Menu lock

Business

Aug 24, 2017

5 comments

Fairfax Media and Southern Cross Austereo emerge as the two winners in the reporting season for Australia’s media groups. The season was dominated by more than $2 billion of losses and write-downs in asset values as revenues continued to weaken, taking profit margins with them. Nine Entertainment emerged with an honourable mention, while Telstra, which remains a bit-player, wants out of Foxtel to allow its rapidly growing TV and mobile media businesses room to grow unhindered.

Judging from the write-downs and outlook statements, the next year won’t see the pressures changing. Seven and Nine are forecasting a small dip in earnings and another strong share of a declining ad market, and Fairfax will be dominated by the spin-off plans for Domain. Southern Cross expects a small rise in earnings, News Corp and Telstra will be busy thrashing out the terms of their Foxtel device, and the future of Ten remains up in the air with the media law changes still stuck in the Senate. It is likely the Foxtel restructure will see a series of write-downs and impairments by both Telstra and News.

Fairfax reported a net profit of $83 million and no write-downs for the 2016-17 year, while Southern Cross this morning reported net profits of $108.5 million (up 40% as its radio,  rather than its regional TV business, did well) and no write-downs. Chief executive Grant Blackley said Southern Cross had reduced debt, sold off its northern NSW TV business to WIN and received broadcast licence fee relief from the government, and would expand into the out-of-home advertising market.

Nine Entertainment reported a loss of nearly $330 million in one-off charges (most were announced earlier in the year), the largest being a write-down on its television broadcast licences ($260 million) and provision to exit its Warner Bros contract. Nine reported a $203.4 million loss for the 12 months to June 30, compared with a $33.2 million profit in the year prior. Excluding one-offs, Nine reported a profit of $123.6 million, compared with $120.3 million in the prior year. Revenue fell 3% to $1.24 billion.

Seven West Media last week reported a small rise in TV revenue and earnings, but that was overshadowed by $988 million in write-downs of the value of the TV licences, magazines, goodwill and onerous contracts and sports rights, producing a loss of $744 million.

The ACCC has this morning approved a bid by Lachlan Murdoch and Bruce Gordon for Ten Network, which lost $232 million in the six months to February 28 after a $214 million write-down in the value of its TV business. Ten collapsed in mid-June as Murdoch and Gordon threatened to sue the directors (including the CEO of Foxtel).

We will get the 2016-17 results from Prime Media tomorrow (it’s an associate of Seven), while we still do not know how Gordon’s WIN travelled in the year to June.

News Corp wrote-down the value of its Australian newspapers’ long life assets by US$310 million and the value of its 50% stake in Foxtel by another US$227 million for a total write down of US$537 million or close to A$700 million. Foxtel saw its net income plunge to A$79.6 million in the year of June, from $244 million a year earlier, thanks to a 100,000 drop in subscribers and a A$3 drop in the annual revenue per subscriber, as well as losses of A$144 million on the failed investment (13.8%) in Ten and the Presto streaming joint venture.

That failed because the Stan streaming venture jointly owned by Nine and Fairfax seems to be a viable model up against Netflix. Nine said on Thursday that Stan had nearly 800,000 subscribers, up 50% on a year ago. “We’re first and foremost a content company … the future media world will be dominated by video and we’re at the forefront,” CEO Hugh Marks said.

In terms of future moves, Telstra’s move to force News Corp to restructure their jointly-owned Foxtel pay TV business is a sign the telco is on the way out of the sector because its own media business is booming.

Amid all the publicity over the dividend cut last week, and the decision to drop its stake in Foxtel to 35% from 50%, was the news that Telstra’s media revenue increased by 8.2% to $935 million “due to the strong performance of Foxtel from Telstra and Telstra TV”. Foxtel from Telstra grew 8.1% to $777 million with 57,000 subscriber additions over the past year, while there are now 827,000 Telstra TV devices in the market, continuing its strong growth. That is up from 300,000 at June 30 last year and just over 600,000 at December 31. Telstra is now Foxtel’s most important customer.

Foxtel also had 1.3 million Sports Live Pass users (including 1.2 million users who receive the service as part of their mobile subscription) across AFL, NRL and Netball, delivering unique and exclusive content for its mobile customers. These are both areas where Telstra is grabbing Foxtel subscribers, especially in mobile sports passes.

NOTE: This story has been updated to include more detail about Nine’s results.

Tips and rumours

Aug 23, 2017

5 comments

From the Crikey grapevine, the latest tips and rumours …

Our land abounds in nature’s gifts … A rushed campaign from the Australian Bureau of Statistics to encourage us to enrol for the marriage equality postal survey seems to be bending over backwards to avoid any obvious links to, ya know, same-sex people in love.

Images of rolling waves, red dirt and suburban lots adorn the ABS’ newly set up Facebook page, television commercial and newspaper advertisements. No mention of weddings, rings, the phrase “same sex” or even cake toppers. Ironically, some of these spots look like an idyllic spot to get hitched.

A quick reverse Google search reveals at least one of these images to be Getty stock of a cattle ranch in Queensland, which prompts the question: who is paying for this ad campaign if the High Court says no go?

