Lachlan Murdoch , Rupert and James Murdoch
Lachlan, Rupert and James Murdoch

The Murdoch clan are about to tighten their already extensive grip over the news Australians read and watch every day. Taking advantage of the lacklustre management and oversight of the Ten Network by Lachlan Murdoch, the 100% News Corp-owned Sky News will produce Ten’s news services to generate significant cost savings. The related-party deal is in the final stages of discussion.

News of the talks and the closeness of their finalisation has raised hopes that the $250 million loan demanded by Ten as a key condition of its survival will be granted and guaranteed by at least Bruce Gordon (owner of WIN, Ten’s regional affiliate) and the Murdoch interests, be it Lachlan Murdoch personally, News Corp or Foxtel.

“Ten News will be produced by Sky News, from Sky News. Still branded Ten News, still with Sandra Sully and other local news anchors,” a source inside Ten told Crikey last night.

“However, Ten newsrooms will close down and staff will be retrenched. A small number might move across to Sky News.”

Fairfax Media carried a story on its websites on Tuesday afternoon quoting Ten News staff worrying about these talks, and the union is gearing up for some tough negotiations.

Once Sky News has control of Ten News, it will be supplying every Foxtel pay TV subscriber (2.9 million) with their news, plus Ten (around 450,000 to 500,000 Monday to Friday and fewer than 400,000 on weekends).

This partly explains why News Corp bought Seven, Nine and Sky of London out of the Australian news channel for about $20 million late last year. Earlier this week, Sky News gained control of Fox Sports News, which already supplies video to News Corp papers and some news.

This latest move will elevate the Murdoch family to an unprecedented level of dominance in terms of control over traditional Australian media assets and their news services.

News Corp’s strong national position in newspapers — via its tabloids, The Australian and its vast stable of suburban and regional papers — was augmented last year when the ACCC allowed News Corp to buy APN’s stable of regional dailies in Queensland and New South Wales. The only asset going the other way was Perth’s Sunday Times, which News Corp sold to Kerry Stokes’ Seven West Media last year in what looked like a quid pro quo for the Sky News buyout.

In addition, News Corp remains APN’s biggest shareholder with a 14.9% stake, but is restricted from buying more or taking a board seat because APN owns two radio networks that compete with Lachlan Murdoch’s privately owned Nova Entertainment stable. Existing media laws prevent anyone controlling more than two radio stations in one market.

Industry talk of a deal on Ten News is why Ten shares ended up for the first time in a month yesterday, closing up 1 cent to 24 cents after reaching a high of 27 cents. 

Also helping was strong ratings for MasterChef Australia, which returned on Monday night for its 2017 season with a national audience up on 2016 at more than 1.42 million people. The importance of MasterChef to Ten highlights another entanglement with the Murdoch clan; it is produced by Endemol Shine, 50% owned by 21st century Fox, the clan’s No. 1 company (ahead of News Corp and its 61% associate, REA Group).

Endemol Shine also produced the 2017 failure of the year for Ten, The Biggest Loser. The more successful Offspring (which returns later this year) is another Endemol Shine program for Ten, as is Gogglebox Australia, which is produced for the Lifestyle channel on Foxtel. Ten re-screens it on Thursday nights, and it has become its most successful program of 2017, with ratings up this year and a Logie. Shark Tank is another Ten program from Endemol Shine, as will be the TV remake of Wake in Fright. There have been others in the past, including the mini series Brock.

Without MasterChef, Offspring, Gogglebox and other programs, Ten’s fortunes would be much weaker. The Endemol deal is far more important than the expensive programming arrangement Ten has with Fox Studios (wholly owned by 21st Century Fox) and CBS (controlled by the Redstone family). It is these two contracts that are really hurting Ten, and need to be re-negotiated.

News Corp owned Ten outright in the 1980s before selling it to the Lowy family for more than $800 million as part of its takeover of the Herald & Weekly Times.

But if the Murdochs get control of Sky News they will almost be back to the control they had in the 1980s, when there was no pay TV and Paul Keating declared you could be the princes of print or queens of the screen, but not both.

It would be interesting to get Keating’s take on News Corp’s Pacman-like push in Australia over the past couple of years.

The power at Ten comes from strong influence over board composition, Lachlan Murdoch’s direct 8% stake, Foxtel’s 13.8% shareholding, the advertising selling arrangement through Foxtel’s MCN, the programming supply deals and now the coming control of Ten News.

The commercial terms of the Sky-Ten news merger will be important to watch and would be fully disclosed but for Australia’s lax related-party transaction laws.

CEO Paul Anderson stressed last Thursday that the transformation plan being contemplated would trigger some one-off costs after Ten’s September 30 year, suggesting the newsroom redundancies won’t happen immediately.

Politically, it makes sense to try and secure media law reform and a cut in government licence fees before the scale of journalism job losses and reduced media diversity is fully comprehended.

Malcolm Turnbull will have some interesting decisions to make. He knows the media game intimately and was the banker who sold Ten to the Canwest-led consortium after the Lowys effectively let it go broke in the early 1990s.

As the UK regulators weigh up whether the Murdochs are “fit and proper” to control 100% of Sky PLC, the same questions apply with Ten in Australia. With the ongoing smell emerging from Fox News, this is not a clear-cut question.

The Murdochs are not allowed to buy Ten under existing law but in terms of controlling a competitor they are doing everything but at the moment.

Maybe it would be simpler if the government declared News Corp or 21st Century Fox could buy Ten outright under one condition — an end to the gerrymandered capital structure, which allows the Murdochs to control 40% of the votes at both companies, but only about 14% of the total shares on issue.

If you want unprecedented power in a vibrant democracy like Australia, surely you should have to wield that power through corporate structures that respect democratic principles, such as one vote, one value.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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