Two rounds with James Packer and then a hand-shake!

February 2, 2010

Dear Mayne Reporters,

After two AGM rounds with James Packer and John Alexander today a strange thing happened at Crown Casino - both shook hands with your correspondent and almost smiled as we exchanged pleasantries. That hasn't happened before!

The lads had been subjected to about 30 minutes of questioning across the two meetings, but it was all quite measured and included things such as hearty congratulations for pocketing $5 billion for PBL Media from those private equity bunnies at CVC Asia Pacific.

However, we still managed a few cheeky moments. The ridiculously large but high-powered 12-strong CMH board all sat elevated on stage when I opened up as follows: "Could any director who has read Gerald Stone's Who Killed Channel Nine? please raise their hand?"

Without being absolutely sure, I think the sole raised hand came from Packer family accountant Michael Johnston.

Whilst the Crown AGM this morning attracted questions from half a dozen different shareholders, the Consolidated Media Holdings gathering was a far less engaged audience. JA was chairing his first ever public company meeting and the only non-Mayne Report question was from a keen pokies and soapies advocate who demanded to know why The Young & The Restless had been shunted from Channel Nine to Foxtel.

James Packer's sentimental attachment to Channel Nine

A nervous and awkward JA largely protected James Packer from questions at CMH this afternoon, apart from one of the early offerings which asked about any emotional attachment James feels towards Channel Nine and ACP. Would we buy back in on the cheap if the opportunity arose or is this one of those "never ever" situations?

Without ruling it out, James did say that the industry structure of free-to-air television was far less secure than when his father bought back Channel Nine from Alan Bond 18 years ago, so shareholders got the distinct impression that he wasn't interested - at any price.

The other tricky questions dealings with issues such as James Packer's relationship with Lachlan Murdoch, pre-emptive rights within the Foxtel and Premier Media pay-TV businesses and future lobbying of politicians in the never-ending pay-versus-free regulatory arm wrestle were all handled by chairman JA in the most minimalist way possible.

Voting protests aplenty across the day

Just because the questions weren't hostile, doesn't mean CMH shareholders didn't take to the board on a few issues. The remuneration report at CMH copped a 25% against vote from the independent non-Packer shareholders and the protest was even larger with a majority of the neutrals objecting to Packer tax guru Michael Johnston being re-elected for another three years.

Further to this morning's quick update after Crown, the protest against John Alexander was actually much bigger than we reported. James Packer controls 258 million Crown shares not 160 million so this means the neutral directed proxies were almost 50% against. So just who were the Crown shareholders who voted 126 million shares against JA, compared with the non-Packer for vote of 130 million shares.

The two most likely candidates are Janus Capital Management which has 8% or 54.4 million Crown shares and Perpetual which has 8.6% or 58.4 million shares.

Both James and JA were blithely ignorant of the reasons behind the various unprecedented Crown and CMH backlashes from institutional shareholders. I asked at CMH why JA was re-elected with the usual 99% in favour when the Crown protest was so big?

"The votes are the votes," came back the reply as if to repeat the famous Kerry Packer line to Jack Tilburn: "I own more shares than you".

Needless to say, this Crown protest against JA was quite a statement by the independent shareholders against an executive insider who heped himself to more than $30 million over the past four years and remains on the teat to this day, even after pocketing a $15 million termination payout last year.

The 5.40pm gig on 774 ABC Melbourne needs some preparation so that's all for now. Tomorrow we'll be getting into Macquarie Media in Sydney for failing to adopt the structural reforms that most of the other Macquarie funds have recently implemented.

Do ya best, Stephen Mayne

* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.