No peace in sight for Victorian Liberals. The announcement yesterday that Victorian Liberal state director Simon Frost is jumping ship to work with the federal branch of the party means a new fissure could open up within the already beleaguered party. It’s been reported that one of the names already thrown around to replace Frost is that of Nick Demiris, who recently found himself in the position of deputy campaign director. Demiris is a former staffer to conservative federal backbencher Kevin Andrews, and is still close with the man who wants all his cycling buddies to know that he likes them (just not enough to get married, soz bros). Demiris is also close to party president Michael Kroger (and Rear Window reported at the time that Frost wasn’t too pleased about Demiris getting the job) — and as we reported when he got the deputy campaign director gig in May, it was thought that meant someone close to the party’s parliamentary leader Matthew Guy was next in line for a plum gig.

What would members make of him getting Frost’s gig just months after feathers were ruffled over his last promotion?

This comes as Kroger met with the board of the Cormack Foundation yesterday to make the case that the $70 million in the foundation’s coffers should not be held back from the Liberals or given to any other party. And we haven’t even mentioned lobsters or mobsters yet.

Goodbye and good riddance. Fairfax is in the middle of redesigning its homepages, with the Brisbane Times the first website to get the new-look treatment, which promises readers “a faster, cleaner and more immersive Brisbane Times across all of your devices”. The other mastheads will follow, with previews looking pretty swish. More exciting than new fonts and faster load times is that one of the most annoying elements of many commercial news websites will be put on the scrapheap — autoplay video is not part of the new look, Ms Tips has been told by a few sources. We often have a go at Fairfax for subediting issues, but today we toast them. Good riddance, autoplay.

Looking after No. 1. The Vodafone National Small Business Summit in Melbourne this week asks the big question: is Telstra’s regional monopoly holding back small business growth? And unsurprisingly, the conference sponsored by a Telstra rival finds the answer is yes. Vodafone wants domestic mobile roaming, which the conference press release says is “Australia’s best opportunity to drive mobile coverage expansion in regional areas”. 

“Currently, Telstra holds a taxpayer-funded mobile monopoly in vast areas of regional Australia. The Summit hosted by the Council of Small Business Australia (COSBOA) will support the right for regional businesses to have the same coverage enjoyed by their metropolitan counterparts.”

“The introduction of domestic mobile roaming would allow all Australians to use their mobile wherever coverage exists, regardless of their provider. This removes the need for multiple carriers to duplicate infrastructure in regional areas, so that carriers, governments and communities could co-invest in one expanded, shared set of infrastructure which delivers new coverage.”

So the Vodafone-sponsored summit wants Vodafone customers to be able to jump onto Telstra networks for free. You don’t say.

Right royal pay rise? What is going on at the Royal Automotive Association of South Australia? Ms Tips has heard the RAA is asking member to vote on a reduction of board members (from 12 to nine) at the upcoming AGM, but that the level of remuneration for the board will not be reduced. In effect, members are voting on whether to give the remaining board members a pay rise. 
As for which board members go —  “the plan is carefully designed to ensure it is not the president or vice president,” our tipster tells us.

We asked the RAA whether this was true, but they didn’t get back to us before deadline.

*Heard anything that might interest Crikey? Send your tips to boss@crikey.com.auuse our guaranteed anonymous form or other ways to leak to us securely

Tips and rumours

Aug 18, 2017

5 comments

Tips and rumours

We found out exactly how Pauline Hanson was identified by Senate security ... early deadlines mean the AFR misses the news again ... and ABC is happy with Uhlmann's editorialising ...

From the Crikey grapevine, the latest tips and rumours …

Is it really about security? One Nation Senator Pauline Hanson’s burqa stunt was all about security, she says, but she hasn’t made it clear exactly what kind of security she expects at Parliament House. Hanson is unrepentant about the stunt, saying she did not mock religions: “I am actually proving a point here. There was no security checks.”  

So what actually happened as Hanson entered the Senate chamber with her face covered? Senate President Stephen Parry said as she entered: “I’ve been advised by the clerk via the attendant that the identity of Senator Hanson was established before she entered the chamber.”

But how? Crikey understands Hanson entered the chamber with fellow One Nation Senator Brian Burston, who was stopped by an attendant and asked to identify who was wearing the burqa. Burston said it was Hanson, and Hanson confirmed that verbally. She wore her senatorial pin on the outside of the burqa (it’s visible in photos in the chamber). We understand that the attendant did not require her to lift her veil. The identification of Hanson ultimately rested with the discretion of that attendant, who was clearly satisfied it was her.

But that is not the entire story — the security process doesn’t begin and end with entering the chamber itself. The general public are not allowed into the lobbies surrounding the chamber without clearance. There are guards and attendants ensuring anyone they don’t recognise has a pass.

The Department of Parliamentary services deals with, among other things, security in Parliament House. A spokesperson for DPS told Crikey: “At the request of Senator Hanson’s office, Senator Hanson and Senator Burston were escorted by Parliamentary Security Service Officers to the rear of the Senate Chamber. This was after Senator Burston verified her identity.”

“All people given access to the private areas of Parliament House have been identified and screened,” the spokesperson said.

Crikey contacted Hanson to clarify how she was identified, and what she would consider an appropriate level of security in situations where someone attempts to enter the chamber wearing a full face covering, but she didn’t reply before deadline.

