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Australia Casino Wars Examined, by Greg Tingle - November 2010

Punters, entertainment and media news junkies, casino and media millionaires and billionaires, and one and all. With all the talk of the Australian media wars, we thought we would explain a little more about what they are today.

The main "war" at the moment concerns the Australian television landscape, with James Packer buying up big in Network Ten shares. Some insiders say Packer's but into Ten has more to do with online gaming and gambling than one might otherwise think. Packer historically was much closer aligned with Network Nine Australia, of which his late father owned and run, and where his long time mate and associate, David Gyngell works. Media Man http://www.mediamanint.com and Gambling911 offer up the latest on Packer VS Gyngell, and much much more on the famed 'Australian Media Wars'...incoming!

In simply terms the Australian mainstream news media landscape consists of the following mains groups:

Television, print (newspapers and magazines), radio, new media, internet / new media, and the "what will they think of next"? / others sector.

In this feature we will mainly focus on television (commercial TV), to a lesser extent pay TV (Foxtel, Fox Sports - Premier Media Group etc), and the internet, which is part of the convergent media sector. Media Man is more a convergent media company, having a number of website portals (but not owning a TV station, radio station or print publication) to help give you an idea.

David Gyngell, Packer Mate And Rival Running Things At Network Nine and PBL Media

Gyngell's rise from the Network Nine Network to running its parent, PBL Media, tells us a few telling lessons. He's extremely well-regarded by its owners (private equity firm CVC especially, which is understood to be looking to float the company on the stock market, but that date is speculation. It confirms that he's not going to be poached to run Network Ten once the share raid on its share register has settled. It once again is a wake up call for everyone what a turbulent media world is in Australia.

Gyngell is a long time friend of Packer. Packer used to be his boss at Nine but now holds 18% of Network Ten, and a half share of Consolidated Media, alongside Kerry Stokes' Seven Media Group, which has a quarter. ConsMedia has a small stake in PBL Media, a quarter stake in Foxtel and half of Fox Sports, as does Packer's other business mate, Lachlan Murdoch, in his capacity as a director of News Corp, which also just happens to own one of this down unders' 2 major newspaper groups. Murdoch's private company holds 9% of Prime television, and he is now its deputy chairman, and half of Nova's holding company, DMG Radio. As well as his responsibilities in running Nine, as chief of PBL Media, Gyngell also runs NBN Television, ACP Magazines and has a say in NineMSN, Ticketek and Sky News...which is a joint venture between PBL, Seven and British Sky Broadcasting, which is controlled by ... News Corp, now making a bid for full ownership.

Are you following?

Should Murdoch buy half of Packer's stake in Ten, its register will be dominated by a trio of two billionaire media moguls...Packer and Win Television's Bruce Gordon...and the son of one. Gyngell's elevation also shows us how competitive commercial television might be next year. Cricket tests - 20 / 20s, football codes and Aussie drama are just some of what's on the Aussie TV menu. PBL chief executive Tim Parker, who's also a partner at its private equity owner CVC, thinks Gyngell is the man to take the moguls on! Last night's statement said: "We are thrilled to have the best media executive in the country to lead the business.

The Nine Network, including Channel Nine and the Go and GEM multi-channels, are in the ascendancy in an enormously competitive environment. The performance of Nine is a credit to David and his team." Television is about to get even more competitive if Ten's news strategy weathers the storm of the Packer-Murdoch attack and it wins at least some of the audience who have traditionally switched off Ten at 5.59pm once its news is over, to watch some more on Channels Seven and Nine. With the departure of current PBL chief executive Ian Law, Gyngell's elevation is also a reminder of how critical television is to PBL's performance.

Australian TV Industry On Fire Thanks To Packer, Murdoch Jr And Gyngell...

In the fast paced tech changes affecting how news and entertainment is delivered to your television, computer and wireless watsy, there is clearly a threat to the old way of doing business. But generational change is also happening now. David Gyngell, 44, now takes the lead of one of Australia's biggest media concerns, PBL Media, owner of the Nine Network.

