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Aug 30, 2013

Election IOU: how will Rupert call in Abbott's debt to him?

The Murdochs will have a long list of obligations they will expect Tony Abbott to meet when it comes to media policy. Bernard Keane and Glenn Dyer compile the hit-list.


We’re unlikely to see “It’s the Tele wot won it” on September 8 if Opposition Leader Tony Abbott wins the election, but News Corporation will be eager to convey the message not just in Australia but overseas as well: its newspaper might be bleeding readers, its print business model might be broken, but it can still swing elections against parties that have incurred its wrath.

It thus won’t merely be disgruntled Labor supporters who will view Abbott as Rupert Murdoch’s pick, but News Corporation itself, whether Abbott is editor Chris Mitchell’s legacy project before he moves on from The Australian, or new Telegraph editor Col Allan’s demonstration of how tabloid power and baby boomer memories of Hogan’s Heroes can still be wielded.

And with that will come expectations: expectations that Abbott will deliver for the company that helped him into the Lodge. For a company mired in red ink, with mastheads like The Australian losing tens of millions of dollars a year, those expectations may be great indeed.

The News Corp wishlist for media policy is therefore likely to be substantial, given the difficulties facing its print arm. Expect it to include:

  • A new look at anti-siphoning: changes proposed by then-communications minister Stephen Conroy in 2010 were never legislated, leaving the door wide open to an Abbott government to further amend the anti-siphoning scheme in Foxtel’s favour. Watch out for amendments to the anti-siphoning rules to reduce the capacity of major sports to deliver their own content without broadcasting. Under amendments proposed by  Conroy, internet content providers would have become subject to the anti-siphoning rules. That would be enacted and possibly extended to rights holders themselves, who even via Malcolm Turnbull’s half-baked “copper magic” broadband network would be able to deliver HD coverage of matches directly to subscribers, with the likes of Foxtel reduced to renting out cameras and outside broadcasting vans.
  • More handouts for free-to-air networks and in particular Lachlan Murdoch’s beleaguered Ten Network. The Gillard government halved television licence fees in March; watch for further licence fee cuts, possibly with the now-traditional justification of protecting local content.
  • A return of government recruitment advertising to newspapers. The Gillard government moved government recruitment advertising online, stripping The Australian and The Australian Financial Review in particular of millions of dollars of taxpayers’ money. Watch for that to be restored.
  • Curb the ABC I: expect an undoing of the Gillard government’s decision to permanently award Australia’s international television service to the ABC, with an amendment to the ABC Act removing the requirement that only the ABC operate such a service. Then, in time, another tender process would likely be commenced, one that Sky News will be in the box seat to win.
  • Curb the ABC II: as both News Corp and its main rival, Fairfax, are moving behind paywalls, the ABC remains a key competitor with its freely available online news and commentary. In his famous McTaggart Lecture in 2009, James Murdoch, before he ended up corporate roadkill in the phone-hacking scandal, attacked the BBC for “dumping free, state-sponsored news on the market”, which “makes it incredibly difficult for journalism to flourish on the internet. Yet it is essential for the future of independent journalism that a fair price can be charged for news to people who value it.” Expect a campaign from The Australian, which routinely attacks the ABC as biased, for the Abbott government to rip into the ABC budget in order to end its unfair online “news dumping” that lures eyeballs away from News Corp websites.
  • And then there’s the real prize for News Corp — 100% control of Foxtel, which can only be achieved by forcing out the other 50% shareholder, Telstra. Foxtel has gross revenues of $4 billion and gross profit of $1 billion, and while it has an estimated $2.1 billion in debt, control of the cash flows would boost the weak and dying print businesses of News Corp Australia. It would also allow Foxtel/News to emulate BSkyB in the UK and plunge deeply into offering more services, such as internet broadband, mobile telephone services and improve emerging platforms like its mobile apps.

The key to control of Foxtel is getting Telstra out. Telstra doesn’t need the cash — it has billions coming in from the NBN (although Telstra might baulk at further deals with “copper magic”). But if an Abbott government were to do a deal on the NBN with Telstra in exchange for getting it out of Foxtel, all in the name of freeing up competition, then News would be very happy and Murdoch’s support would be generously repaid.

