air) fled — voluntarily, or involuntarily (myself). Some of Alexander’s appointees undermined Nine’s news and current affairs reputation. Packer and Alexander’s worst appointment was Eddie McGuire as CEO of the Nine Network in February 2006. McGuire started cutting staff and costs. Remember the now infamous ‘boning’ reference in a affidavit filed in the case involving former Nine News chief (now at Seven), Mark Llewellyn. The McGuire appointment alone shows how much both Packer and Alexander had little understanding of managing media assets such as Nine.
If John Alexander is appointed to the Ten board by Packer (Alexander is currently a high-priced chairman of Cons Media which is really a post box and an office), then heaven help Ten, it will be all downhill from then on.
David Gyngell was a Packer appointee to Nine first time around, but he fled in April 2005 because of interference (as he put it) from Park Street (John Alexander and others). But Gyngell returned under the new owners, but not without talking it over with James Packer before saying ‘yes’.
Gyngell is now a director of Crown. That will make for a rather large conflict of interest potential at Crown board meetings. No doubt some of the media will talk about the possibility of Gyngell going to run Ten; well what about the equity pool that CVC established to ‘incentivise’ PBL Media management like Gyngell and Ian Law (another failed Packer management appointee) and keep them at the company? That equity crystalises when PBL Media is eventually refloated (and there is a similar situation at Seven Media Group).
James Packer quit PBL Media and now the sycophants in the media claim it was because he was tired of all the scrutiny that went with being a mogul. So he sold to CVC, took the money and decided to go deeper into gambling, where he proceeded to lose hundreds of millions of dollars in silly over-priced plays in the US, UK and Australia. The same writers gave him a towelling for that as well. After the event, mind you.
And now we are to believe that Mr Packer is over that unease at public exposure (and accountability, to non-Packer Crown shareholders) and wants to play with the big boy of Australian media Kerry Stokes? Stokes kept dealing through the GFC, when he could. Packer went and lost huge amounts of money and went into a funk. Stokes grabbed control of West Australian Newspapers. There’s no comparison at all. And we can’t forget Rupert Murdoch, still stranded in print and Pay TV. He’s reportedly back here next week, what will he say?
James Packer is not very clever when it comes to the media. It was because he was so sour on TV and magazines that he wouldn’t participate in CVC’s recapitalisation of PBL Media two years ago. That saw his remaining 25% stake cut to less than 1%, which in turn opened the door for Kerry Stokes to clamber into the Consolidated Media share register, which he did.
If the PBL Media stake had been maintained at 25%, Stokes would not have been able to buy any more than 14.9% of Cons Media, but he could and forced James Packer to outlay several hundred million dollars to increase his stake to around 50% and reach a standstill agreement with Stokes.