No longer in the hands of the powerful Packer family, PBL Media was acquired from 2006 to 2008 by private equity company CVC Asia Pacific. Its board has elevated Gyngell to chief exec because it sees him as the best man to help sell the company to investors in an expected $5 billion stockmarket float next year. Gyngell's best mate, James Packer, 43, last month spent $280 million buying an 18% cent stake in Ten and wants to revamp the network's internet strategy to make better use of the opportunities emerging. He has been keen to install Paul Bassat, 42, who co-founded the successful job search firm Seek. Bassat and his brother, Andrew, have built a $2.4bn online employment and education empire in the past decade.

Lachlan Murdoch, 39, is also eyeing a co-investment in Ten. The investments are a sure sign of confidence in traditional media that was not thought of a year back. The changes are rapid. Packer has said privately to friends he has been surprised by the success of the new multichannels Australians can access on their TVs and that have attracted new advertising. Newspapers, such as The Australian, are launching across new platforms such as the iPad and new revenue streams are opening up. The last great boom of technology in media and communication companies was in swing a decade ago. How was that for a bit of a history lesson.

Network Ten Loves Internet; Visa Versa...

Packer is thinking about Ten's news and online strategy, but Ten exec are also considering a strategy when it comes to the web. The network, which recently inked a deal to use MCM Entertainment's video platform movideo to play video on its website, typically divides full-length programs into 6 parts, which enables it to show an advertisement, dubbed a pre-roll, before each part. Yahoo7 and Ninemsn show fewer ads on their full-length catch-up TV content on their Plus7 and FixPlay services respectively.

Ten's chief digital media officer Nick Spooner said movideo technology would enable the network to experiment with new ad formats and recommend similar programs to visitors who have watched a video on the site. MCM group CEO Tony McGinn said movideo technology would allow Ten to serve videos across all digital platforms, including internet-delivered TV, or IPTV.

Ten's video views were up 31% year on year to 60 million views of premium content within 12 months, Mr Spooner said. "It provides a better experience for the audience in a range of ways," he said. "These include supporting much closer links to social networking engagement around our programs.

"From a client perspective, we currently run pre-roll advertising, and movideo allows us to trial new advertising formats."

Online video advertising is a small but burgeoning market in Australia, estimated at $25 million for the 2010 financial year, although that figure does not include video-sharing website YouTube. According to eMarketer, US online advertising revenues will grow at more than 30% a year until at least 2013, when they will be worth $US4 billion. MCM group CEO Tony McGinn said the online video platform market was worth about $480 million worldwide. MCM group, which also operates a music and media syndication business and a digital design agency, began marketing its video player to third parties in March, and is now expanding into Asia. Media Man is part of the wave of new media, will you be?

Lachlan Murdoch Prime Media Group Sells Assets...

Prime Media Group Ltd has sold its non-core outside broadcast assets amid reports its deputy chairman Lachlan Murdoch is in talks to buy half of James Packer's new stake in Ten Network Holdings Ltd. Prime said it had sold OSB Australia to UK-based Gearhouse Broadcast Pty Ltd for $8.5 million in cash and $3 million in instalments between December 2012 and December 2014. OSB Australia provides outside broadcast facilities and services for professional sporting events.

Prime will hold a 15 per cent interest in the merged OSB/Gearhouse business, which has extended its agreement with Fox Sports for rugby union coverage through to 2015. "The sale of OSB Australia continues our program of divesting non-core assets to re-focus on maximising earnings from television and radio," Prime chief executive Ian Audsley said in a statement. Prime in July sold its New Zealand outside broadcast operator, OSB New Zealand, to Sky Television Ltd and also announced the sale of Moonlight Cinema to Amalgamated Holdings Ltd. Prime will incur a $1 million impairment on the sale of OSB, but will avoid $13 million of capital expenditure that is required for OSB Australia.

The proceeds of the sale will be used by Prime to pay down debt, which stood at $96 million at the end of June when the company recorded a $54.5 million full-year net loss, a widening of its $45.5 million net loss for the previous financial year. Separately on Thursday, Fairfax reported Mr Murdoch's company Illyria Pty Ltd was likely to buy 50 per cent of Mr Packer's 17.88 per cent stake in Ten acquired last week. Mr Packer's surprise $280 million purchase marked his return to free-to-air television after years of focusing on the gambling sector.