Hold the front page (and the whole paper). The Australian Financial Review‘s early deadline has bitten again, with the paper missing one of the big political stories of the day. Deputy Nationals leader Fiona Nash announced just before the Senate rose for a two-week break about 7pm yesterday that she was also a dual citizen by descent. It was a story big enough to be splashed above the fold in The Australian. But the Fin‘s early print deadline meant it was caught short, with the biggest development of the day in a growing dual citizenship fiasco missing the hard copy paper entirely.

Don’t speak too soon. Still on the Hanson stunt, while we know that expecting consistency from Hanson is probably a bridge too far, we found this passage from John Safran’s book Depends What You Mean by Extremist interesting in light of yesterday’s events. It starts with Safran asking if it’s likely Hanson will change her opinion on Islam in the future (as she was claiming she had never been against Asian immigration in the 1990s):

“‘How do I know I’m not going to bump into in fifteen years’ time and you’re going to be –‘

‘Wearing a burqa?’

‘Yeah and you’re going to have some excuse abou –‘

‘It won’t happen,’ she promises. ‘I will never wear a burqa!'”

Never say never, we guess.

Chris Uhlmann’s anti-renewable rant A-OK. Is the ABC’s political editor Chris Uhlmann completely unbiased when it comes to reporting on renewable energy? We have reported before on his controversial (and largely discredited) rant about wind power in the wake of the South Australian blackout, and a viewer thought his recent report on electricity prices was beyond the pale. During the report Uhlmann said: 

“The cause is more than 10 years of bad policy. State governments loosened the rules around poles and wires in order to boost their own revenues. Blackouts a decade ago caused some kneejerk spending on network back-ups. There’s less competition with fewer owners in both electricity generation and retail industries. Add to that the cost of stunningly over-generous green schemes, and now sky-high gas prices. It all adds up to electricity bills that have doubled in a decade.”

Is that a fair assessment, or pushing his own anti-renewables barrow? The ABC responded to a viewer complaint by saying Uhlmann was in the clear: 

“In our view, the statement that green schemes had contributed to increased electricity prices was a material fact for the purpose of this story and reasonable efforts were required to ensure that it was accurate and presented in context. Mr Uhlmann’s statement … identifies six factors as contributing to increased power prices.  We note that these same six factors have been identified by the ACCC in its current inquiry into electricity affordability.”

Evolving offshore at Telstra. We hear Telstra is planning to offshore another lot of jobs in its accounting systems and data management areas.  The catch is, a tipster tells us, this offshoring will only affect the business relating to Australian individual clients, with “government and big corporate business deemed too important” to offshore.

We asked Telstra whether there were plans to send roles relating to accounting systems and data management overseas, if so, how many and which customers would this affect, and a spokesperson did not deny it:

“We continue to look for ways to reduce complexity within our business so that we can deliver better experiences for our customers. This includes digitising some systems and developing agile ways of working.

“While our size and shape will evolve, our success will continue to be built on people with deep connection to customers, expert knowledge and recognised technical expertise.”

You may have noticed that the statement makes it no clearer if Telstra actually is offshoring jobs in accounting systems and data management, so we’ve asked Telstra to directly answer the question and we’ll let you know when we do.

*Heard anything that might interest Crikey? Send your tips to boss@crikey.com.auuse our guaranteed anonymous form or other ways to leak to us securely

Federal

Jul 25, 2017

5 comments

In one of his first meetings as Communications Minister, Mitch Fifield met with executives from state-owned China Telecom weeks before he met with representatives from Telstra, Optus, or Vodafone, Crikey can reveal.

The admission is contained in over a dozen pages of diary appointments of Fifield’s first three months as the Minister for Communications, obtained by Crikey after an 18-month battle to get the logs under freedom of information law.

China Telecom doesn’t have a major presence in Australia, and was only established here in 2011, mainly focusing on business network services. The company barely registers in the news in Australia, even in the local technology press. Nevertheless, the company was able to secure an early meeting with the new minister. Just a week after being sworn in, Fifield’s diary records that on September 29, 2015, Fifield held an “introductory meeting” with the telco’s representatives, sandwiched between media interviews with The Australian and The Australian Financial Review

According to the diary entries, his meeting with the telco was even before meeting with NBN Co executives — he is one of two shareholder ministers for the NBN. That meeting, with the chief executive officer, chief financial officer, chief operations officer and other executives didn’t happen until the following day, on September 30. Fifield did not meet with any other telecommunications companies  for over another week, when he met with Telstra’s chief executive officer, chief financial officer and head of government relations on October 9. Optus did not get a meeting with the minister until October 21, and Vodafone had to wait until October 30. John Stanton, the head of the telecommunications lobby group, Communications Alliance, had a meeting with Fifield on November 2.

A spokesperson for Fifield did not explain why China Telecom scored the first meeting before other telecommunications companies or what the meeting was about, simply stating that “the minister meets a wide range of stakeholders”.

[If Huawei is OK within Defence, why sensitivity about the NBN?]

