Salary spectrum, more journo attacks, News Corp, Macquarie, charity commission
July 28, 2008
Here are Stephen Mayne's five stories from the Crikey edition on Friday, 11 November, 2005.
6. Rupert Murdoch, James Packer and the salary spectrum
By Stephen Mayne
Crikey achieved a long-held ambition this morning by mentioning James Packer's pay packet, or lack of it, during a live television interview on Channel Nine. Anyone who was watching Today at 6.45am would have heard the discussion about CEO pay packets conclude as follows:
Crikey: Rupert Murdoch owns 30% of the votes in News Corporation. He doesn't need to get a $30 million dollar salary as well. It is not as if he is going to go somewhere else. I would far rather see Rupert Murdoch do what James Packer does at PBL where he takes no salary.
Karl Stefanovic: For the love of the company. Stephen, good to talk to you, my friend.
The Australian's Strewth column omitted one vital point when it carried the following this morning: "James Packer is picking up a modest $80,000 a year fee for being chairman (of Seek). That's good money for not doing any work."
No, James Packer doesn't get any of that because he told the Seek AGM that his fee goes straight to PBL. This is standard practice when directors are representing another company's shareholding on a board. It also means that James doesn't get to keep the fees paid by Challenger Financial Services, where he also represents PBL.
Maybe that's why James Packer joined the Qantas board, so he could keep the $116,775 annual director's fee for himself, given that his dad is so ridiculously tight-fisted in denying him more financial independence.
Meanwhile, we just loved the following lines in today's Daily Telegraph editorial:
The news that Leighton Holdings' CEO Wal King is getting an extra $23 million on top of the $36 million he picked up in bonuses this year will no doubt cause some eyebrows to raise. In a rare bit of serendipity, it comes at a time when workers on federal awards have been told they will not get their annual pay increase next June because the Government's Fair Pay Commission will not make a decision until the end of the year.Apart from over-stating the size of King's already outrageous package, Rupert Murdoch's season high $30 million pay deal last year is also worth considering in the same context. Rupert could pay the annual $25,000 salary of 1,200 of Australia's lowest paid workers out of his own generous package.
Mr King's bonuses and benefits alone could pay the weekly wage of more than 120,000 workers on the minimum rate of $484 a week. An analysis of the top 300 companies on the ASX has found CEO salaries rose by 44 per cent this year. Those on the minimum wage got a 3.6 per cent pay increase. Can anybody seriously argue this is fair?
Incidentally, does anyone else think The Daily Telegraph's bleatings about looking after the worker should be taken seriously when no other employer in the country pioneered AWAs and no-strike contracts quite like News Ltd, as was noted in The Latham Diaries.
26. Five more memorable attacks on hacks
By Stephen Mayne
The list of media professionals who have been physically attacked over the years continues to grow and today's five entries are all quite interesting. Keep them coming to smayne@crikey.com.au. At this rate we'll probably finish up with more than 40:
Hugh Riminton writes from CNN in Hong Kong: Hazel Hawke once dug me in the ribs with her elbow when I was walking over to interview Bob on election night, 1987. Does that count? It bloody hurt. Her loyalty to the Silver One was inadequately rewarded, I always thought.
George Willison: On September 11, 1975, two months before the Dismissal, the Ten News reporter was chasing the story of the beleaguered Whitlam Government running out of money. At Sydney airport a stressed and jet-lagged Federal Treasurer, Bill Hayden, had just returned from a meeting of the International Monetary Fund in Geneva. It was rumoured Hayden had been seeking emergency funding to keep his fledgling Medibank scheme afloat. When asked about the rumour, Hayden lunged at Willison with his heavy briefcase – grazing Willison's nose. Hayden later wrote a letter of apology to Willison offering to buy him a beer – to show there were no hard feelings. How times have changed!
Mick O'Brien: The SBS cameraman was bashed in Canberra in 1992 when he, reporter Alan Sunderland and a sound-recordist followed a phone tip that there was going to be a raid on the Iranian embassy by a group of political dissidents. Mick was stabbed with a screwdriver on that occasion and returned bloodied and scratched to Parliament House.
Stephen Feneley: On the night Barrie Unsworth lost the 1988 election in NSW, the ALP's ad man, John Singleton, tried to hit Channel Nine's state political reporter. It happened in view of The SMH's Robert Haupt and The Australian's John Lyons, and both gave it prominent coverage. Singo's tired and emotional lunge at Feneley followed an encounter earlier in the evening when Singo conceded to Feneley on camera that the ALP lost because "the Government wasn't good enough." Singo eventually made a public apology to Feneley eight months later in a crowded restaurant in Toorak on the eve of the Melbourne Cup.
Dean Felton writes: Deidre Swan, a union official turned Queensland State Industrial Commissioner, was being questioned over her expenses during the Cooke Inquiry in Brisbane. My cameraman, Drew Towson, tried to shoot pictures of her leaving the hearing after her evidence, when an AWU hardman and ALP powerbroker, who'd been in the hearing, and another chap, thumped both of us and tried to wrench the camera away. I can still hear Drew shouting, "Don't be a galah, mate..."
30. News Corp's impressive first quarter profit
By Stephen Mayne
News Corporation has delivered an impressive September quarter profit result and its share price has risen this morning after a comprehensive 75-minute conference call with analysts and journalists which directly tackled many of the issues that have been depressing market sentiment for media stocks.
Operating income was up 19% to a record $US909 million, although a few one-off items, such as a $US1 billion write-down of US television licences due to accounting changes and a $US200 million increase in the tax bill, dragged the bottom line down to a loss of $US433 million.
