Dec 7, 2012

If Lachlan wasn’t a Murdoch, he’d be gone from Ten

With the Ten Network in the doldrums and solutions thin on the floor of the AGM yesterday, time's up for chairman Lachlan Murdoch. He's just not up to the task.

Stephen Mayne — Journalist and Founder

Stephen Mayne

Journalist and Founder

After just two and a half hours sleep, at one level Lachlan Murdoch put in a sterling effort at the Ten Network Holdings AGM yesterday as he athletically roamed the stage in front of the directors for a little over two a half hours. At another level it was a singularly unimpressive performance as he ummed and ahhed his way through the meeting, struggling with the detail and refusing to engage on key issues. I left the meeting more convinced than ever that he is simply not up to the job and should be moved on. While Ten is facing the same structural challenges as Seven and Nine, the execution during Lachlan’s two years on the board has been dreadful. Having paid $1.43 a share to buy half of James Packer’s 18% stake, Lachlan continues to be propped up by his silent and invisible partner through their joint vehicle Cavalane. There were many elements of yesterday’s AGM which were completely missed by today’s papers and one of them was the Packer-Murdoch relationship at Ten. Having received a $US150 million payout in shares and cash when Wendi Deng’s two daughters were cut into the Murdoch inheritance, there remain obvious questions about Lachlan’s personal ability to sustain losses of more than $100 million at Ten. When asked about this yesterday, Lachlan insisted he was receiving absolutely no financial support from his friend James Packer. Given the AGM wasn’t webcast -- and journalists were forbidden from even recording proceedings for their own purposes -- we’ll have to wait for Ten to provide a copy of the transcript to look at the detail of his various claims about where the power lies within the joint venture vehicle. For instance, former McKinsey management consultant Siobhan McKenna has been Lachlan's personal chief executive for the past few years after he quit News Corp in 2005. She came in through Lachlan’s investment vehicle Illyria and was a well-paid consultant at Ten in 2011 when Lachlan was acting CEO ahead of James Warburton's commencement. McKenna was comfortably elected to the board as Packer's personal representative yesterday, although she gave me a big lecture about factual accuracy claiming she was only his "nominee" and there was a big difference. When asked why Packer couldn't represent himself on the Ten board, both McKenna, his board nominee, and Murdoch, his financial partner, refused to explain. "You'll have to ask Mr Packer," Lachlan said. "He won't return my calls, so I'm asking you instead," came the reply. Lachlan was similarly protective of his other great supporter on the board, Gina Rinehart. When I suggested the billionaire’s $90,000 annual fee should be docked because she only made it to eight out of 14 board meetings and couldn't even get to the AGM on time, Lachlan instead blamed himself saying he kept calling board meetings at short notice. This goes to one of the problems of effectively putting Lachlan in charge of Network Ten for the past two years: he simply doesn't have the skills or time to make a good fist of it. The issues within the News Corp board, the Murdoch family and Lachlan's personal investments such as DMG have clearly been very distracting over the past two years. Given the disaster that has unfolded, it is surprising all these billionaires haven't yet called time on Lachlan's tenure. If he wasn't a Murdoch, he'd be long gone. Now that Packer has pocketed his $1 billion from News Corp from the sale of Consolidated Media Holdings, you would think he too would be fed up with losing $100 million on Ten. Bermudan-based former billionaire Bruce Gordon has now dropped more than $300 million on his Ten investment and he sat sullenly in the front row during yesterday’s AGM. Ten’s former executive chairman Nick Falloon quite rightly argued Gordon couldn't join the board after he bought Channel Nine in both Adelaide and Perth. As Packer never understood during his campaign against Echo Entertainment Group, you never invite a competitor to sit on the board unless they pay an appropriate control premium to all shareholders. But once it was agreed that both Packer and Murdoch could join the Ten board -- despite the obvious conflicts of interest -- the entire board had to yield to Gordon's request and he duly nominated lawyer Paul Mallam. Interestingly, because Gordon himself isn't on the board, he appeared to vote his 186.6 million shares in favour of the remuneration report yesterday, which surprisingly passed with more than 90% in favour. Gina, Lachlan and Packer were all unable to vote. At least that's one good thing that flows from being denied a board seat. If Rinehart refuses to stump up the cash by today’s deadline in Ten’s four-for-five entitlement offer at 20 cents, her 143.7 million shares will be diluted from 10% to just 6%, which would raise serious questions about her entitlement to remain a director. Frankly, it would have been better to see a repeat of Fairfax yesterday, with Gina off the board throwing rocks and triggering a "first strike" against the remuneration report. This would then have sparked fears of a board spill next year -- which is precisely what the Ten directors need after delivering a slow moving train crash for the past two years.

