Only in Australia’s ever-more incestuous media industry could the following circumstance pass unremarked upon this morning in the acres of media comment devoted to the axing of Ten CEO Grant Blackley and the ascension of Lachlan Murdoch as CEO (acting).

In fact, we are now in a media fairyland in this country where anything is possible and everything impossible is possible.

Yesterday’s beheading of Blackley means we now have at the Ten Network a shareholder who is acting CEO, who owns a competing radio network (located a couple of doors down from Ten’s HQ in Pyrmont in Sydney) and who is a big shareholder and director of News Corp, which owns 100% of News Ltd, which owns competing newspapers and magazines in Sydney and across the country.

None of our morning yappers though it necessary to point out the extent to which Murdoch is so badly conflicted. He is not only a shareholder in Ten and a director, but is now in a position to see its advertising secrets and best deals, while being a director of two competing media groups with their own ambitions to grab some of Ten’s ad dollars (just as Ten wants to grab those flowing to DMG radio stations and News Ltd papers and magazines).

And what happened to the protocols the Ten board said last year would be put in place to ringfence Murdoch and his One.Tel twin James Packer? Axed chairman Nick Falloon announced the arrangement in early November: “We are pleased Mr Packer and Mr Murdoch have accepted our offer to join the Ten Holdings board and agree that appropriate board protocols will be put in place.”

No word from replacement chairman Brian Long (a long-time associate of the Packer business interests, former auditor of PBL and former adviser on One.Tel, the night before it collapsed, leaving the Packer and Murdoch companies with huge losses) on whether those “protocols” are still in place. But you would have to conclude they they no longer apply seeing the board, led by Long, asked Lachlan Murdoch to become acting CEO. If they no longer apply, then Packer and Murdoch now effectively control Ten. In any event, they cannot possibly apply to the acting CEO.

Long revealed that the reason Grant Blackley was axed as CEO was the sagging profitability of Ten in the six months that end next Monday. Sales growth and profits were not up to budget or expectations, and yet it’s still amazing that this was not apparent last December when Blackley was named as CEO of Ten. What was going on with the board, its oversight of the business and the flow of financial data from management?

Blackley was certainly nervous about the lack of ad revenue. Last year he pulled Ten out of the twice-yearly independent audit and disclosure of the TV networks’ FreeTV ad revenues by KPMG. That was a worrying sign, and yet the Ten board either accepted Blackley’s explanation or ignored the issue. Blackley claimed the audited figures understated Ten’s revenue and overstated Nine’s. From last night’s figures issued by Long, Ten’s revenues weren’t being understated, they just weren’t happening.

Long revealed that a review of the Ten TV business was now under way: “The board continues to be responsible for all decisions regarding the strategic direction of the company, and has decided to conduct an immediate strategic review of the company’s operations.” There was no mention of who would be conducting the review, but this morning’s edition of the Murdoch media journal (aka The Australian) reported this morning that Murdoch himself would “look closely at the broadcaster’s struggling news services and digital sports channel One in a strategic review aimed at lifting the flagging ratings and revenue.”

So Lachlan Murdoch will be deciding the future of Ten’s TV business and its future strategy, while holding conflicting roles and ownership in rival media companies in newspapers and radio, not only in Sydney but in all other capital city markets. And News Ltd also owns a quarter of the biggest TV competitor to the FTAs, Foxtel.

If that’s not a multiple set of conflicts, then nothing is. Only in Australia would this be allowed to happen and persist.

It gets worse, though, if you drill down. James Packer’s Consolidated Media News Ltd controls Premier Media Group (aka Fox Sports). News Ltd just punted the long-time CEO of Premier Media Group David Malone  because they thought he’d been there too long and wasn’t making enough money. That would have been done with the approval of Packer and Cons Media.

As we saw, one of the reviews will be the future of the One digital sports channel. It consistently out-rates Fox Sports, except when Fox Sports broadcasts NRL and AFL games. And yet One will likely go as a result of the review — benefiting PMG, News Corp, Foxtel and Cons Media because it will lessen the competition for sports rights and advertising directed at young males who watch One and/or Fox Sports if they have pay TV.

It doesn’t stop there — remember how incestuous an industry this is: News also has an indirect interest, via BSkyB, of 33.3% in Sky News. Nine and Seven are equal owners. Seven’s controller Kerry Stokes is also a shareholder in Cons Media and indirectly has a small stake in Foxtel and Premier Media, as well as stakes in Prime, which is 11% controlled by Lachlan Murdoch. If Murdoch decides to get rid of the underwhelming 6-7pm news shows introduced by Blackley (and approved by the Nick Falloon-chaired board last year), then some pressure for viewers will be taken from Stokes’s Seven 6pm news and Today Tonight.

And there is a further conflicted shareholder of Ten who will benefit mightily from the Murdoch review. Bruce Gordon has 14% of Ten, but controls the WIN regional TV network, which is Nine’s major affiliate. He also owns the metro Nine stations in Perth and Adelaide (which have been performing badly this year, especially Perth where the loss of audience has made the Ten Network look like an outperformer. The losses have come from decisions made by Gordon, such as removing two CEOs in the past 18 months). Gordon isn’t on the Ten board, but has a Sydney-based lawyer representing him. Any move to dump the 6-7pm news period will benefit Gordon’s TV businesses, especially the Nine metro stations in Perth and Adelaide.

Ten will be pushed back to low-cost TV aimed at 16-39s and immediately start attacking its own Eleven digital channel, which has been successfully launched and will be profitable later in the year. This 16-39 approach worked when TV competition was lower and the number of FTA (and pay TV channels) fewer, and when the internet was newer and less developed. It’s the approach likely to appeal to people such as Murdoch, whose media executive experience is limited, and Packer, who hardly covered himself with glory at the Nine Network before selling it to the bunnies at CVC.

They think it’s all about cost and targeting of audiences, rather than good, clever programming, smart content, good, smart people and looking to expand by investing in new people and ideas. None of the businesses they (or Bruce Gordon) have been involved in have ever shown any sign of understanding this, not Packer’s casinos, or his stint running Nine after his father died or Murdoch’s investment in TV or radio. They’ve bought into Ten in the good times, with revenues up (and Ten not getting its share). How will they handle the next downturn? Ten isn’t theirs to sell, or is it?

Better yet, Murdoch’s bigger role at Ten now gives News Corp a FTA TV presence. Its lack of a TV network has always been its biggest problem when it came to influencing governments. Now the Murdochs no longer have to rely on The Australian and their tabloids to prosecute the company’s interests and agenda, they have a TV network too.

All’s well in the incestuous world of Australian media.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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