See below from today's AFR outlining why Murdoch needs to act soon to get Free to Air TV in Australia. Also some details about WIN and what Bruce Gordon is doing.
News Corp needs to move quick to secure free-to-air dream
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News Corp will have to be the next to move if it is to fulfil its long-term desire to gain hold of a free-to-air network in Australia. David Rowe
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by Max Mason
News Corporation will have to be the next big media player to move if it is to fulfil its long-term desire and nab a free-to-air TV network in Australia.
In the wake of the merger of Nine Entertainment and Fairfax Media, publisher of The Australian Financial Review, the rumour mill is in overdrive about counter-offers and other deals that might happen in the media M&A space.
Reports from News Corp's own publications have sought to dampen expectations the Murdochs still have their eyes on free-to-air TV. Instead, News Corp mastheads suggest, the business is totally focused on growing subscription broadcaster Foxtel.
However, industry insiders believe it is now only a matter of time before News Corp moves on Seven West Media. Some describe the move as inevitable.
But it's not black and white, even without factoring in what the competition regulator might have to say, and an oft-forgotten piece of legislation passed in 2006 could complicate things for the Murdoch-controlled conglomerate if it doesn't move quickly.
Despite being painted as a free-for-all, last year's media ownership changes were anything but. In metropolitan and larger regional markets, in total 32 areas, the little-known '5/4 minimum voices' rule remains in place as a pre-internet-style safeguard for media diversity.
What this means is in metro areas there must be at least five different owners (or "voices") of the major print, radio or TV stations, regardless of editorial differences within those media companies. In the bush, that number reduces to four
For example, for the purposes of the voices test, The Sydney Morning Herald and 2GB's Alan Jones are counted as one voice because Fairfax Media owns the SMH, and holds a 54.5 per cent stake in Macquarie Media, which broadcasts Jones' radio show. In practice, the two are polar opposites politically. However, the voices tests counts Fairfax Media as a controller of Jones' Macquarie Media.
The legislation is designed to make sure there is an acceptable level of media diversity in different regions across the country.
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David Rowe
Adelaide is an interesting example which illustrates how News Corp needs to be the next business to make a move, or it may miss out on a free-to-air television station.
There are currently six "voices" in Adelaide – News Corp and Seven are two of those. Fairfax has no assets in Adelaide, so the merger with Nine has no impact.
News Corp chairman Lachlan Murdoch owns radio broadcaster Nova. For the purposes of the voices test, Nova and News Corp are counted as one in Adelaide.
News Corp could acquire Seven, taking the Adelaide market to five voices.
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Assuming the merger of Nine and Fairfax gains regulator and shareholder approval, the two voices the suitors have in many markets across Australia will then be counted as one. AAP
But, here's why News has to be the next big player to move if it wants a free-to-air station: if Seven or Network Ten (now owned by CBS), for example, bought Australian Radio Network owner HT&E before News Corp made any move, Adelaide would reduce to five voices. The Murdochs would fall foul of the voice rule and so couldn't buy Seven.
News Corp has sought to distance itself from M&A following news of the Fairfax-Nine tie-up. But, it's hunger to bring free-to-air TV into its vast portfolio has not been quenched – Lachlan Murdoch missed out on Ten last year, and News Corp has previously mulled an acquisition of Seven via an all-scrip offer but was scared off by the company's debt, as revealed by the Financial Review in May.
All this is without factoring in whether the Australian Competition and Consumer Commission would take issue with combining News Corp and Seven – Lachlan Murdoch's attempt to buy half of Ten last year was preapproved and treated by the regulator as if News Corp were doing the deal. One of the major reasons the competition regulator let the deal through is Ten had little online news presence, and its news ratings and operations are much smaller than Nine and Seven's.
Rupert Murdoch is believed to be touching down in Australia later this week. Sources have downplayed suggestion the mogul will look to thwart the Nine-Fairfax deal, but there is no denying when Murdoch comes home, big things happen.
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In order for News Corp to buy Seven, it would need to be the next company to make a move. Bloomberg News
One thing is certain, barring more changes to media ownership regulation – which the government is unlikely to have an appetite for, and is pretty much dead should the Labor government win power at the next election – Murdoch and News Corp know they will need to be the next to act.
Max Mason is Media & Marketing editor of the Financial Review
