richest man cleared of breaching media laws
credit to WSWS (World
Socialist Web Site)
richest man cleared of breaching media laws
By Mike Head
18 March 1999
extraordinary degree of control of Australia's
mass media by two tycoons--Rupert Murdoch and
Kerry Packer--is likely to tighten further after
a remarkable decision by the Australian Broadcasting
Authority on March 8 to clear Packer of breaching
media ownership laws.
Packer and Murdoch are multi-billionaires. Packer,
said to be worth $5 billion, is regarded as Australia's
richest man only because Murdoch--now an American
citizen--is no longer counted as an Australian.
Packer owns the top-ranking television network--Nine--as
well as a large stable of news, women's and other
magazines. Murdoch owns a daily national newspaper--the
Australian --plus dailies in nearly every capital
city, in some cases the only daily newspaper.
run by the two media moguls and their sons, James
Packer and Lachlan Murdoch, are also equal shareholders
in the pay-TV group Foxtel and last month took
strategic joint stakes worth $709 million in One.Tel--a
rising telecommunications and internet company.
from the two government-run TV and radio outlets,
the Australian Broadcasting Corporation (ABC)
and the Special Broadcasting Service (SBS), the
only significant media company not in the grip
of Packer and/or Murdoch is Fairfax Holdings,
the publisher of the Sydney Morning Herald, the
Melbourne Age, the Australian Financial Review
and regional newspapers. That exception is now
in question following the Australian Broadcasting
Authority (ABA) ruling.
six members of the ABA, a federal government-appointed
body, declared on March 8 that neither Kerry Packer,
James Packer nor Brian Powers, the former chief
executive of two key Packer companies, had breached
the Broadcasting Services Act last year when Powers
simultaneously resigned his positions at the head
of Packer's empire and was financially assisted
by Packer to join the Fairfax board.
Act, as last amended by the Keating Labor government
in 1995, prohibits the owner of a TV station from
controlling a newspaper in the same city, either
directly or through an "associate".
This currently presents a problem for both Packer
and Murdoch. Packer has repeatedly stated his
determination to take over Fairfax, but if he
did so openly he would breach the Act by controlling
newspapers as well as TV stations in Sydney and
Melbourne. For his part, Murdoch wants to acquire
a national TV network but cannot legally do so
while he owns newspapers across the country.
May 18 last year, Powers quit as Executive Chairman
of Packer's Publishing and Broadcasting Limited
(PBL) and as Chief Executive Officer of Consolidated
Press Holdings Limited (CPH), and, on the same
day, was appointed to the Fairfax board. This
spectacular switch, and the widespread public
concern it generated, gave the ABA no choice but
to announce an investigation. On the face of it,
Powers was acting on behalf of Packer.
suspicion was heightened when the editor-in-chief
of the Sydney Morning Herald, John Alexander,
was dismissed on May 22, Powers became chairman
of the Fairfax board on May 29, and the Chief
Executive Officer of Fairfax, Robert Muscat, resigned
on August 24. Within four days of Powers arriving
at Fairfax, its leading editor had been removed.
Within 11 days, Powers had taken the chair and
within three months the company's chief executive
only that but Powers, who had been one of Packer's
right-hand men since 1993, was given an ongoing
consultancy with Packer's companies, and continued
to have his house lease, mobile phone and tennis
and golf club memberships paid by them. He also
retained a close social relationship with Kerry
and James Packer.
addition, Powers remains a director of an offshore
company involved in American film and television
production and in which PBL has a 20 percent share.
James Packer is soon to join Powers on that company's
all, Powers had only become Fairfax chairman by
using a $12 million loan from Packer to acquire
a 15 percent stake in FXF Trust, a Packer company
that has a 16.2 percent holding in Fairfax. Just
before he shifted to Fairfax, Powers had collaborated
with Packer on a failed attempt to have Neville
Miles, an administrator of the FXF Trust, appointed
to the Fairfax board.
lays down the law
ABA's decision to rubberstamp these arrangements
provides a rare glimpse of the actual relations
between the media barons, the government and official
regulators. The ABA's inquiry, conducted behind
closed doors, was dominated by blunt and belligerent
testimony from Kerry Packer, followed by threats
of legal action from Packer's lawyers if the ABA's
initial draft report was not altered to remove
any suggestion that he and Powers were acting
to an edited version of Packer's sworn evidence
at the inquiry last October 27, he was asked why
the ABA should be satisfied that he was not working
in cahoots with Powers in relation to Fairfax.
