Murdoch wants his pound of flesh

Elizabeth Knight

Business columnist

Opinion

Illustration: Michael Mucci.

Having been the largest single contributor to the election of Tony Abbott's Coalition government, Rupert Murdoch is looking for his reward, according to word around the industry. The Sun King - as he has been crowned - is said to have been talking to the freshly minted Canberra legislators about the possibility of acquiring the Ten Network.

The jungle drums say his agenda also includes discussion on the abolition of anti-siphoning laws restricting the ability of pay-television operator Foxtel to exclusively broadcast first-run premier sports events.

The lobbying is said to extend to the Foreign Investment Review Board (or at least its ultimate master, Treasurer Joe Hockey) and media regulator the Australian Communications and Media Authority.

The acquisition of Ten has long been speculated to be on Murdoch's wish list, but under the previous government the notion of doing News Corp any favours was fanciful. It would make perfect sense for Murdoch to revisit this lobbying under the Abbott regime.

Indeed, he was seated alongside Hockey and Communications Minister Malcolm Turnbull at the Lowy Institute gala dinner in Sydney last Thursday. Both the ministers, together with A-list business representatives, attended the function to hear Murdoch's lecture on his vision for Australia.

The trouble is that neither of these items would be easy for even the current government to resolve.

Let's take the acquisition of Ten. Under the current media and competition laws this scenario wouldn't pass muster. News Corp is the largest print operator in Australia with near total coverage of all major markets. Murdoch's son, Lachlan, who owns just under 10 per cent of the Ten Network, also owns DMG, a national radio network with stations in each capital city, and is a director of News Corp.

In two markets in particular - Brisbane and Adelaide, where News owns the major newspapers - the obstacles are even greater.

Thus there are a couple of hurdles the Murdochs would need to mount to allow such a move.

The first is getting around the rule that restricts media organisations to owning two of the three media (print, radio and TV) in a market, and the second is foreign ownership.

Murdoch would need to convince regulators that he and his son were not related parties in a corporate sense, and it is hard to see that notion flying. It would be further complicated by the fact that News Corp owns half of Foxtel and all of Fox Sports, which supplies the former with programs.

The ACCC made it clear when Seven tried to take a larger stake in Foxtel that the move was unacceptable. Having said that, it has remained silent to date on recent moves by Ten and Foxtel to a proposed sales force tie-up.

The already close links between News/Foxtel and Ten have been well documented, including the appointment of former News Corp executive Hamish McLennan to run the network.

Perhaps the bigger question is why Murdoch snr would even wish to buy the troubled third-rating network, which has needed its existing major shareholders - Lachlan Murdoch, James Packer and Bruce Gordon - to guarantee its recently refinanced debt package.

There are cross-promotional opportunities and there is a chance that over time Ten's fortunes may improve, and buying it cheaply is good business. It would also serve to extract Lachlan from an investment in television that represents an embarrassing blot on his commercial record.

The abolition (or at least the relaxation) of anti-siphoning laws would be a far bigger boost to News Corp.

Before this year's split of Murdoch's empire, Foxtel's performance was a much smaller contributor to his international empire.

But in the new News Corp, which now houses the international print business and the 50 per cent stake in Foxtel and 100 per cent stake in Fox Sports, these are major contributors to its performance.

Foxtel's penetration continues to be less than half that achieved by cable operators in the US, due mainly to the restrictions on sport coverage.

But to allow Foxtel exclusive live access to premier sport would be so unpopular with the public (and the powerful free-to-air television lobby) that it is difficult to see how this favour could be granted - even to Rupert Murdoch.

But if any government was to allow Murdoch a good hearing, it would be the current one.

Read more: http://www.smh.com.au/business/murdoch-wants-his-pound-of-flesh-20131105-2wzhs.html#ixzz2k2sqAIbZ

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