The Fairfax reports, citing "a well-placed Murdoch source familiar with the discussions", said Mr Murdoch saw the possible deal as a "turnaround" story. A price had not been agreed upon, the report said. Ten declined to comment, while Prime was being sought for comment.

Comment was also being sought from Consolidated Media Holdings Ltd, where Mr Packer is deputy chair. Shares in Prime closed steady at 65 cents, Ten shares dipped almost two per cent to $1.50 - the same price Mr Packer paid for his shares in the broadcaster - and Consolidated Media shares were two cents softer at $3.35.

James Packer Media News...

Ten Network chairman Nick Falloon may be getting ready to leave as media moguls James Packer and Lachlan Murdoch join forces on the network and we ponder could Falloon’s loss end up as Murdoch’s gain? Meanwhile, BHP Billiton moves to squash talk that its PotashCorp bid is set to crash and burn in Ottawa.

Elsewhere, as the political offensive against the ASX-SGX merger intensifies investors may be losing faith with the exchange operators and AXA SA seals a heavyweight China deal with the world’s most valuable lender ICBC. With Ten Network Holdings reportedly set to welcome two heavyweight media moguls as its major shareholders the rumour-mill has gone into overdrive with reports that James Packer’s planned overhaul of the network may have claimed its first victim. Unsurprisingly, the unfortunate victim is reportedly the network’s executive chairman Nick Falloon.

According to The Australian, Falloon has agreed to relinquish his position after a meeting with Packer. Rumblings that Falloon’s head was on the block took hold pretty much as soon as Packer pulled of his share raid last week and The Australian reports that his departure is yet to be formalised. The news comes as media scion Lachlan Murdoch looks set to take a board seat at the network with confirmation that his Illyria Private Limited was in talks with Packer’s Prime Capital to buy 50 per cent of its 17.88% stake in Ten for around $155 million. The deal between the two moguls is expected to be finalised in a month or so and interestingly there is talk that Murdoch will not only push for a board seat but could possibly be a candidate to become Ten’s chairman.

Packer has reportedly set his sights on culling Ten’s planned foray into news and current affairs and return the focus on the low-cost 16 to 39 demographic. While the plans seem to have been broadly welcomed by Ten’s major shareholders there are detractors out there especially analysts who point out that a return to youth-friendly programming could actually end up costing the network more money and with the inception of multi-channel offerings from Seven and Nine cutting into the market the new approach may not be as successful as first thought.

Either way its great reading for the the Gambling911 and Media Man loyal following. All we can say is don't bet against Packer.

Wrap Up...

Readers... er, punters, how did you like our special Australian Media Wars Explained feature? Tell us in the forum.

If you have a bet, please bet with your head, not over it, and for God's sake, have fun.

*Greg Tingle is a special contributor for Gambling911

*Media Man http://www.mediamanint.com is primarily a media, publicity and internet portal development company. They cover a dozen industry sectors including gaming and offer political commentary and analysis.

 

Australian Casino Wars: The Art Of War, by Greg Tingle -
5th November 2010

Network Ten Nick Falloon No Fool; Likely To Dodge Board Of Directors Execution...

Network Ten executive chairman Nick 'No Fool' Falloon will avoid standing up for re-election at December's AGM.

That move is tipped to be a talking point for his new major shareholder James Packer, and friend and associate, Lachlan Murdoch.

Falloon should ordinarily be required to resign his possy and offer up his head for re-election following the expiry this year of his 3-year term as executive chairman, but his appointment late last year as MD means he will not need to stand. Are you still with us?

Under the ASX listing rules, the MD of a listed company such as Ten Network Holdings is exempt from rules requiring directors to be up for re-election at the annual meeting every 3 years.

The appointment will essentially stop Packer and his soon-to-be fellow Ten investor, Lachlan 'Lucky Money' Murdoch, from seeking to have 'No Fool' Falloon voted off the Ten board at the AGM next month.