In the meantime, there’s a somewhat more pressing regulatory problem. If News Corp doesn’t release its 2012-13 results by Monday (to take account of Friday ending early Saturday our time in US timezones), the company will be in clear breach of ASX regulations, which require all June 30 balancing companies to release their results by the end of August. The ASX won’t be happy being forced to take on News and the Murdochs with their powerful friend Tony Abbott headed into the Lodge.


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20 thoughts on “Election IOU: how will Rupert call in Abbott’s debt to him?

  1. Observation

    Easy, slow down the roll-out of the NBN and make it an inferior product.

  2. marcfranc

    ‘•A return of government recruitment advertising to newspapers’. I don’t think an Abbott government will be doing much recruitment advertising.

    Some of the other supposed pay-offs to Murdoch assume the Coalition will get control of the Senate from next July. That seems unlikely.

  3. Lee Miller

    Everything we can expect and it will all happen.

  4. Limited News

    After the Tele called Howard ‘Mr Wishy Washy’ the ‘never ever’ GST was back on the agenda. It doesn’t matter how many denials he makes – not even Tony Abbott knows what he will end up doing at Murdoch’s behest.

  5. Julia

    Oh. My. God.
    Thanks Kevin, thanks Bill.

  6. The Pav

    Abbott has already delivered with FRAUDBAND

  7. klewso

    I just hope Rupert remembers to thank the GFC in his acceptance speech?

  8. klewso

    And can’t that ASX reg be changed – in, say, a fortnight?

    [“The Canberra Parliamentary Opera Company will begin rehearsing “Faust”, starring Tony Abbott, as the doctor and Murdochstopheles as himself – to begin production in Earnest in early October”?]

  9. Mike Flanagan

    He will not have endebted this country and his government to the bloody Murdoch’s, but check the monthly accounts that are going to arrive from the Mining conglomerates, the Heartland Assoiciation and any other toe rag that might help pay him pay his bills to the Fossil Fuel enviromental destroyers. All have assisted his fraudulent usurping of the treasury keys.
    The press and scribblers in general will all have their fingers in the treasuries hip pocket as a repayment of their slothful analyses of this pretender, over the past three years.

  10. klewso

    At least – “After all I’ve done for you?” – he won’t have to face the ignominy of being asked to be “Back Door Boy” and use the servant’s entrance, like he was by Cameron? Unlike the British press with it’s diverse ownership, here he owns most of that “overlook” view.
    “To the winner the spoils!”?

  11. tonyfunnywalker

    The Prize is the 50% of Foxtel and possibly the acquisition of Bigpond which is the largest Internet provider with a lemon speed thus reducing the streaming capabilities of ABC2 and SBS which are widely popular as is the movie streaming at Bigpond. It would be interesting what share of audience of subscribers Bigpond has it is open to all internet users and no other provider has the same film library for home viewing. This will continue to explode as ” smart HD” TV’s become more common. The Interface between TV and Laptops and Tablets is closing all the time. Good article – the payback Murdoch expects will turn the company around in Australia enough to abandon print completely.
    The return of employment ads to print I doubt unless Murdoch closes Linked In which is targeted and much more effective in reaching prospective skilled employees than newspapers will ever be.

  12. Interrobanging On


    There is a good chance the Senate will be controlled by Pauline Hanson or someone else far right. (Voting Green seems the best way to avoid Hanson getting up as she can win with 2% of the vote in NSW unless The Greens as the most likely alternative can keep their nose in front as the micro-party preferences flow to her).

    No real ideological problem for the Liberal Party which is pretty much One Nation now anyway in so many ways, but the right wing loon(s) in question may not favour Murdoch (at least without a deal).

    The only bright spot of Hanson getting up seeing how she deals with Abbott after his ‘Australians for Honest Politics’ slush fund that worked to put her in jail. There was I believe a well known News ‘journalist’ involved too…

  13. Hamis Hill

    Wall to Wall Murdoch begets Wall to Wall Liberals?
    When was the last time Australia had Wall to Wall Liberals?
    And how long did it last?
    And when in this election campaign has any member of the Fourth Estate raised this issue of Wall to Wall Liberals?
    Because are Australian voters don’t need to be told that Wall to Wall politicians of the same party are not their cup of tea?
    Wall to Wall Liberals? sniff the editors; no, definitely not news!
    Beyond Pathetic.

