Murdoch, Piers Akerman, AMP and talk circuit
July 22, 2008
Here are Stephen Mayne's four stories from the Crikey edition on Friday, 19 May, 2006.
3. Why Rupert should have followed his own advice
By Stephen Mayne
Rupert Murdoch's call for John Howard to go out whilst he's on top sounds pretty logical, but why wouldn't Rupert take the same approach with his own tenure at News Corporation?
If John Howard makes his elegant departure in December, as Rupert's great mate Piers Akerman has predicted, he'll be 67. When Rupert Murdoch was 68 in early 2000, News Corp shares soared to their record high of $28 ($56 in today's terms) as the dotcom bubble peaked. In hindsight, Rupert should have retired, appointed Peter Chernin as the new CEO and sold his family's shareholding for a tax-free $20 billion.
Alas, Rupert just didn't know when to get off the horse and today the family's stake is valued at about $9 billion and he's a dying breed of old world media moguls fighting the enormous challenges of the digital age. The Sun King has done a Thatcher and hung on too long.
The move to America in 2004 was supposed to put a fire under the News Corp share price which never materialised, partly because it was booted out of the Australian index and only the non-voting stock was included in the US S&P 500 index. This left us poor holders of the News Corp voting stock without representation in any index, when at the start of the process it was suggested we'd enjoy the double dipping benefits of being in both.
All of this ties in with yesterday's announcement from the ASX and S&P that some foreign companies will be allowed to have a presence in our indices. Terry "His Master's Voice" McCrann has today declared this to be "shutting the stable door – in this case after a $40 billion horse or so had bolted".
McCrann has over-cooked the numbers in claiming local institutions had a $50 billion exposure to News Corp before it was booted out of the index. The Murdoch family and John Malone's Liberty Media together owned about 25% of all the shares before the move and the company was only capitalised at about $75 billion, so on McCrann's numbers this only leaves about $6 billion for the rest of the world. Bollocks.
The idea of reinstating Telecom NZ, Singtel, News Corp and Fisher & Paykel into all the Australian indices is odd to say the least, because they would displace some genuinely Australian-based companies.
What would make more sense is having a separate index in which weighting was based on the proportion of asset, revenue and profit that are based in Australia. Given we've sold most of the farm off to foreigners, this would mean the likes of Mitsui and Mitsubishi, which each own more than $10 billion worth of Australian assets, would also be included.
If 5% of News Corp's profits come from Australia then 5% of its shares should be included. It was always bizarre having $20 billion-plus of Australian superannuation money riding on the vicissitudes of News Corp's American and British operations, especially given that the operation was run out of New York. We should not return to this situation and it seems the ASX is just simply trying to make more money in the latest example of the conflict of interest that comes from being a profit-motivated exchange.
17. Mayne v Akerman – could there be a mediated settlement?
By Stephen Mayne, who is batting 0 for 6 in getting letters to News Ltd titles published
Daily Telegraph associate editor Roger Coombs, Australian Press Council executive officer Jack Herman and yours truly had a productive 75-minute mediation session in Sydney yesterday. We were dealing with the question of whether Rupert's flagship tabloid would run my polite 96-word letter responding to Piers Akerman's column on 1 December last year which included the following line:
It can be argued that almost anyone can call themselves a journalist these days, as evidenced by the nonsense published by people claiming to be journalists on websites such as Eric Beecher's and Stephen Mayne's Crikey.I can't breach confidences about what was discussed but a mediated settlement is a prospect, although if this falls through we'll be going to a full hearing before a 7-member panel in Sydney on 16 June.
The contrast between my understated factual letter and some of the rather intemperate language of News Corp correspondents in Crikey over the years is stark indeed. Try these for size, which we've happily published:
"Where on earth do you come up with this garbage? You've taken paranoia and unprofessional journalism to new levels."Does anyone else think that all this aggression is a touch overblown? Surely we journalists should engage in civilised debate, respecting the rights of others to hold alternative views. I'd more than happily drop by for a coffee or beer with any of the above chaps, but for some reason we seem to have generated all this fury and anger.
– Herald Sun editor Peter Blunden
"You should be ashamed to run such drivel. Leave it to Indymedia and grow up."
– Andrew Bolt
"You are a complete f*ck...You dumb f*ck."
– Terry McCrann
"Your joke website is wrong again. Your lack of credibility is matched only by the incoherence of the ungrammatical garbage carried on your site. Once regarded as a potentially serious journalist, you have become a clown in the eyes of your former colleagues."
– Piers Akerman
"Crikey, it is acknowledged, is to accuracy and ethical practice what the Big Mac is to cuisine and rainforests. Any less patently absurd periodical would have checked the facts."
– News Ltd motoring writer Paul Pottinger
Today we've even seen a new incarnation of the Herald Sun ban on me and Crikey. Andrew Bolt's attack this morning on his own paper's trashy Rex Hunt splash described our ezine as "the gossip site of Sydney Morning Herald ex-editor Eric Beecher".
Truth be known, the current Press Council action is just a dry run for a forthcoming complaint over the Herald Sun's ban, and Bolt's column today will be exhibit 96. The Greens cleaned up the Herald Sun in the Press Council after the last federal election and I'm very confident of a similar result if they don't lift the ban during this year's Victorian election campaign.