Fellow shareholders, namely Perpetual and WIN TV owner Bruce 'Grinning' Gordon were expected to strongly support the push. If need be, push will become shove, but the extra force shouldn't be required.

In a series of meetings last week 'Our James' is understood to have requested for Falloon's immediate resignation! Falloon agreed to step aside, bust asked for a further 14 months in the role. Perhaps he's just after a few more fat pay days... aren't we all.

Ten confirmed last Monday that Falloon had agreed to transfer to a non-executive role before Packer's cunning chess move last month to spend $280 million to buy an 18% stake in the hot youth orientated network.

Packer and Murdoch are now expected to question why Falloon can retain the title of managing director after shifting more than 2 years back to a part-time role, a move that cut his base salary from $2.2m to only $1.1m. You've go to feel sorry for him (Not, as comedy creation Borat would say).

Group general counsel... legal eagle Stephen Partington confirmed that, in recent correspondence with shareholder activist Stephen 'Crikey' Mayne, Network Ten had made (good) use of the existing listing rule exemption.

Readers, we hope you're still with us in our describing of the complex 'Art Of War' tactics here.

"Following the exit of Canwest from the Ten register late last year, Nick Falloon was appointed to the role of managing director of Ten," Partington documented.

"Mr Falloon was originally appointed to Ten in the roles of executive chairman and chief executive and continues to hold these positions. On this basis and in accordance with the company's constitution and the ASX listing rules, Mr Falloon is now no longer required to retire by rotation."

A Network Ten spokeswoman declined to comment further.

Numerous insiders agree that the change could benefit the Ten board in the battle with Murdoch and Packer if the board wanted to retain Falloon.

A Media Man spokesperson said "While these maters of the Australian media wars are complex, especially pertaining to the changes afoot at Network Ten, Fallon is no fool, nor are Murdoch, Packer or Nine's Gyngell. All smart and cashed up smart cookies indeed. The media's love affair with covering media continues, and we're guilty of that also, and the global readership is just loving it and lapping up every move of the chess board. Art of war media style at its best".

The media movements have generated extra interest to potential investors and Media Man and other convergent media companies are tipped to buy into the the situation in more ways than one ala share portfolio expansions, adding yet more fuel to the fire that is the Australian media wars.


Ten Network Chairman Nick Falloon To Resign!...

Ten chairman Nick Falloon has surrendered to considerable pressure to leave the firm, advising he will go in order to make way for billionaires James Packer and Lachlan Murdoch.

The company yesterday said Falloon had agreed to resign from Ten after the AGM next month if his departure "would assist in the resolution of the outstanding issues" between the company, Packer and Murdoch.

A deep throat leaked Packer and Murdoch were still trying to obtain a 3rd board position, but did indicate they were "prepared to negotiate."

The Packer - Murdoch 'dream team' have been offered 2 seats on the board but are seeking a 3rd, understood to be for Seek chief exec Paul 'Ballsy' (MM) Bassat.

The leak also shrugged off rife speculation that Murdoch wanted to snatch Falloon's chairmanship.

Packer and Murdoch have been in negotiations with the network since the beginning of the working week.

Falloon's offer to leave Ten came days after he said he was prepared to shift into a non-exec role...reports stating he would fight for his life to remain at the company he had helped successfully run since 2002.

Ten confirmed on Monday that it had offered the dynamic duo 2 board positions following speculation Packer was preparing to offer his friend, and sometime business partner, Murdoch half his 18% stake in the company.

Crown Casino 'King Of The Castle' Packer made a cunning grab on Network Ten last month when he bought 18% of Ten's stock to become the largest shareholder at an investment of a cool $280 million, pocket change to Packer.

He has yet to speak publicly to reveal his strategy for buying into the company, but various media commentators including Media Man say it's part of his master plan to make a huge splash into online gaming and gambling, adding to his Betfair business. A convergent media aspect is understood to be on the whiteboard for gaming linking Packer media businesses to Packer and affiliate - partners online gambling products, and Packer and co are understood to have been watching the tactics of PartyGaming, bwin, Virgin Games, Aspers, William Hill, Paddy Power, Centrebet and others.

