Rupert Murdoch and Kerry Packer, Australia’s two richest men, have been rivals for 30 years. The media moguls are feuding again, this time jockeying for bigger stakes in Australia’s highly profitable Fairfax newspaper group.

The latest wrangle centers on Packer’s aim to outmaneuver fellow Fairfax shareholder, Canadian Conrad Black, and an unedifying falling out between Packer and his one-time ally, Prime Minister Paul Keating.

But a subtext to the dispute is the ongoing struggle for dominance of the Australian media between Packer, who presides over the Nine network and Australia’s biggest magazine group, and Murdoch, the News Corp. chairman and largest stakeholder in the Seven web.

“Murdoch is siding with Black (in the Fairfax battle) because he wants to keep Packer at bay,” said Alex Pollak, media analyst at stockbroker Macquarie Equities. “Murdoch wants to prevent Packer from getting a more serious hold (on Australian media) than he already has.”

Pollak believes Packer was prompted to buy a 30% stake in highflying producer Arnon Milchan’s New Regency last year after being accused of not emulating Murdoch’s lead in becoming a Hollywood player.

In a rare public appearance on a Nine network current affairs program Feb. 16, Packer acknowledged Murdoch as a “ferocious competitor.”

He took a swipe at News Corp.’s pay TV co-venture with the government-owned Telecom, alleging taxpayers will foot the bill for Telecom’s $A3.5 billion ($2.5 billion) cable network, at no cost to Murdoch, while News will control the programming.

Such utterances may suggest ill-feeling between the two. Not so, according to those who know both tycoons.

“They like each other; there’s a healthy respect on both sides for what each has done,” said a senior source in the Packer organization. “They both understand power. Rupert’s vision has been to get world power through the media, while Kerry has concentrated on Australia.”

The News source was less charitable toward Packer, saying that while Murdoch is an “empire-builder,” his rival is an “empire-controller.”

That’s not entirely fair to Packer, who inherited a modest-sized TV and print media company from his father, Sir Frank Packer, and parlayed that into a fortune estimated at $A3 billion ($2.2 billion).

Packer and Murdoch have been allies occasionally. They’re partners in the New South Wales lottery organization Lotto. Packer bought U.S. coupon insert-maker Valassis in 1986 for $365 million. Valassis then ran up heavy losses for several years until its two U.S. rivals were bought by Murdoch. By 1992, Valassis was worth $1.2 billion, according to Paul Barry’s unauthorized bio, “The Rise and Rise of Kerry Packer.”

Earlier this year, the titans clashed over TV rights to Australian Rugby League matches, as Murdoch’s bid to snatch them away from the Nine network was thwarted by Packer’s personal intervention.

Opposing camps

The two are in opposing camps in the fledgling Australian pay TV business. Packer had successfully fought off the introduction of feevee for many years to protect his free TV network.

Initially, both belonged to the so-called PMT consortium with Telecom and the Ten network. In uncharacteristically erratic fashion, Packer broke away from PMT and joined the rival cabler Optus Vision.

But Packer decided to slash his investment in both telco Optus and Optus Vision late last year after the Keating government decided Optus Vision could not restrict access to its cable web.

The government’s decision soured relations with Packer, who reportedly told Keating’s office via an emissary that their heretofore cordial relationship was “finished.”

Profit prophet

Packer kept 5% of Optus Vision (with an option to go to 20%) but declared on the Nine network program he doesn’t think there’ll be any profit in pay TV “for many, many years.”

In the hunt for Fairfax, all three combatants are ham-strung by government regs.

Packer has upped his Fairfax stake to 17.4%, more than the 14.9% allowed under cross-media rules. The Australian Broadcasting Authority promptly told Packer he must prove he does not exert control of Fairfax. (The ABA was understood late last week to have found that Packer does not control Fairfax.)

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