18. Crazy times on the media and talk circuit
By Stephen Mayne, media tart and speakers circuit regular
The whole Crikey adventure has involved a lot of media and speeches over the years but these last few days have been close to the craziest period I've experienced.
The first unusual event was to get a call at 5.30pm on Tuesday to fill in for Noel Pearson who cancelled a dinner speaking engagement in Melbourne at the last moment. The audience of 150 at the Darebin Arts & Entertainment Centre was only told Noel was a no-show as I was being introduced, so the 30 or so members of the Indigenous community who'd turned up were in for a bit of a surprise.
Having had no time to prepare, I embarked on a familiar rave about corporate behaviour, the evils of some media moguls and what sort of political reforms were needed in Victoria, but this wasn't good enough for one Indigenous lady who leapt to her feet mid-speech and gave me the mother of all bollockings for talking about stuff that was of no interest to her community.
One of the organisers had to demand the lady stop abusing me and sit down, but instead she just stormed out. Talk about a tough gig. There were plenty of questions from the floor and positive feedback afterwards so it wasn't a complete disaster but next time you get a request to fill in for someone at short notice on a topic you know little about, be wary.
Thankfully, last night's speech in Sydney to the Australia-Israel Chamber of Commerce Young Business Forum was better received although I probably took the "disclose, disclose, disclose" the mantra a bit too far and some in the audience looked a little incredulous at times.
Then there has been an avalanche of media on a range of topics. It's not often you knock back A Current Affair, but surrendering a couple of hours to get one minute of air-time sledging Macquarie Bank just wasn't worth it. I also slept in on Wednesday morning and missed a chance to talk to Mike Carlton and Peter Fitzsimons about the Millionaires Factory on 2UE's breakfast program but there were the usual Tuesday spots on the ABC in Tasmania, NSW and Victoria which were dominated by Macquarie. Tune in to The National Interest on Radio National at midday on Sunday for another lengthy discussion about Macquarie.
The chequebook journalism story out of Beaconsfield also sparked a longish chat on ABC Newcastle and a few lively grabs for The World Today, and even the sledges of James Hardie chairman Meredith Hellicar at the AMP AGM yesterday got picked up by AAP.
However, the favourite media appearance of the week was this AAP feature on the immorality of Australia's hypocritical shock-jocks. Have a read because the AAP reporter has amassed an impressive list of shock jock indiscretions.
The real reason for producing this item is to seek some assistance from the Crikey Army for a live 20-minute Triple J spot with John Safran and Father Bob McGuire on Sunday night at 10.30pm.
Safran comes up with some obscure corporate conspiracy topics and this time he wants to explore the question of companies who align themselves with activists or profit directly from activism. The Body Shop is a good example and at one level Crikey has also profited from shareholder activism over the years, but we'll need far more than that so all insights on this topic are welcome to smayne@crikey.com.au.
22. AMP, derivative plays and inaccurate balance sheets
By Stephen Mayne, proxy for his dad at yesterday's AMP AGM
Not much of it was picked up in the mainstream press today, but there were some very interesting exchanges at the AMP AGM yesterday. For starters, the company continues to have the most inaccurate balance sheet in Australia's top 50 companies, although it's now massively undervalued rather than massively overvalued.
The 2002 annual report claimed AMP had net assets of $18 billion when the market value had slumped to about $8 billion. This was all about the $10 billion that AMP dropped on its UK misadventure, but now that this has been demerged, the new AMP only claims to have net assets of $2.8 billion, yet the current market capitalisation is $17.8 billion.
Asked how on earth AMP's balance sheet could go from being $10 billion over the odds to $15 billion under in just three short years, chairman Peter Mason dodged the question and declined to invite long-time auditor Brian Long to speak.
Mason was also reluctant to engage over the large derivatives contract with UBS in late 2002 to de-risk AMP's UK business by protecting itself on the downside of UK equities but surrendering much of the upside. CEO Andrew Mohl told the 2003 AGM this had saved the company "hundreds of millions of of pounds", but the UK market has doubled since then. Mohl got quite animated after the meeting in a private chat as he defended the arrangement and he told shareholders the deal retained "most of the upside".
Crikey has written previously about the perception problems of appointing Mason chairman when he is a "senior adviser" with its main adviser, UBS, which pocketed upwards of $100 million from AMP during its capital crisis over the previous five years. Mason defended the arrangement, denied he would be involved in any AMP work and said he left JP Morgan because they wouldn't allow him to take on the AMP gig, which will pay a very tidy $480,000 in 2006 after yesterday's increase in directors' fees.
I gave the board a bollocking for returning all this excess capital in 2005 and 2006 when they massively diluted shareholders in 2002 and 2003 by issuing 711 million new shares – more than 60% of the shares on issue at the time – at an average of only about $4.20 each. Mason gave some meek line about history suggesting you could do things differently, but with the stock pushing $10 this week, shareholders were not particularly angry even though most would remember the stock trading above $20.
The most disappointing aspect of the meeting was not rolling James Hardie chairman Meredith Hellicar on the show of hands. She got back with about two-thirds support so clearly the clarion call to "send a message about corporate behaviour" could have been presented a lot better.
Check out all the proxy votes here and you'll see that Meredith was re-elected with more than 98.05% in favour so clearly even the union-backed industry funds failed to register a serious protest vote. Talk about a missed opportunity.
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