Infamously, another Chinese state-owned telecommunications company Huawei has been banned from supplying technology for the National Broadband Network. Proposed changes to legislation that governs Australia’s telecommunications network infrastructure would also give the government power to direct commercial companies not to use technology or make changes to their network that may impact the security of their network. This has been viewed by the sector as an attempt to extend the NBN-Huawei ban out to the rest of the industry. The legislation received bipartisan support from the parliamentary committee reviewing the bill, but the legislation did not pass prior to the Parliament rising for the winter break.

Fifield’s office had long fought releasing his diary under FOI law, going so far as taking Crikey to the Administrative Appeals TribunalCrikey sought access to the first three months of Fifield’s diary in his time as Communications Minister in 2015. Fifield’s office refused this request at the start of January 2016, but earlier this year, Information Commissioner Timothy Pilgrim overturned this decision and ordered Fifield’s office to hand over the 15 pages of the diary. Fifield’s office then appealed the decision to the Administrative Appeals Tribunal, at the same time as the AAT also received an appeal from the Prime Minister’s Office for a similar FOI request from The Australian. That appeal appears to still be ongoing.

[Access to Fifield’s diary denied]

Last month, Fifield’s office offered to settle the case, committing to providing a printout of the relevant diary entries for Fifield as minister — minus the personal entries, and personal information like phone numbers — rather than providing an exact output of the Microsoft Outlook email program diary similar to what Attorney-General George Brandis ultimately handed over after Labor’s epic battle over his diary. Crikey accepted this offer to settle the case.

Crikey will have more coverage from Fifield’s diary in the coming days.

Communications Minister Mitch Fifield has announced that TPG and Vodafone have snapped up the remaining blocks of 700MHz spectrum left over from the switch from analog to digital TV several years ago. TPG paid a hefty $1.2 billion for the spectrum, which is noteworthy because TPG doesn’t have a mobile network of its own yet.

TPG has been quietly buying spectrum licences for years and sitting on them, with expectations rife that the company would begin building its own 4G mobile network, rather than just reselling white label mobile products from other networks. TPG has talked this down, saying a network was still in research and development mode, but today finally showed its hand and told the ASX it would be building a network with 80% population coverage over the next three years with between 2000 and 2500 mobile towers.

The company told the ASX it would look to get about half a million subscribers.

Vodafone buying up some of the spectrum is also interesting in that one of the bigger rumours in the telecommunications industry would be that TPG would buy out Vodafone’s assets from its global parent companies. Either way, once TPG gets into mobile, it will be close to giving Telstra a run for its money as Australia’s largest telecommunications company. Telstra is more focused on becoming a global tech company, so it probably isn’t too concerned.

Federal

Apr 7, 2017

5 comments

When the current self-appointed standard-bearer for the conservative cause Eric Abetz came into Parliament in 1994, he set his sights on legislation the then-Labor government was looking to implement to override the Tasmanian Liberal government’s refusal to decriminalise homosexuality. It passed, but before that happened, Abetz was there to put out a press release stating: “Federalism perverted to allow sodomy and incest”. 

“In this, the international year of the family, Labor is telling Tasmanian families that their value system is wrong.”

What was an argument against decriminalising homosexuality was couched in terms of the federal government overriding states’ rights, but the intention was clear. In 1997, Abetz was back again, arguing against equalising age of consent laws because homosexuality should be deterred at all costs.

“I believe that homosexuality is an undesirable activity. It is, I submit, an appropriate aim of the criminal law to encourage young persons not to engage in such activity especially in that phase of their life where young people are developing,” he said.

“I do not know how many people believe that it is a desirable outcome for young people to engage in homosexual activities … To have an age of consent of 16 years, especially for young men, I believe, leaves them too vulnerable to predatory males. It is for this reason that the policy position of the Model Criminal Code in dealing with heterosexual and homosexual activities is misplaced. The quality of the two acts, I submit, are substantially different.”

It was couched in terms of child protection but was obviously thinly veiled homophobia.

Now, as gay rights are much more accepted in Australia broadly, and Abetz is entering the twilight of his career, the conservative senator’s language has changed, and softened. In an interview with Sky News this week, Abetz said that what people want to do was a matter for them. But he was still there to argue that more should be said about people in same-sex relationships who then go on to be in heterosexual relationships.

[Pansexual’s labyrinth: Abetz lost in a bewildering maze of queer theory]

For the subject matter Abetz was brought on to discuss — the latest corporate bid for pink dollars in rings developed by Airbnb and others with a tiny gap to denote the lack of marriage equality — he could barely muster an argument against it except to suggest Christians opposed to marriage equality might feel “uncomfortable” if the rings were offered to staff and suggesting the “PC” campaigning would lead to higher costs for Telstra or other pro-equality customers.

Marriage Alliance’s Sophie York (who might still be a plant by pro-marriage equality people) made an even more ridiculous argument that in addition to “bullying” anti-gay workers, the gap in the ring might represent an OH&S issue in the workplace.

These are the arguments those opposed to marriage equality are left with. If you have followed the marriage equality debate since its inception, you will notice that we are long past the days of most people quoting Bible verses about sodomy and fire and brimstone. The fact that Eric Abetz’s brief dalliance in the language of sexual fluidity (but gender fluidity doesn’t exist in Abetz’s world, thankyouverymuch) was greeted with much mockery suggests that the debate has moved on.

