Talk about chutzpah! Fresh from precipitously pulling the rug on Ten Network Holdings, Lachlan Murdoch and Bruce Gordon have gone ahead and sought ACCC approval to purchase the network from the very receivers they installed on Friday night.
The Australian’s media editor Darren Davidson remains in purgatory after smearing former Ten chairman David Gordon (no relation), but at least the paper produced some serious coverage on the whole saga today, such as this spicy Margin Call column.
It was also reported yesterday that the recently listed investment bank Moelis, led by Sydney Swans chairman Andrew Pridham, has been appointed to run the needlessly hasty auction and that Melbourne lawyer Leon Zwier, who has a big history with Ten’s administrators KordaMentha, is acting for a rival bidder.
The undue haste has been brought on by three guarantors — James Packer, Lachlan Murdoch and Bruce Gordon — who agreed to extend a $30 million lifeline to Ten until August 31. They brought in PPB Advisory as receivers on Friday night.
“This will allow the business to continue to trade as a going concern and enable the Receivers and Managers to undertake a sale process for, or a recapitalisation of, the business,” PPB told the ASX on Monday.
The challenge now will be running a fair and orderly auction that maximises the sale price at a time when the unnamed Murdoch-Gordon bid vehicle clearly has an insider advantage.
If Lachlan Murdoch and Bruce Gordon want to control Ten, they should have simply launched a takeover bid to buy 100% of the shares on issue. In reality, without the assistance of real billionaires such as James Packer and Rupert Murdoch, they don’t both have the financial capacity to pull off such a deal.
This is why they instead want to shaft all the other Ten shareholders (including Foxtel and Gina Rinehart) and some of the creditors by converting their joint $100 million debt and creditor exposure to Ten into 100% equity control.
James Packer, who started this whole saga with his $280 million share raid in 2010, is presumably happy to walk away with a $200 million loss while facilitating passing control to Murdoch and Gordon.
The only problem here is the enormous degree of difficulty this involves.
The ACCC is only part of the problem, because this manoeuvre is banned under current media ownership laws, although legislation is before the Senate to change this and Senator Nick Xenophon is making continuing noises about supporting it.
Does Xenophon seriously think it would be good for Australian democracy to allow the Murdoch family to extend their media dominance?
Media Watch on Monday night highlighted some of the appalling editorial practices tolerated by the Murdochs, particularly Paul Murray’s recent six-minute foul-mouthed rant against Christopher Pyne.
Tom Watson, Jeremy Corbyn’s deputy in the British Labor Party, was onto this issue with his 236,000 Twitter followers last night as he battles to block the Murdochs from seizing 100% control of Sky Plc.
Sky News Australia has turned noticeably toxic since Seven and Nine each sold their 33% stake to News Corp late last year. If control of Ten passes to Lachlan Murdoch, stand by for a foul-mouthed Paul Murray to start appearing on The Project with Alan Jones, Andrew Bolt and various other nasty right-wing blokes nurtured by the Murdochs.
That, of course, assumes Bruce Gordon would just be a passive shareholder in Ten, which is not certain given his past refusal to acquiesce to the demands of his fellow powerful shareholders in Ten.
What looked obvious on June 14, when Gordon and Lachlan Murdoch lodged this joint substantial shareholder notice in Ten, became even clearer yesterday afternoon with the ACCC request.
These are busy days for Murdoch watchers as we have until July 14 to lodge another submission to the OfCom review of Fox’s Sky Plc bid and until July 24 to tell the ACCC what we think about Murdoch control of Ten.
Individuals have never privately controlled networks of capital city television stations in Australia, so the move by Gordon and Murdoch to privatise Ten is without precedent on several levels.
Why wouldn’t Foxtel, News Corp or 21st Century Fox be the bid vehicle for Ten? Is the Murdoch family able to restrain them from bidding even though they all have various levels of non-Murdoch shareholdings?
The ACCC received the request for an informal review from Illyria Nominees and Birketu Pty Ltd, the respective investment vehicles of Murdoch and Gordon.
“While this transaction is dependent upon the passage of the media reform bill, it is appropriate that the ACCC begin its review of the proposed transaction that has been put to us by the parties,” ACCC chairman Rod Sims said.
“The ACCC will assess the potential effect upon advertisers and upon competition within free-to-air television and between free-to-air television and Foxtel, particularly in relation to sport, given the holdings of the main players involved. However, an ACCC investigation does not mean that the transaction raises competition concerns, but that further consideration is required for the ACCC to reach a view.”
The ACCC expects to release a final decision or a statement of issues by August 24, just one week before the additional funding expires. And there are only five sitting days for the Senate to pass the media laws before the funding expires. Talk about clifftop poker.
At the moment, Lachlan Murdoch cannot control Ten because it would breach the two-out-of-three rule. He currently controls radio and newspaper assets in markets such as Adelaide, Brisbane, Sydney and Melbourne, where Ten is broadcast. Owning a commercial television network would give him control of three out of three. Scrapping this restriction is the most controversial of the government’s proposed changes, but he could potentially get around the law by resigning as News Corp co-chairman or selling his radio business.
Gordon is restricted by the “reach rule” because he already owns WIN television, a regional broadcaster. The reach rule stops a single person controlling media that reaches more than 75% of the population. Scrapping this rule is not controversial.
Even The Australian was gently poking fun at Australia’s weak media laws today, with Margin Call columnists Christine Lacy and Will Glasgow writing: “If the media ownership law changes fail, the pair are cooking up a clever structure that they hope will receive regulatory approval anyway.”
If the Murdochs get away with this one, Australian politicians and corporate regulators are, to borrow a phrase from Sky’s Paul Murray, “as weak as piss”.