As The World Tunes Into Internet Tv, Media Moguls Need All The Mergers They Can Get
The Age
Wednesday October 19, 2005
THE political heat is ebbing out of the media reform debate, helped by, among other things, Apple Computer's deal with Walt Disney last week.
The Wall Street Journal reported yesterday that Apple began selling an episode of the television series Lost through its iTunes Music Store for $US1.99 ($A2.65) last Thursday, the day after the same episode aired on America's ABC network. Apple CEO Steve Jobs and Robert Iger of Walt Disney, which makes Lost, announced a deal to distribute a variety of TV shows to the new video iPods that Jobs also launched last week. The WSJ reported the president of the association representing ABC affiliate stations, Leon Long, as describing this deal as "disappointing and unsettling", and the owners of Australia's TV networks probably know how he feels. Whether downloading TV shows to iPods for two or three bucks a time turns out to be a good business or not, the encroachment of the internet into broadcasting is changing the atmospherics of the media reform debate in Australia as it approaches its climax. It rather seems that the traditional media businesses are being eaten alive by ants even as they bleat for more protection from lions and tigers. The Government has to finalise new media legislation early next year because the ban on new commercial TV networks automatically expires at the end of 2006 unless something is done, the prospect of which is a lot more "disappointing and unsettling" than anything Steve Jobs is up to. Six weeks ago Communications Minister Helen Coonan launched a fat, billowing kite above the National Press Club through a speech that proposed deregulation of cross media and foreign ownership and open slather on datacasting and digital multi-channelling by free-to-air networks. A flurry of fretful phone calls among media proprietors ensued, as they digested the prospect that some extra competition might actually accompany the ability to take each other over and acquire more power. A month later The Australian carried a story headed: "PM reins in media reforms", which was widely taken to mean that Rupert (Murdoch) and Kerry (Packer) had got to John (Howard). However, the next day the same paper ran: "Coonan tipped to stick to the plan", while The Age and The Sydney Morning Herald went with: "Coonan insists she will stick to her guns on media reform". The impression given is that a tussle is taking place between the Prime Minister, Mr Murdoch and Mr Packer on one side and Senator Coonan on the other, which, to put it mildly, looks a bit one-sided. But it may not be as simple as that. The debate about media reform now is marginal things only - multi-channelling, datacasting and anti-siphoning. It's clear that the removal of cross media and foreign ownership is a fait accompli and the ban on a fourth commercial network will be extended well beyond January 1, 2007. The three things being debated are not unimportant but, compared to the prospect of industry consolidation and continuing protection from competition, they are. More importantly the shape of them is open to negotiation. What, exactly, will a datacaster be allowed to datacast? How many digital channels can a free-to-air network have, and what could they show? And how many of the 1000 sporting events festooning the anti-siphoning list be removed? This is a straightforward negotiation with a deadline of about three months. And anyone who thinks Helen Coonan is a patsy should reflect on what happened to Telstra. She got a tougher "operational separation" regime past the Prime Minister than might have been expected in light of its potential to damage the value of Telstra for T3 - although the rampaging Telstra management helped strengthen her arm. In media, her leverage arises from the fact that on January 1, 2007, if nothing is done, all protections for existing free-to-air networks will automatically disappear. Senator Coonan clearly intends to use this to make life as uncomfortable as possible for the media moguls without actually allowing competition, in return for letting them have their takeovers. John Howard and the Senate will wave this through because it doesn't seem to matter much any more, since internet TV from all over the globe is just around the corner, plus TV shows being downloaded to iPods. The media moguls will need all mergers they can get. THE most interesting thing about yesterday's formal rejection of Toll's offer by the Patrick Corp board and management is that they believe a break-up of Pacific National would be good for Patrick because it will be able to move into freight forwarding and take market share from Toll. If that is a likely consequence of Patrick shareholders rejecting the Toll offer, it should be in the Tar-get's Statement. The valuation of PN in the statement is based on the business as a whole, going concern. Yet there seems to be a greater than 50 per cent chance that it won't be if the bid fails. Patrick should put out a supplementary statement detailing its intentions for PN. -- mail@alankohler.com -- www.alankohler.com
© 2005 The Age