The Australian Christian Lobby is now forced to complain about the “rainbow agenda” of everything but marriage — surrogacy, freedom of speech and Safe Schools — all of which have nothing to do with marriage equality.

The ACL and Marriage Alliance complain about the Coopers boycott resulting in the company putting a statement on the record about being supportive about marriage equality, but they both signed up to the Cape Town Declaration last year — an initiative of the right-wing National Organisation of Marriage — which includes a call to boycott businesses supportive of marriage equality:

“We rededicate ourselves to honoring, restoring, and protecting these truths. We commit, where possible, to refuse to deal with corporations that deny them.”

[Nine things we learned in Senate estimates, including Abetz declaring war]

The ACL and Marriage Alliance were also fully supportive of the Catholic Church bullying Telstra into not promoting marriage equality in exchange for its business — until Telstra backflipped. Why no outrage about all this bullying? It’s because they will not win. They could boycott every business calling for marriage equality, but what phones would they use? What internet service provider would they use? Where would they stay on holidays? Which airline would they fly?

So they stick to symbolism. Rings, rainbow flags, departments marching in Mardi Gras. So affronted by the acceptance of LGBTI people, we are at the point now where even visibility of same-sex relationships leads to complaints from the conservatives of people feeling bullied. The Australian this week has a piece complaining about a Magnum ad depicting a lesbian wedding, and the Australian Christian Lobby targeted the Volley shoes company for an ad depicting a scantily clad same-sex couple. It has a long history of opposing any ads with gay couples showing any sort of intimacy. Because visibility brings acceptance, and they lose.

There is also no fight too minor for them, now. The Australian along with the ACL have been running a campaign on a couple of LGBTI activists on Twitter directing tweets at certain brands associated with people working for the Australian Christian Lobby. The national broadsheet devoted several front pages of its agenda-setting news coverage just two people on Twitter tweeting at a few brands as reprehensible bullies trying to silence others. The big red EXCLUSIVE marks every article simply because no one else is engaging in their culture war.

For Abetz, it must be about setting a legacy. His frequency and apparent enthusiasm to engage in these debates as a backbencher can only mean he wants to be remembered as a Christian warrior in the dying days of religious freedom. For most, however, he’ll be remembered as the guy who complained about rainbow flags and wanted more reporting on gay people turning straight.

News

Mar 28, 2017

5 comments

From the Crikey grapevine, the latest tips and rumours …

Getting away with it, Scott free. It’s not unusual for the staffers of politicians to omit verbal stumbles made by their bosses, but two curious edits from Treasurer Scott Morrison’s office had us raising our eyebrows. The first one was innocent enough. On ABC’s AM program, Morrison confused AM host Sabra Lane with RN Breakfast host Fran Kelly. ABC records the stumble, ScoMo omits. 

Morrison’s press release

ABC transcript

The second time came when right-wing shock jock Ray Hadley had a dig at Morrison at the end of their usual weekly interview, saying he hoped he’d be talking to Morrison next month as treasurer — in reference to rumours that Morrison might go if the budget doesn’t go well (although the budget isn’t until May). “Of course you will,” was Morrison’s response, but the whole exchange was left out of the end of the transcript on the minister’s website. 

Baby, we were born to run (for political office). The hits keep on coming from our request for members of a parliamentary super group — with a line-up so far featuring Peter Garrett on lead vocals, Tony Abbott on backing vox, Craig Emerson on guitar (and … whatever this is), Graham Perrett on bass, Athol Guy on double bass and Steve Gibbons on … bass again, we may need something in the higher registers to cut through all that bass. Former New South Wales premier Kristina Kenneally has been put forward as a possible co-lead vocalist, with this ABC footage of her and press secretary Mark Tobin attesting to her lilting tones, which could nicely pair with Garrett (with the added bonus of making Abbott harder to hear). We’re told Ku-ring-gai MP Alister Henskens could slide in as an “accomplished” lead guitarist. According to his Facebook page, Tony Burke plays piano and guitar (and certainly, a photo from March 20 shows he has a sweet Telecaster, which Wills MP Peter Khalil may or may not have nicked). Given the preponderance of guitars, we might stick him on keys. A tipster informs us that former Victorian Labor MP Evan Thornley was the drummer in a Midnight Oil cover band when he was at Melbourne University in the mid 1980s. Also handy at beating the drum is Democrats senator and leader Andrew Bartlett who was in Brisbane bands I Am Vertical and Too Green For Summer (Whose I Don’t Believe It rounds out the 2004 compilation Rock Against Howard). Bartlett could also slot in on keys, having tickled the ivories in a group called The Cutters

ACL goes to ground. As reported by The Australian this morning, because of perceived “threats” from LGBTI activists, the ACL applied, and was successful in, having the names of its directors and the directors of the associated Lachlan Macquarie Institute removed from the Australian Charities and Not-for-profit Commission (ACNC) register.

This came after a campaign from two activists over former PwC executive Mark Allaby’s position at the Lachlan Macquarie Institute and his new job at tech giant IBM. One side effect of the ACNC granting the ACL secrecy over who sits on its board is that the financial reports of the lobby, detailing how much money the political lobbying organisation takes in are now no longer on the ACNC website. Some donation information is still available on the AEC website, but much of the ACL’s financial information is now hidden. Crikey asked the ACNC what evidence the ACL provided to back up its assertions that its directors were under threat, but due to the secrecy provisions governing what the ACNC does, it could not comment on the case. 