Investors were not at all concerned with this as News Corp voting shares were up 33c to $21.13 in morning trade, partly because of the optimism expressed and results delivered for DVD sales and advertising volumes amid all the market hysteria about the internet threat.
News Corp stressed that this was the 15th straight quarterly rise in operating income and better than any other US media company. The best divisional performance was from filmed entertainment (up from $US291m to $US368m), followed by cable network programming (up from $US166m to $US197m), television (down from $US197m to $US166m, largely due to $US50m in marketing expenses from an early programming launch) and then newspapers (up from $US118m to $US125m).
After about 45 minutes of detailed presentation from CFO David Devoe, Rupert Murdoch in Australia and COO Peter Chernin, the trio answered questions from 13 analysts and then only three journalists before the call was terminated to coincide with the commencement of trading in Australia.
Rupert went straight to the heart of some of the issues causing share price weakness that is "frustrating" everyone, including the much-vaunted digital threat to traditional advertising models and the home entertainment market. Fox has pioneered DVD sales of television series and this is what the company believes will underpin ongoing annual growth of about 1.25 million units a year in the 25-million-a-year US DVD market.
Rupert said the poison pill and John Malone situation is generating "far too much press and investor speculation and we want to put it behind us." However, "cordial" negotiations with Liberty Media are dragging on because of some uncertainly out of Washington over the tax treatment of various options and Malone's obsession with not paying too much tax. The poison pill was never mentioned.
There was a lot of focus on the $US60 million operating loss by Sky Italia when it is forecast to be "substantially profitable" this year and Rupert admitted some concerns about subsidised government competition, although the churn rate is still expected to remain below 10% for the year.
Rupert stressed that $US1.4 billion in internet acquisitions this year was "both offensive and defensive" and he hinted that the $US2 billion spending limit could be cast aside because with takeover opportunities "you never know in a fast moving industry like ours."
Fox Interactive Media will start reporting as a separate segment from 2006-07 and Rupert stressed his internet strategy is for the next 3-5 years. What we've seen so far is only "a major project at its beginning."
Myspace.com is now signing up 135,000 new members every day and Rupert is very bullish about this because they volunteer loads of information about themselves which allows for target advertising. The social exchange site now attracts 70 million monthly visits and 35 million of these are from signed up members.
With $US6.5 billion in cash and less than $US1 billion in debt, many investors were hoping the $US3 billion buyback program could be expanded, as Time Warner did last week, but empire building Rupert is keeping all the fire power. "We always want room to continue to expand and develop and new businesses," he said.
Having overpaid for many acquisitions over the past 15 years, this is what scares so many investors. Rupert is very excited about the internet and loves to dominate any market segment he tackles. It doesn't look like News Corp will bid for AOL, which Rupert explained was becoming a major struggle between Google and Microsoft.
"Google pays hundreds of millions of dollars a year to AOL for search and Microsoft is very keen to damage Google and get into search seriously," The Sun King explained, suggesting even he was nervous about getting into a major fight with the two biggest gorillas of the digital age.
32. Will the Macquarie Media float get across the line?
By Stephen Mayne
Southern Cross Broadcasting chairman John Dahlsen made it pretty clear at yesterday's AGM what he thinks about the valuations Macquarie Bank is putting on its regional radio empire as part of the sale into the new Macquarie Media fund. Don't expect the man who helped build Australia's dominant commercial talk radio network to apply for any shares.
Couple that with an extraordinary attack on the prospectus by Trevor Sykes in Saturday's AFR and you've got to ask yourself whether the Millionaire Factory will be able to get the Macquarie Media float away within the indicative price range.
Crikey sat next to Sykes in The AFR's Sydney office for a couple of months in mid-1999 as the dotcom boom was ramping right up. The veteran of more than 50 years in business journalism was scathing of over-hyped floats back then too. I can well remember his utter refusal to touch the Austar float which they got away at $5 a pop, meaning investors who subsequently watched the stock fall below 20c took a real bath, although it did peak at more than $7 and has now recovered to $1.16 after being recapitalised.
Sykes told his loyal band of followers on Saturday that the Macquarie Media prospectus "should be thrown on the barbecue" and that Macquarie was effectively getting its 20% stake in the fund for $12 million, such was the hefty profit it was booking.
We asked Sykes if Macquarie Media had reacted angrily and he replied as follows:
Chairman Tim Hughes rang me to say that there was some $90m debt in the radio companies when they were bought, which ought to be added back to the entry price. He also reckoned they'd improved profitability and were selling on the same EBITDA multiple (12.2 times) as they bought, but because profitability had risen the number had risen.Given that ASIC has also been forcing changes to the Macquarie Media prospectus, this float certainly hasn't been all plain sailing and there are now serious doubts that they'll get anywhere near the top of the range, which is $3.05 a share for the first instalment.
It still looks expensive at $2.70, the bottom of the range, and after that it all comes down to your belief in the Macquarie machine. The big question is whether Macquarie is prepared to go below the range if the demand does not materialise.
39. Why doesn't Australia have a Charities Commission?
By Stephen Mayne
We might not have followed the Kiwis down the road to an independent foreign policy, but one interesting recent initiative across the ditch is the new Charities Commission, which came into effect on July 1 after the Charities Act 2005 was passed into law.
According to the legislation, two of the purposes of the Act are as follows:
- provide for the registration of societies, institutions, and trustees of trusts as charitable entities.
- require charitable entities and certain other persons to comply with certain obligations.
No wonder new Pentecostal churches are opening at the rate of one every four days in Australia. It's a huge rort and fails the test of accountability, transparency and a level playing field given the enormous tax deductions these groups are afforded.
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