Ten advised discussions were continuing but no final agreement had been reached.

"In discussions to date, Ten Holdings has offered Messrs Packer and Murdoch the opportunity to take up two directorships on the basis that the company's board would be expanded to 10 directors," Ten said.

"The offer of two directorships to Messrs Packer and Murdoch is contingent upon their agreement that the company put in place appropriate board protocols."

Network Ten shares closed at $1.46.

They traded as high as $1.59 last month followings Packer's share-buying raid which generated massive world wide headlines and sent the industry into a spin.

Insiders agree that thus far the latest venture between Packer and Murdoch looks to be a 'dream team' pairing, unlike their previous business deal with a telco start-up that proved to be disastrous for the duo. Both have appeared to have learnt their lessons well, and are on top of the media world at the moment.

Wrap Up...

Readers... er, punters, how did you like our latest on the Australian Media Wars? Is it all part of Packer's online gambling master plan? Tell us in the forum.

If you have a bet, please bet with your head, not over it, and for God's sake, have fun.

Profile

Network Ten, or Channel Ten, is one of Australia's three major commercial television networks. Owned-and-operated stations can be found in Sydney, Melbourne, Brisbane, Adelaide and Perth, while affiliates extend the network to cover most of the country. Ten consistently rates third amongst all channels in Australia's five largest cities, behind the Seven Network and Nine Network.

History

Origins

From the introduction of television in Australia in 1956 up until 1965 there were only two commercial television networks in Australia, the Nine Network and the Seven Network, but in the early 1960s, the federal government began canvassing the idea of licencing a third commercial television station in each city. This decision was seen by some commentators as a way for the government to defuse growing public dissatisfaction with the dominance of imported overseas programming and the paucity of local content.

Structurally, the Australian television industry was closely modelled on the two-tiered system that had been in place in Australian radio since the late 1930s. One tier consisted of a network of publicly-funded television stations run by the Australian Broadcasting Commission, which was funded by government budget allocation and (until 1972) by fees from television viewer licences. The second tier consisted of the commercial networks and independent stations owned by private operators, whose income came from selling advertising time.

Founded in 1965, the new television network was initially dubbed the "Independent Television Network" or ITN, but it quickly adopted the title The 0-10 Network which reflected the names of the first two stations in the group. In the early 1990s, Ten also referred to itself by the acronym "The Entertainment Network" in network promotions.

ATV-0 in Melbourne opened on August 1, 1964, and was prodominantly owned by the Ansett transport and media group, which at the time owned one of Australia's two internal airlines. TEN-10 in Sydney, which opened on April 5, 1965, was originally owned by United Telecasters Sydney Ltd (UTSL).

 

Programming

On November 17, 2006, Network Ten revealed its 2007 program line-up. It was announced that all of Ten's Australian and overseas franchises would return. Network Ten has commenced a new program supply agreement with 20th Century Fox, and its music records based on Sony BMG only, which was previously held by the Seven Network. Ten has also commenced a new program supply agreement with the CBS Corporation, which includes its news division, which had been aligned with the Nine Network for many decades. Ten's chief executive officer, Grant Blackley, and chief programming officer, David Mott, launched Ten's 2007 lineup at Sydney's State Theatre.

Ten's current Australian programming lineup consists of television shows including: 9am with David and Kim, Australian Idol, Big Brother Australia, The Biggest Loser, Neighbours, Rove and Thank God You're Here. On February 7, 2007, Ten debuted the Australian version of the The Con Test, based on the British TV show Poker Face. Also premiered early in 2007 is Saving Babies, also the return of Bondi Rescue.

Network Ten relies heavily on its CBS and FOX output deals. The Simpsons has been a staple of the network for almost two decades, with repeat episodes formerly screening at 6pm weeknights (Friends replaced this timeslot in February 2008) and on weekends. Other overseas programming on Ten includes; Futurama, House, Jericho, the Late Show with David Letterman, Law & Order, Law & Order: Criminal Intent, Law & Order: Special Victims Unit, Medium, NCIS, NUMB3RS, Supernatural, The Office, The Bold and the Beautiful and Judge Judy.

