No surprise that Scott Morrison was a touch discombobulated at yesterday’s latest stab at a reset on gender politics. He had a big known-unknown swirling around in his head: what is Lachlan Murdoch doing in Australia?
Fond as the Los Angeles-based billionaire Murdochs may be of their Australian ancestral homeland, it raised eyebrows when the Nine papers reported at the weekend that Lachlan and his immediate family was quarantining in the country, presumably at the family farm near Yass, in preparation for a lengthy stay.
Murdoch visits today are seen in Australian politics much as mediaeval astrologers saw the appearances of comets: they portend the death of kings. The last big visit was in August 2018 when Lachlan accompanied Rupert for a trip that coincided with the fall of Malcolm Turnbull and the rise of Morrison. (Turnbull subsequently fingered the Murdochs for triggering the spill.)
The prime minister’s red-misted punch-back at a (totally appropriate) question from Sky News’ Andrew Clennell with a subsequently denied allegation of sexual harassment within the company may have hurried on the cycle of leadership change.
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News Corp responded formally, with a strongly worded statement from Australian boss Michael Miller (which provoked a late-night apology on Facebook from Morrison). This morning the company turned to its more direct messenger of choice, Sydney’s The Daily Telegraph with a bannered all caps front page: SCO-D’OH, dismissing his press conference as “tears and smears”.
News Corp’s alignment with political leaders has long been part ideological and part transactional. The risk for Morrison is that he’s fumbling the ideology while outsourcing the transactional to his treasurer and deputy, Josh Frydenberg: the news media bargaining code; budget funding for Foxtel; undermining the company’s superannuation fund-supported competitor The New Daily.
It’s one of the reasons that Frydenberg has come to be seen as the undisputed heir to Morrison, leap-frogging Health Minister Greg Hunt and seeing off the now falling star of Attorney-General Christian Porter.
Morrison would know it’s unusual in the modern coup-culture of Australian politics for rising stars to risk holding back their ambition in the turning wheel of opportunity — particularly once the party’s media arm is on side.
Murdoch visits can also portend big corporate change — there are rumours they are planning on going big on betting with a buy-out of all or part of Australia’s largest gambling company Tabcorp. As a foreign takeover this, too, would require the supportive attention of Australia’s treasurer.
As an investment, gambling has much of the same attraction today as media did late last century: large guaranteed cashflows with profits underpinned by taking a cut off the top on the way through. It’s also an industry that, like media, plays to one of the core competencies of the Murdoch companies: shaping and managing government regulation.
The Murdochs’ push into betting overseas has been driven through the family’s Fox arm, which was structurally separated from News Corp in 2013 to protect it against fallout from the ongoing UK hacking scandal. While Fox is best known for its right-wing news channel, it’s more valuable cable property is Fox Sports (with two channels).
Similarly, in Australia the most valuable part of Foxtel is its sporting rights, with Fox Sports rolled into the joint venture with Telstra in 2018 to give the Murdochs through News Corp a two-thirds stake in the company.
Now the company is keen to leverage this long-term investment in sports into a cut of the gambling money it generates.
In 2019, Fox bought a share of Canadian Stars Group which it parlayed into Fox Bets in some US states (where gambling is regulated). It has been attempting to partner Fox Bets with Australian bookmakers. At the same time, the 2016 play at the market in the UK with Sun Bets broke up after two years.
The visit may well hurry on the sale of New Corp’s Australian tabloid newspapers which no longer fit as neatly into its broader corporate strategy. Right now, the promised cashflows from the deals with Facebook and Google have made them more valuable. Why not capitalise these future cashflows now, rather than take the gamble of them running down over time?