Sep 1, 2014

Kim Williams’ lucrative gift to News keeping the empire afloat

News Corp's relentless attacks on former CEO Kim Williams belie a fundamental truth: Williams' management of Foxtel was a financial boon for the company.

Glenn Dyer — <em>Crikey</em> business and media commentator

Glenn Dyer

Crikey business and media commentator

News Corp’s reaction to Crikey‘s exclusive revelations about the dire state of its Australian newspaper empire in 2012-13 was two-pronged: one, to say that the accounts were old and everything was fine now; and two, to blame the poor performance on former CEO Kim Williams. What News’ attack dog The Australian has yet to do, however, is to give Williams his rightful due for what he did for the Murdoch mob at Foxtel, turning it into a cash cow that was regularly milked by News and Telstra to the tune of $1 billion (or more) in the past five years. That was enough to get him promoted to run News Corp Australia, where his attempts to reshape the company and give it more time to adapt to the digital onslaught from the net were frustrated by the dinosaurs who remain in control to this day.

Williams has been the subject of some virulent comments from News commentators in the past week or so, and more will no doubt flow this week when he launches his new book, Rules of Engagement. But they are biting the hand that helped feed and sustain the Murdoch empire in Australia. The annual distributions from Foxtel have been greater than the “earnings” from the collection of dying newspapers being run into the ground by the dinosaurs at Holt Street in Sydney and elsewhere — Melbourne, Brisbane, Adelaide, Perth and beyond. In fact, in 2013-14, Foxtel paid News $219 million in shareholder distributions and interest on a shareholder loan, which is more than the News Corp papers earned. And including 2012-13, the total distribution is more than $400 million (with a similar amount flowing to Telstra). Adding in smaller distributions made in earlier years by Foxtel, the amount received by News would be over half a billion dollars. Prior to 2012, the distributions were split three ways between News, Telstra and Cons Media.

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One thought on “Kim Williams’ lucrative gift to News keeping the empire afloat

  1. michael r james

    [But it is clear that without Williams’ management abilities, lobbying efforts and the team of executives he assembled at Foxtel, News Corp’s already strained finances would have been more stretched without his dowry ]

    While there is little doubt about Kim Williams’ management capabilities, and his intellect, the above statement typically goes too far, way too far. Yes, it is a monopoly* which is a huge factor. But the other Murdoch equivalents, Fox in USA and BSkyB in the UK, are also hugely profitable, and of course predate Foxtel. It is the model that is responsible, and that is attributable to Murdoch himself more than any other individual, and his willingness to back it (eg. he is often accused of “overpaying” for sports rights).

    Whether Williams could have made a difference to the decline of News’ other media is arguable. His main inclination would appear to close it all down. He is a ruthless and unsentimental business operator (which curiously he doesn’t apply to his personal passions). He also shows a strong streak of the blight of successful business types, “self-affirmation” disease, by which their own thoughts on all and any matters are so self-evidently correct. Any other opinion or approach is the product of fools for whom he shows zero-tolerance.
    *Btw Glen Dyer, the comparison with the PT monopoly is beyond ridiculous. Not only is it not a monopoly (it has to compete with all other means of transport) but as a business it is not allowed (in the Anglophone world at least) to “monetize” all the externalities attributable to it and which generate massive wealth (just one example: increase in property values when a fixed-line transport line goes thru a suburb). The real comparisons should be true monopolies like the privatized KSA airport, or the toll roads.
    But you have raised an interesting possibility: put Williams in charge of a genuinely difficult business: Sydney public transport (with the proviso he is not allowed to close it down for his buddies in the toll-road business!).

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