Network Ten plans to show several new shows from the 2007 US fall season. Season One of Californication has already been broadcast (episodes were shown two weeks after their American broadcast) - though most of the US Fall 2007 shows are expected to appear on Ten in 2008, including Back To You, Women's Murder Club, Kid Nation, K-Ville, Journeyman, Cane, Swingtown and Rules of Engagement. Ten has also announced that they are going to screen Dexter, the remaining episodes of One Tree Hill during the second half of 2008, and will air a new Australian soap opera, Out of the Blue.

News & Current Affairs

Ten News

Network Ten's news service is called Ten News. It produces the following bulletins/programs; Ten's Early News, Ten's Morning News, Ten News, Ten's Late News, Sports Tonight, and Meet The Press. In November 2006, Network Ten struck a deal with CBS, reportably worth AUS $6 Million a year. This allows Network Ten the rights to air all CBS News footage, as well as access to its 60 Minutes, Dr. Phil, Late Show with David Letterman and 48 Hours programs. This deal occurred after CBS's talks with the Nine Network broke down, with Nine refusing to pay AUS $8 Million a year to continue its 40-year deal with CBS. Ten in turn struck a cheaper deal, and has onsold CBS's 60 Minutes stories to Nine.

Sport

In 2002, Ten acquired broadcast rights for Saturday afternoon and Saturday night games in the Australian Football League, the elite Australian Rules Football competition, displacing the Seven Network which had held the rights for more than 40 years. The deal also assigned the rights for finals broadcasting to Network Ten. From 2007 to 2011, Ten will jointly broadcast the AFL with the Seven Network, continuing to broadcast the Saturday component of the competition. However, unlike the previous deal Ten will not hold the exclusive rights to the finals series. Instead, the networks will share the broadcasting of the finals series and will alternate the broadcast (year on year) of the grand final. In years when Ten does not televise the Grand Final (2008 and 2010), it will show the Brownlow Medal presentation. Network Ten has announced that it will broadcast the AFL and the Rugby World Cup 2007 in the 1080i High Definition format.

Ten used to air the National Rugby League (NRL) (then New South Wales Rugby League (NSWRL)) in the 1980s and early 1990s, but the Nine Network took over the rights.

Network Ten also used to air the National Basketball League during the mid-90's, but after delegating games to extremely late night time slots the network eventually ended its broadcasting. Fox Sports is currently the major broadcaster for the NBL and the Nine Network runs a weekly highlight package (the only free-to-air broadcast of the league). Despite no longer broadcasting the NBL, Network Ten remains a sponsor and "Official Television Partner" of the Perth Wildcats.

Ten used to air WWF RAW And WWF Superstars on Monday and Saturday nights between 1995 and 2000. but ended when Foxtel bought the rights to air the shows.

In 2003 Network Ten started broadcasting the Formula One World Championship. In 2007 they had also started showing coverage of the qualifying.

Network Ten broadcasts major sporting events including; the AFL Premiership Season and Finals (In conjunction with the Seven Network and Foxtel), Formula One World Championship , Moto GP World Championship, NASCAR (TEN HD from 2008), and the Red Bull Air Race World Series. Ten also holds the rights to the 2007 Rugby World Cup and the US Masters golf tournament.

As well as this, Network Ten, in joint partnership with subscription television provider Foxtel, has broadcast rights for the 2010 Commonwealth Games.Network Ten have also bought the rights to the upcoming Indian Premier League (IPL) Cricket starting April 18th 2008 and will broadcast the event annually for the next 5 years although there is some doubt that the Australian contracted national players will be available for the tournament. (Credit: Wikipedia).

 

Websites

Network Ten Australia

Profiles

Bondi Rescue

Big Brother

V8 Supercars

Tench

Rove

Andrew G

The Simpsons

David Letterman

Ready Steady Cook

Southern Cross Broadcasting

Media Companies

Media Man does own shares in Ten Network Holdings