Someone should turn the shenanigans at Network Ten into a soap opera. Or perhaps it is already.
They could call it Moguls or Murder (Packer and Murdoch combined) and take a lead from The Sopranos, because there’s definitely something a bit Mafia-like in James Packer resigning from Ten’s board yesterday. To me at least, it shouts ‘honour’ and ‘respect’.
For if the spin is to be believed, James fell on his sword because he wanted to send a message to his fellow mogul Kerry Stokes — once known as Little Kerry — that he hadn’t poached James Warburton from the Stokes-owned Network Seven to be Ten’s new CEO.
“Sorry, Kerry, it wasn’t my idea.”
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Now if that’s really so, it’s a remarkable turnaround from 11 years ago when James allegedly went round to Stokes’s house in Vaucluse to deliver a message that he was too small to play in the big league. In that conversation — whose contents are hotly disputed by Packer — James allegedly told Kerry that he wouldn’t win the TV rights to AFL because the Packers and Murdochs were going to gang up with Telstra and take them off him.
It’s also a turnaround since Pam Williams interviewed James for the Australian Financial Review five years ago and found him still seething over Stokes’s accusation.
And it’s also a turnaround from July 2009 when James and Kerry were at war over Consolidated Media Holdings (CMH) after Stokes launched a hostile raid on the Packer-controlled company by snapping up 19.9% of it shares.
So what has wrought the transformation? First was the peace deal the pair made in September 2009 in which Packer agreed to let Stokes have two board seats at CMH. Second is that James has matured a lot since that December 2000 confrontation. But third and most important is that, for Packer, money always rules. And there’s more to be made with Stokes and Foxtel than there is at Network Ten.
Packer’s CMH, in which Stokes has roughly a quarter share, owns 25% of Australia’s leading pay-TV provider, Foxtel, which is currently making $500 million a year in profit (before interest, tax and depreciation), or more than twice as much as Ten. Packer has long believed that it’s a far better business than free-to-air.
And it may be about to get better. Foxtel is eyeing up a merger with its regional pay-TV rival Austar, which would give it — if the Australian Consumer and Competition Commission (ACCC) allows — an Australian pay-TV monopoly and make it even more profitable than it already is.
So it doesn’t make sense to fall out with Stokes while this up for grabs.
Nor does it make sense for James to remain on the board of Network Ten if the ACCC is going to scrutinise (and possibly block) a Foxtel-Austar merger. And guess what, the ACCC intimated yesterday that it might do exactly that. Having already opened an investigation into Packer and Murdoch’s role at Ten it now says it is informally examining the potential marriage of Foxtel and Austar.
But with or without the ACCC, the bottom line is that James discovered long ago that he and his fellow moguls make far more money if they don’t fight. (More echoes of the Mafia here?) He learnt in the 1990s with Super League that peace in the valley brings prosperity — and that’s partly what his joint venture at Ten with Lachlan is about.
We’ll see whether it lasts in the next episode … when Foxtel is put into play, as Telstra is forced to sell its 50% share. Don’t miss it!