Additionally, it is believed that complaints have been made to the ACNC regarding the ACL’s political activity, particularly in campaigning against Labor both at the last federal election and in the WA election, potentially in breach of the rules regarding what charities can campaign on. The ACNC could also not comment on this but did confirm that of the 27 complaints received in the past two years about charities involved in political advocacy, some of them were related to charities set up to advocate for religion, like the ACL. 

Burying the lede? The New York Times is one of many international outlets to have covered Cyclone Debbie, the category 4 storm currently buffeting north Queensland but we wonder if its tweet accompanying the story really got across the severity of what is happening in Queensland today. It reads: “A cyclone in Australia halted ferry and train service and closed a local airport.”

The article itself is a straight and informative take on a major event, but our eyebrows were raised at the choice of information in the accompanying tweet. Given that the up-to-275-km-per-hour winds and lashing rain threaten the safety of roughly 25,000 people in low-lying areas and could cause up to $1 billion in property damage, we’re not sure the inability of local residents to catch the train for a while is really the most important detail.

*Heard anything that might interest Crikey? Send your tips to boss@crikey.com.au or use our guaranteed anonymous form

Business

Mar 27, 2017

5 comments

Freshly minted ABC chairman Justin Milne won the job through an independent appointment process over two short-listed rivals. Communications Minister Mitch Fifield made the call, and gained immediate sign-off from the PM.

In an interview with Crikey last Friday, after he met with ABC chief executive Michelle Guthrie for the first time, internet industry veteran and multimedia pioneer at Telstra BigPond and Telstra Media Milne made it clear he would protect the ABC’s independence fiercely.

“Politicians of all stripes see themselves as ABC stakeholders because they represent ordinary Australians,” he said.

“Now I will take calls from politicians and absorb what they have to say but I want to make it clear that I will not be pushed around by any politicians. The ABC is an independent organisation. I report to the Minister for Communication who is the shareholder on behalf of the taxpayer.”

As one of Milne’s former executive reports at Telstra BigPond noted: “You have to remember Justin has a tough side and it can be a rough side, he’s very earthy and quite prepared to have full throttle arguments, but I don’t think he will be calling people **** ***** at the Aunty board table.”

The general consensus of people who have worked with and known Milne over the years is that he is very considered when he is weighing his view on a topic, but once he has made his mind up he will prosecute that view very strongly.

“Justin figures things out by himself, he is not really an advice-taker, he doesn’t have bag carriers and advisers, and he is really a bit of a lone wolf.” 

Indeed, Milne is fielding his own calls and Facebook messages.

During his time running Australia’s biggest internet business, his only regular sidekick was his head of communication, but he would just as happily take media interviews by himself. With a complete grasp of his business to an impressive headline level of detail, one always got the sense that Milne put in the long hours understanding the drivers of his businesses, and the opportunities that lay ahead, by leveraging technology.

“Justin set up some remarkably bleeding edge digital media innovation at BigPond when we got online rights to AFL, NRL and V8 Supercars,” Sandy Davey, former Telstra Sports boss said. “He was happy to fund as and let us go as long as we were creating a new way of engaging. Telstra was doing things there and was a few years ahead of anywhere, including America,” she said. “So don’t listen to this line about a lack of content experience in filmmaking. He has more than most media executives. And a lot of the talent, people like Brad Fittler, who got his start at BigPond, and many others, are now top of the main broadcast stream.”

But Telstra original content was always under the threat of an attack from Foxtel, which understood Telstra had a cheap, ubiquitous platform already paid for by telephony, rather than the expensive, ageing proprietary technology used for the Foxtel HFC cable network, which lost money for more than a decade after it was built.

Milne sat on the Foxtel board for many years and saw, first hand, the acrimony between the two sides. This has largely been triggered by News Corp’s 100% ownership of the wildly profitable cable monopoly Fox Sports. Yet, for a decade, Telstra was forced to wear losses as Foxtel bled red ink. Telstra saw the creation of Fox Sports as a sneaky deal outside the spirit of the Foxtel partnership.

News saw the win as part of the cut and thrust of business, and the advantage of having management to control, and a decade of institutional industry knowledge — an advantage over the Telstra near-monopoly cash machine using monopoly profits for unfair advantage in an already corded media sector and News has no intention of moving into Telstra’s telco patch.

Milne is carefully diplomatic about News — The Australian’s interview with Milne led with the wearyingly predictable “news” that the new ABC chairman didn’t seek a job at a biased media company, and he disagrees with the relentlessly over-balanced editorial copy at the national broadsheet. In short, Milne says there’s no bias at the ABC — oh and he’s backed by a controversial and stringent bias-checking process instated by former managing director Mark Scott.It was a quixotic attempt to hand critics some hard facts to counter woolly opinion-cum-unanalytical analysis of bias designed to weaken the organisation’s resolve to pursue stories in the public interest.

In his broad analysis of the media sector, Milne quietly nails News’ motivations without seeming to touch on the subject.

“In the movement of millennials from what used to be mainstream media, the advantage the ABC has is that it doesn’t have a rapidly deteriorating revenue line to deal with at the same time; that is very chilling for them.”

