Oz Titans Tight

Australia’s two rival media titans, Rupert Murdoch and Kerry Packer, are shaking hands so warmly these days that pundits believe they’ve agreed to carve up the media pie Down Under between them.

Because of their new-found chumminess, Packer is emerging as the undisputed titan of terrestrial TV, while Murdoch is strengthening his hold as feevee kingpin. And if their coziness continues, some say the duo will also manage to split up the Aussie newspaper market. The two have known each other and fought over who has the most media muscle Down Under for more than 30 years.

The latest agreement between Murdoch and Packer involves Oz TV rights to 20th Century Fox product: Murdoch has yanked all Fox product – from “Murder One” on – from his own Seven web and licensed the fare to Packer’s Nine network.

This surpising rapprochement between the two moguls comes after a barrage of acrimonious public attacks on each other earlier this year over pay TV and over sports rights.

The bickering ended, however, in the early fall, with these developments:

* In September they agreed to set up a global racing channel.

* Shortly thereafter, they announced a joint news service for their competing pay TV operations, Foxtel (Murdoch) and Optus Vision (Packer).

* Last month, News sold Nine the free-to-air rights to Murdoch’s new Rugby Super- League – a competition originally set up to spoil Packer’s sports ratings on the Nine Network.

Taking stock

The latest deal for Fox TV shows caught the stock market unawares and sparked a roller-coaster ride for media stocks – upward for Packer’s Publishing & Broadcasting Ltd., News Corp and other media companies thought to be buying divestments of the two or about to be snapped up by them, and downward for Seven.

“It came like a bolt out of the blue,” a media analyst says. “They are telling us something; Kerry’s not wedded to Optus Vision (OV) and Rupert’s not wedded to Seven. It seems to me, Rupert is saying ‘I want pay TV and Kerry is saying ‘I want free-to-air.’ “

Seven sale

Some pundits believe that Murdoch, frustrated at being stuck at a 15% stake in the Seven web – the maximum allowed a foreigner such as the Americanized Murdoch – will sell off his Seven shares to concentrate on his newspaper empire and pay TV operation Foxtel.

The consensus is that the Seven board enraged Murdoch – and the web subsequently lost its strategic importance to him – when it sided in May with rival paybox Optus Vision (O V) over Murdoch’s Foxtel.

Neither high-ranking Murdoch nor Packer lieutenants would officially comment for this story.

Most analysts agree Murdoch will offload his Seven stock, possibly to the cashed-up local mini-titan Reg Grundy, while Packer will eventually dump his 5% stake in paybox O V.

Many believe Packer will take shares in Foxtel when it merges with satcaster Australis Media’s Galaxy next year pending regulatory approval. If that happens, Packer will end up back with his original pay TV partners: Murdoch and public telco Telstra, which owns half of Foxtel.

The latest theory – and the one that analysts say is most titillating – is that Packer will now move on the Fairfax newspaper empire – and then deal some of its assets back to Murdoch. At present, Canadian Conrad Black owns 25% of Fairfax, which he wants to increase, while Packer has 17.5% and Murdoch only 5%.

Fairfax, which publishes a string of metropolitan daily newspapers plus a national title, is viewed as a choice prize for Packer and Murdoch – both of whom have lusted after this paper empire for years.

Cross-media crossroads

The Fairfax scenario gathered steam when the federal opposition leader, John Howard, said he would consider ending the cross-media rule, which prevents the same entity controlling electronic and print media in the same market. (Howard’s views on relaxing foreign media ownership rules appear to be in flux.) A federal election is due by March, and the current government is trailing badly in the opinion polls.

But the current government – and Black – is determined to block such deregulatory moves, having recently tightened the cross-media rules. The tightened regs closed-off loopholes and put a cap of 15% on those such as Packer who also control a terrestrial TV license.

Murdoch hamstrung

The foreign ownership laws, which would be difficult to change under any government, effectively hamstring Murdoch from acting on his own to acquire any more newspapers, without significant asset sales.

Whether the two titans will continue making nice to each other long enough to act in concert to acquire the Fairfax papers remains to be seen. Their new-found relationship could, say some pundits, be just a spell of commercial expediency rather than a long-term alliance.

“I don’t think six months ago they hated each other, just as I don’t think they like each other now either; it was expedient to say nice things now and I still think they’d screw each other for sixpence,” an analyst says.

“I think Packer made himself sufficiently troublesome to Murdoch to show he has to be included in things; Packer has put his eye back on the ball in the last 12 months.”

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