Is the ghost of Kerry hanging over Ten today
The Packer name back in the public media fold has caught everyone by surprise. There is a temptation to start dusting off analogies to his father Kerry Packer and his love of Channel Nine; the proprietor who might be given to bark down the phone ordering changes to that night’s line-up.
There’s nothing like a mogul roaming the media landscape. Ten was boring until now thanks to an open share registry - an entity in the hands of fund managers who were more interested in EBITDA and price to earnings ratios than the alchemy of making a rip-snorting TV show.
Indeed, Ten boasts the most successful TV franchise ever in Masterchef but the thing that has frustrated shareholders is that it hasn’t really translated into stellar gains in the share price _ Ten’s cost structure has risen of late and it’s share price has taken a whack.
And has there been a touch of hubris creeping into Ten?
It’s plan to run two and a half hours of weekday news and current affairs from 5pm to 730pm on weekdays, hiring big guns like George Negus and Chris Masters, should be applauded by journalists but bean counters and shareholders know that news and current affairs is expensive content. Let’s hope for George’s sake that he has a watertight contract.
Anyone has spent time at Nine, for instance, knows beyond the glossy facade of the TV studio the place runs a low cost structure. (Just a visit to the loos will give you an idea).
Of course James Packer started selling out of Nine in 2006 and cutting a 50 year tie the Packer dynasty had with Nine. He exited Nine and other businesses like Women’s Weekly under the Publishing and Broadcasting Ltd umbrella completely by 2008 and in so doing proved pretty unsentimental about the Packer heritage of one of Australia’s premier media businesses.
His timing was immaculate. He sold at the top of the market to the private equity group CVC. CVC took the bait before the GFC, so to speak.
Kerry Packer famously said when he timed his sale of Nine to Alan Bond: “You only get one Alan Bond in a lifetime and I’ve had mine”. James could say the same for CVC.
Now Packer buys into a free to air TV network at a time when ad markets have been resurgent and the media landscape looks a lot brighter than it did a little over 12 months ago when media proprietors and their employees stared into the abyss.
The multi-channel strategy of the commercial networks has proven to be a much more successful revenue generator than anticipated, helped of course by the typical largesse from Canberra in which taxpayers are foregoing up to about $300 million in licence fees for valuable spectrum because it was deemed that free to air TV stations needed a helping hand.
Critically this ownership move also comes just ahead of the first major media policy announcement from the Gillard government .
Within two weeks communications minister Stephen Conroy is expected to submit to cabinet his proposal for a new anti-siphoning regime - the rules that protect free to air networks sports broadcasting rights from poaching from pay TV.
The new regime is expected to offer some concessions on the use of multichannels by the free to air networks for their sports telecasts - something that Conroy allowed Ten to do during the Commonwealth Games when it ran games coverage on its One channel during its news broadcasts.
Of course Packer has a foot in both camps, since he is a 25 per cent owner of pay TV company Foxtel, which is also 25 per cent owned by News Ltd (publisher of The Punch). The other 50 per cent is held by Telstra.
Ownership moves in media have often coincided with government policy shifts.
Conroy stressed today he had no idea about Packer’s swoop on Ten but clearly Packer sees a policy setting that he likes and in Ten a strategy that could be changed to lift the share price.
Who knows, if he makes a motza he could sell and offer CVC a deal to buy back Nine. Just as Kerry did with Bond. Anything is possible.
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