“I have three millennials in the house and none of them watch the ABC. They tell me they come across the ABC on social media, so it is these platforms that are increasingly important for that audience.’’ 

“The traditional media is like the apocryphal frog in hot water: they are trying things but I don’t know the answer. And they don’t have the answers yet. But traditional media will survive; I think newspapers are ‘safe’ for instance, but they will have, say, 10% of the readership they used to have.”

“The value of those brands and mastheads will go down,” Milne said.

And Milne also made it clear that he will stand up for the ABC and its employees against serial campaigns, bereft of any self-awareness or of the ironic elephant perched in the corner, alleging bias at the ABC.

“There is no argument that Australians like the ABC; they like it telling Australian stories,” he says. “Regional Australia is well-serviced by the ABC and they like it. People understand that the ABC tries, at all times, to play down the centre of the line.”

He also seems keen to shut down the constantly resurfacing whinge by the warriors of the right, by The Australian and ABC-hating politicians like the unlamented former Queensland Liberal Senator Santo Santoro, and the Wollongong Liberal who has taken up his cudgels, Senator Concetta Fierravanti-Wells.

“I do not think the ABC is biased,” Milne stated with some finality. “People know that Fairfax has a more left-wing line and News has a more right-wing line and they trust the ABC to play the issues straight down the middle. If you talk to some people they think the ABC is biased left, and others that it is biased right, so they seem to be doing their job.”

Milne also mused on the prospect of some restoration of the Australia Network widely mourned in Asia by thousands of Australians and lovers of Aussie rules.

“I always thought the Australia Network had shed loads of great stories and content. It was great soft power, an opportunity to tell Australian stories to our neighbors. But I am still new to this, so need to get a grasp of where things are at, and obviously it depends on resources.”

Despite his far longer and deeper operational experience in the media and technology sectors substantially outweighing Guthrie’s, Milne said: “it is not the chairman’s role to be very hands on, but I do have broad experience in media, so I will always make myself available to Michelle as a sounding board. We have a similar view on where technology is taking media; we both have old and new media experience, so we speak the same language and I sense kindred spirit.”

“I met her for the first time Friday and I was impressed. She is smart and eloquent and has a good grasp of the business. I think she will be pleased to see it’s not easy being new in a job and having your chairman leave.”

Milne says he has no intention of “calling Michelle after I have a brainwave about content in the middle of the night” but noted, after meeting her for the first time only last Friday, that they are “fellow travelers” across the old and new media sectors and they agree on reshaping the ABC for a diverse media environment. 

Australia

Mar 22, 2017

5 comments

And so, at last, it appears that the national broadcaster will finally get a chairman with not just media experience, but with decades of digital media experience in the shape of former Telstra and OzEmail executive and NBN board member Justin Milne. He’s not perfect, and he arguably lacks core “content creating” experience, but he spent years inking media deals — and on the Foxtel board — so it’s refreshing, albeit determinedly un-Australian.

And at last it seems, too, that James Spigelman’s replacement at the ABC, will finally get the media company he has been, often quite publicly, aching to run for almost 20 years.

Yes, Milne goes way, way back to the halcyon days of OzEmail, the little internet service provider that could — and which was the foundation stone of Prime Minister Malcolm Turnbull’s fortune (he pulled in about $60 million) when it was sold to the long-defunct WorldCom for $520 million in 1998. Milne was one of the crew at the time and took over the running of the thing when Sean Howard danced off with his millions (about double the PM’s windfall).

Milne’s experience leaves him, on any sane reckoning, streets ahead of two corporate lawyers that had been variously mooted for the job: Danny Gilbert, of long-time media luvvie law firm Gilbert and Tobin, and smooth-talking David Gonski, the corporate world’s answer to Eddie McGuire. A reasonably phlegmatic character, with quite a bit less bullshit about him than he easily could have, given where he has been, Milne’s pretty much seen it all on the way up. From famine, to feast, and back again.

The bald truth is that Milne has far more operational experience than his chief executive Michelle Guthrie — and despite what critics will doubtless line up to say, he certainly understands the nuts and bolts of the business; he makes his “deep diving” CEO look like a digital neophyte and, importantly, he’s had his share of failures with his successes.

Guthrie will find him a vastly different proposition to the hands-off, hardly-there Spigelman. Indeed, it’s hard to see given his history how he won’t be more hands on than any chairman, potentially, in ABC history. Given Guthrie’s thin CV operationally, this might not necessarily be a bad thing, but is it a sign that people are already worried? 

Milne’s first bid to be a media maven of the digital variety — back in the days when there was still a distinction — came when he was still at OzEmail. It was by way of a slightly bizarre press conference held, with more than a whiff of desperation, in the foyer of the Sydney Stock Exchange (as it was then) in Sydney’s Bridge Street in 2000. 

Barely a year after the WorldCom deal was finalized, OzEmail was on the block again as the dotcom bubble started to deflate. It was at the ASX that Milne announced that now-forgotten dotcom minnow Eisa would buy OzEmail for $300 million in a deal that would create Australia’s premier multimedia company. Into the mix went a whole pile of content partners including Yahoo, and it was all predicated on broadband availability. The deal would collapse in ignominy two years later in the dot bomb wash-up, as OzEmail finally unveiled its first broadband service. But Milne had a taste and not long after he would jump ship to his hated rival Telstra, and be on his way, on his long voyage to Ultimo. Having spat and howled about Telstra up until the day of his defection (as it was very much seen at the time), no one, then, should have doubted his ambition.