  14. Marty

    It thus won’t merely be disgruntled Labor supporters who will view Abbott as Rupert Murdoch’s pick

    I think you missed an ‘r’ there.

  15. gabrianga

    How will Rupert call in his debt from Abbott.

    Possibly Penberthy could answer this after his support of Rudd, Election week 2007?

  16. klewso

    No one could save Howard in ’07. Not even Murdoch’s PR theatre ensemble.
    So he girded his loins, held his breath (that wouldn’t take long) and saved his own king-maker political credibility in the face of the tsunami.

    After the flood he could resume hostilities :- starting at Burke, then on to those tantrums (apparently, from the edited evidence, a politician like “only Rudd” throws?) and reaching a crescendo in “Utegate”.
    A “decomposed” symphonic cacophony of unbalanced, one-sided negative publicity and PR – aimed at public perception of “Fitness to Govern”.

  17. Emma Dawson

    Interesting analysis, but some problems with the assumptions.

    1/ “….internet content providers would have become subject to the anti-siphoning rules. That would be enacted and possibly extended to rights holders themselves…”

    This is not actually possible without running into constitutional issues around acquisition of rights. The anti-siphoning laws regulate how a content provider must offer its content to market – they do not require a content provider to offer its content to market in the first place.

    2/ “…an undoing of the Gillard government’s decision to permanently award Australia’s international television service to the ABC, with an amendment to the ABC Act removing the requirement that only the ABC operate such a service…”

    Possible, but such an amendment to the ABC Act would have a hard time passing the Senate unless the Coalition controls the numbers in its own right.

    Similarly, it is also now more difficult for funding cuts to the ABC to force it to abandon its online offerings, as the recent changes to the ABC Act now make these a core activity at Aunty.

    I also reckon the ACCC may have something to say about a 100% acquisition of Foxtel (although given its decision on the takeover of Austar, perhaps not….).

  18. green-orange

    @”A new look at anti-siphoning: changes proposed by then-communications minister Stephen Conroy in 2010 were never legislated”

    Unnecessary. Fraudband will ensure that video streaming will only be able to be reliably delivered on cable TV. Abbot is likely though, to get rid of the anti-siphoning rules, allowing News to buy out sporting rights completely.

    @”More handouts for free-to-air networks and in particular Lachlan Murdoch’s beleaguered Ten Network.”

    Why ? They compete with News, which has no terrestial TV prescence.

    @”Curb the ABC I”

    Its likely that any government will cut ABC spending, even reduce the number of transmission licences (ABCNews24 sucking up 20% of the ABC budget and struggling to get audience numbers into three digits cannot be sustainable), but Abbot will be looking at creating lots of nice retirement homes for News columnists once Col Pot gets started.

    @”And then there’s the real prize for News Corp — 100% control of Foxtel”

    So ? If Australians haven’t been interested in cable when there were only 5 TV stations and no internet, why would they suddenly be interested in this Pong-era technology now ?

  19. Daniel Ruben

    Sorry but I think this is wild speculation of the kind we’re more used to seeing in the DT. I think the influence of the DT and the C-M have been vastly overrated in terms of the extent to which they’re supposed to be shaping the election campaign. It’s the Alan Jones effect & media talking about the media, giving way more exposure to an outlet than it deserves. If you look at 2GB’s ratings it’s interesting to see who actually listens to Jones – almost exclusively an audience aged 55+, with a massive spike in the 65+ range; an audience which probably already made up its mind 40 years ago. 2GB is an old folks station and nothing against old folks. My point is, like Jones, the DT and the C-M are preaching to the converted. Their influence on the outcome of the election is vastly overrated. Now, if Melbourne’s HS did a stunt like turning into the DT, that would be a real concern. It would also be the death of the HS which it why it doesn’t and hasn’t. Newscorp is opportunistic maybe but not stupid.

  20. Russ Hunter

    Tony Abbott this morning said he still regards Rupert Murdoch as an Australian (he’s no longer a citizen) and that he is a home-town hero. He’s started repaying Murdoch’s favours before he’s even in the lodge!


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