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33 thoughts on “If Lachlan wasn’t a Murdoch, he’d be gone from Ten

  1. Lano

    And Gina Reinhart is lecturing Fairfax? If they worried about ratings they wouldn’t have Bolt on either.

  2. peter bainbridge

    Seriously, how hard can it be buying programs people want to watch.? The utter tripe 10 has sanctioned is beyond belief. And when Sara Murdoch appeared in the first promo for that dancing ”Thing” i felt for her. whoever thought Sara dressed like a character from ”Mad Max” would work.? I could go on and on re: what they need and why they shouldn’t have put on what they had in recent times. But what would be the point.? No ones listening. Has anybody at 10 read ”The Kid Stays in the picture” by Robert Evans.? If anyone has, then i DARE you to hire me and put that sinking ship back in the black, they have Nothing to loose.

  3. Venise Alstergren

    PETER B: Unfortunately, commercial TV stations pitch their marketing at the great mediocrity of the average ten year old thought processes. This must take mediocre minds to get down to this level. It just looks as though channel 10 decided to lower the age to eight year old’s. And, for some strange reason the ten year old’s objected.

    On the other hand, you could always put your talents to raising the level of Channel two.

  4. Mike Flanagan

    Hi Venise, Hope the rehab is going well.
    ‘If Lachlan wasn’t a Murdoch’ he would be selling Heralds outside the Bridge Hotel Richmond for his coppers.
    The male progeny of Keith Murdoch, without their overloaded bank balances and monopolies, have shown little financial acumen let alone business ethics.
    I do hope that the workers super funds have grasped that fact.

  5. zut alors

    Attendees being forbidden from recording suggests the board’s paranoia of having something to hide – incompetence, for example.

  6. peter bainbridge

    I throw out the challenge to the powers that be at 10. Give me 10 programs your thinking of buying and I’ll tell you with 30 seconds to 30 mins watching each one if you should buy or pass. I’ve been in this business for 20 years as a photographer-and a pretty good one. (pardon the back slapping)

    Watching 10 over the past 18 months was like watching a cheap electricial using second hand wiring. You JUST knew the house would burn down. The people calling the shots shouldn’t have been put in charge of a punch & Judy show let alone a TV station. Some of the choices made where horrendous. beyond belief.

  7. Venise Alstergren

    PETER B: If it’s writing you are into you might consider spelling properly Para one, line one…you’re not your. Line para one line two…”I’ll tell you within, not with”.

    Para two, line one, “like watching a cheap electrician, not electrical”. Line three “Punch and Judy”, not lower case ‘p’. Line four Beyond belief, upper case after full stop. Actually a hyphen would have been a better form of punctuation in this case.

    I’m sorry to be pedantic. However, if writing is your choice of career it’s best to submit clean copy.

    Also from a photographer.

  8. Will Arnott

    Well well. Surely if Lachlan was not a Murdoch he would not actually be there in the first place. And it’s not like James Packer set up the fabulous Crown rivers of gold deal! And of course Gina created all that iron ore all by herself?

  9. Hugh John Reddit

    @Peter B, you’re a great photographer, programming a schedule is a different game.
    Everyone is a genius in hindsight. One never knows with great certainty what will or wont work. The reasons behind the very core of the problem is essentially poor ratings which has translated to a massive drop in advertising revenue. Part of the reason for this has been a significant migration of its core demo to online screen time. Be it social networking, downloading or streaming. Ten simply hasn’t caught up with this change. Their online presence and offering simply isn’t good enough.

    N.B unfortunately distribution rights are often very restrictive on what a broadcaster is allowed to put online…things outside of Ten also need to change.

  10. peter bainbridge

    @Venise. I do get a tad enthusiastic at times. And yes, i should have subbed. Thx.

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