Milne had earned his stripes at OzEmail running its “data casting” business, which he later described (in a revealing interview with Beverley Head at Fairfax) as “one of the last brave Sean Howard and Malcolm Turnbull (founder and chairman, respectively) experiments”. Having missed out on the big payday, he valiantly searched for one of his own — until Telstra, desperate to differentiate its vanilla internet division, BigPond, came calling.

Armed with Telstra’s marketing millions and with the space to make mistakes, Milne was one of two standout successes in former Telstra chief executive Ziggy Switkowski’s decidedly mixed bag of appointments to his senior team. But Milne’s yearning to run more than just an ISP eventually meant his position at BigPond morphed into the grander Telstra Media division that also looked after the company’s 50% share in Foxtel. During that time there were what now look like prescient deals for AFL online rights, internet horse racing and the wildly expensive experiment of BigPond Movies, a stab at the first phase of Netflix —  all cruelled by the Foxtel partnership, in the end.

Throughout it all, there was Milne — on a hiding to nothing, but by dint of Telstra’s extraordinary reach and BigPond’s generally above-average marketing (and above-average budget), unable to ever really lose, or, in the sense of creating a real media company, win.

While the frustrations must have been many, then Telstra boss Sol Trujillo quietly doubled the pay of his often-sidelined Australian executives, to help salve many wounds and Milne found himself a highly paid minister without much portfolio, as BigPond proper was handed to an amigo.

Since leaving Telstra, Milne has made the most of it, chairing one of Australia’s standout software companies MYOB and collecting various board seats but clearly, the big media gig remained front and centre.

We will never know if he was a (strong) Telstra second choice when Thodey was unwilling to give up his CSIRO chair after only 18 months (Thodey did express interest in the ABC job publicly but confirmed to this writer in February he was no longer “a candidate”) — but that’s probably unfair to Milne. Thodey’s experience is more suited to the national laboratory than broadcaster and for what it’s worth, the two are friends.

Still, there’s some irony, or something, in the fact that the government’s broadband (NBN chair Switkowski), technology and media tsars are all Telstra alumni. Not such a big pond, after all.

Media briefs

Mar 2, 2017

5 comments

It is odd that in devoting a whole column to the problems of Telstra, especially the future of Foxtel, The Australian Financial Review’s Chanticleer columnist this morning never mentioned how Foxtel’s financial and subscriber performance deteriorated in 2016.

“Negativity towards Telstra’s shares is not being helped by a growing frustration among fund managers about the way in which the company is dealing with its problematic cable TV joint venture, Foxtel,” Tony Boyd wrote.

“The market wants Telstra and its partner in the business, News Corp, to get a deal done that finally resolves the long-term ownership question and allows each company to pursue separate video and content strategies.

“News Corp wants control of Telstra’s 50 per cent shareholding in Foxtel, but for some mysterious reason a transaction that has been talked about for several years cannot be completed.

“Telstra shareholders are concerned that a failure to exit Foxtel will result in a repeat of Telstra’s experience with the Yellow Pages business directory, also known as Sensis.”

Boyd failed to mention that News Corp’s second biggest shareholder in Perpetual wants to see the Murdoch clan company split with the underperforming print and pay TV businesses hived off (not added to). In any shareholder vote, Perpetual holds the whip hand with its 12% stake because the Murdochs will not be able to vote their 39.1% holding. Several US investors and analysts want to see something similar — with the real estate websites, REA and Move, removed from the weak print and pay TV operations of News.

And then there is the weak operational performance of Foxtel in 2016, which had a big write-down — the second in three years. A reading of the News Corp fourth-quarter report, or the more detailed filing with the US Securities and Exchange Commission, would have revealed that Foxtel suffered a fall in subscriber numbers in the six months to December of around 100,000 (to 2.82 million, a figure in the Telstra half-year report). That was down from “more than 2.9 million” at June 30. A look at both News Corp reports would have shown that the value of the 50% stake in Foxtel was impaired by US$227 (nearly A$300 million), that Foxtel abandoned its interim dividend payments to both Telstra and News Corp (the previous one was US$25 million). Foxtel’s churn rose to a very high 15.5% (that is, it had to replace 15.6% of the roughly 2.9 million subscribers at June 30, or more than 452,000).

Foxtel is already heading down the Sensis path and there is little Telstra can do because News Corp is, in effect, the dominant 50% partner. If News buys Telstra out of its share of Foxtel, it will also include the shareholder loan of more than US$400 million, plus benefits to Telstra of the Fox Sports content supply agreements and those held by other associates of News and the Murdochs in 21st Century Fox. News Corp will also have to make sure Telstra remains attached to Foxtel because its Telstra Now product is the single largest supplier of new Foxtel subscribers at the moment (88,000 added in the December half year and some 600,000 devices, many with Foxtel subscriptions). Telstra is now more important to Foxtel’s future than Foxtel and News Corp are to Telstra’s. — Glenn Dyer