When Greg Hywood took over as CEO of Fairfax Media last year, one of the first things he did was initiate discussions to merge printing operations with News Limited in Australia. The discussions were terminated a few weeks ago but there were other signs of collaboration between the two Australian publishing giants. For instance, with Fairfax veteran Mark Baker taking over as president of the Melbourne Press Club last year, it was interesting to watch the cosiness with Rupert Murdoch’s Melbourne boss, Peter Blunden, at last Friday’s Quill awards. News Corp’s phone hacking scandal wasn’t mentioned all night, with the exception of a two-second image which flashed up during the video highlights reel. Another point of collaboration between the two companies was their joint attacks on the Finkelstein inquiry, as Hywood and an assortment of News Ltd operatives argued there was no suggestion of illegality in Australia. Until today. Wednesday, March 28, 2012, is one day when The Australian Financial Review, the world’s most expensive financial daily, is certainly worth its $3 cover price. Spread across five pages (and syndicated -- for free -- to Fairfax news sites far and wide), Neil Chenoweth has vividly told the story of the dark games played by a rogue division of News Corp, NDS, which eventually left behind a $5 billion windfall for the media empire and a trail of destruction for its pay-TV competitors. In the context of the British phone hacking scandal, the revelations are dynamite and will inevitably trigger an even stronger regulatory response across various jurisdictions. In essence, Chenoweth has a treasure trove of emails which reveal the dark arts of global pay-TV piracy and the way NDS division hired scores of spooks, coppers, hackers and pirates to maximise its own commercial position and damage its competitors. While many of the allegations are old and the commercial issues sorted, the revelations of Australian piracy activities is vital for two reasons. Firstly, it raises even more questions as to whether Rupert Murdoch is a fit and proper person to be granted management control over a pay-TV monopoly in Australia. Only yesterday, the ACCC announced it was again delaying approval of Foxtel’s $1.9 billion Austar takeover. Secondly, there will be questions as to whether News Corp can retain its share of the windfall $US5 billion sale of NDS to Cisco, which was announced just two weeks ago but won’t close until various regulatory approvals have been given. Chenoweth has spent more time than anyone researching and writing about the world's most powerful family. As we all know, the Murdochs play the game hard, so News Corp has long campaigned to undermine Chenoweth's employment at Fairfax, claiming he is biased, obsessed and full of conspiracy theories. There has been a recent regime change at Fairfax with Hywood coming in and removing Michael Gill and Glenn Burge, the duo who ran The AFR for the previous decade. They were replaced by two News Corp recruits from The Australian -- Brett Clegg and Michael Stutchbury -- who both had spent many years previously at The Fin. What to do with Chenoweth was always going to be an interesting question for The AFR’s new leadership team. The timeframe of the various moves is important to note:
  • February 7, 2011: Greg Hywood replaces Brian McCarthy as CEO of Fairfax.
  • March 21, 2011: Hywood removes Gill and Burge and Clegg announced as AFR supremo, sparking tough News Ltd moves to enforce some gardening leave.
  • July 4, 2011: UK phone hacking scandal explodes, sparking a series of articles by Chenoweth in The AFR which is editorially leaderless.
  • September 28, 2011: Clegg finally settles in as AFR CEO and immediately poaches Michael Stutchbury from The Australian to be editor.
  • Early November, 2011: Chenoweth takes annual leave and long service leave from The AFR to help the BBC’s flagship investigative program Panorama research allegations about News Corp’s role in global pay-TV piracy.
  • March 27, 2012: The Panorama program goes to air and The AFR carries a two-page Chenoweth spread summarising the allegations.
  • March 28, 2012:The AFR goes super-hard with five pages of new Chenoweth allegations, including details of hacking and piracy involving NDS in the Australian pay-TV market.
In the end, The AFR’s hand was effectively forced by the quality and gravity of what Panorama produced. It would have looked very strange to see an AFR reporter helping the BBC drop a bombshell without sharing the goodies around. However, The AFR’s decision to go so hard today was still very brave. It will be interesting to see how the rest of the Fairfax empire follows up. Will there be editorials damning the unethical Murdoch empire? While there have always been plenty of competitors and journalists who take pot-shots at News Corp, the key to its power has been an ability to keep compliant regulators and politicians on side. That all changed in the UK when everyone turned on News Corp over phone hacking. News of the World was closed, scores of employees have been arrested, the BSkyB mop-up takeover was abandoned and there are now serious prospects the company will be kicked out of Britain in disgrace. Amazingly, News Corp’s share price has soared ever higher in recent months and jumped another 10c to $19.48 this morning, valuing the company at $US51 billion. The Murdoch family has a debt-free $6.5 billion stake in News Corp and appear to be financially unscathed from the British scandal. But the family’s biggest single earner over the years has been US programming pumped out through the world’s most lucrative global pay-TV distribution channels. Thanks to Chenoweth's revelations, there are now serious questions being asked as to whether these have been ill-gotten gains. As for what happens now, I reckon Chenoweth’s package -- there’s more to come -- will pick up the Gold Walkley in 2012. The Murdochs will be kicked out of Britain, Foxtel won’t be allowed to buy Austar and Sir Rod Eddington, lead independent director of News Corp, will finally develop some spine and intervene to reduce this notorious family’s control over its unethical media empire. 4pm 28th March 2012. Response from Mark Baker, MPC President: Today's piece by Stephen Mayne is ridiculous and insulting. In support of his bizarre thesis about some kind of conspiracy between Fairfax and News he describes my "cosiness with Rupert Murdoch's Melbourne boss Peter Blunden" at last Friday's Melbourne Press Club Quill awards dinner. I did indeed have a brief and friendly chat with Peter Blunden at the start of the dinner. And I am happy to reveal all: I thanked Peter for his considerable support in preparing for that night's presentation of a Lifetime Achievement Award to Herald Sun veteran John Hamilton and I wished him a pleasant evening. And, while I haven't gone out of my way to avoid him, it was the first time I had seen Peter since another Press Club event more than 10 years ago. Some conspiracy.