Packer responded: "Because I am not a liar
and I'm telling you I'm not. I do not control
Fairfax and I never, ever have, much as I would
like to, and much as one day maybe I will."
ridiculed the inquiry panel, insisting that he
could hardly "control Mr Powers by mental
telepathy". He was indignant when asked about
his alleged influence over editorial decisions
at Fairfax. "If I controlled Fairfax, do
you think they would actually be running those
stories? I mean, I would have thought it was self-evident
I have no damned control of Fairfax".
from the sanitised transcript released by the
ABA, Packer's performance was reminiscent of his
1991 appearance before a federal parliamentary
media inquiry into one of his previous bids to
take control of Fairfax. For two hours Packer
verbally kicked the assembled MPs around the room,
berating them for having the nerve to question
the conduct of someone such as himself.
a Labor MP politely asked Packer if he thought
parliament had no right to inquire into media
ownership, Packer replied: "That's exactly
what I am saying." Packer told the inquiry
that it was an "intellectual wank" and
he was tired of having "crap" heaped
on him over the Fairfax bid. One Labor MP apologised
abjectly for suggesting that Packer had evaded
foreign investment laws.
in all, it was a graphic demonstration of the
contempt with which the ruling class treats the
"people's representatives". What followed
the ABA's questioning of Packer last October was
equally revealing about how the corporate elite
deals with regulatory agencies such as the ABA.
Packer's verbal barrage, according to well-sourced
media reports, a majority of the six members of
the ABA originally concluded that Packer and Powers
were associates within the meaning of the Act,
that is, likely to act at the direction of, or
in concert with, each other. This split finding,
the first in the ABA's history, was included in
the draft report, sent to the affected parties'
legal representatives last December.
for both Packer and Powers sent back submissions
declaring that the ABA had failed to provide sufficient
evidence to prove an association and would face
an expensive and protracted court challenge. Powers'
lawyer, John Atanaskovic, suggested that because
the ABA agreed that Powers did not personally
control Fairfax, there was no need to make a finding
on his association with Packer.
is precisely what the ABA did in its final report.
As confidently predicted by media commentators,
the ABA ruled that Powers, being only one member
of the 10-person Fairfax board, did not control
the company. Having done so, the ABA sidestepped
the nature of the relationship between Packer
and Powers, saying that a finding on that issue
had become irrelevant and "would serve no
useful purpose in the terms of this report".
ruling was all the more striking because Packer
bluntly told the ABA that he intended to use his
stake in the FXF Trust, held in partnership with
Powers, as a "starting point" to seize
control of Fairfax as soon as legally possible.
more remarkably, Packer made it plain in his testimony
that he expected Powers to take charge of Fairfax
in no uncertain terms. Asked about his likely
future dealings with Powers, Packer said that
during one of their many golf games together he
might say to Powers: "What are you doing
about getting those arseholes [a reference to
Fairfax journalists] into shape? Have you got
rid of any more people? Is this managing director
of yours that you have appointed [Fred Hilmer,
Muscat's successor] any bloody good?"
is no doubt that, in practice, Powers placed his
personal stamp on every aspect of Fairfax's operations
from the day he joined the board. Evidence before
the ABA showed that in addition to ousting Alexander
and Muscat, he successfully prevailed upon the
board to impose a staff freeze, slash the planned
budget and drop a bid to buy the Canberra Times,
then on the market. And unusually for a company
chairman, Powers personally held discussions with
Packer over Fairfax forming a joint Internet venture
with Packer's PBL Online and NineMSN--the Nine
Network's web service.
the ABA admitted that: "Mr Powers has clearly
been influential in a number of key decisions
taken at Fairfax." Yet its report concluded
that Powers was not in a position to exercise
test for "control" over a newspaper
company under the Act is couched in unambiguous
language. It asks whether the person "either
alone or together with an associate of the person,
is in a position to exercise, in any manner, whether
directly or indirectly, direction or restraint
over any substantial issue affecting the management
or affairs of the company". Powers obviously
exercises such "direction" and "restraint"
academic, Jock Given of the Communication Law
Centre at the University of New South Wales, commented:
"Probably many chairmen in Australia would
be surprised to discover they are not in a position
to exercise control of their companies."
He added that on the basis of the ABA's ruling,
it was "difficult to see why Mr Packer couldn't
become a chairman of Fairfax as well".
said the politicians who voted for the cross-media
ownership laws might be "rather surprised"
to learn they had created a law that allowed such
a result. Whether that is true or not, there is
no doubt that the Howard government is preparing
to make another bid to clear the way for Packer--and
Murdoch--to have free reign. Prime Minister John
Howard moved to scrap or water down the cross-media
ownership laws in 1996 but backed off in the face
of widespread public criticism.
week, as soon as the ABA handed out its report,
Communications Minister Richard Alston declared
that the matter of Packer's control or influence
over Fairfax was "now closed". The previous
week he asked the Productivity Commission to review
the broadcasting laws to assess whether they were
Murdoch press is already mounting a campaign to
use the proposed review to overturn restrictions
on media monopolisation, as well as limits on
foreign ownership. Responding to the ABA report,
one Murdoch business columnist Mark Westfield
wrote: "Even a superficial analysis would
show that both the cross-media ownership rule
which binds Packer and the foreign ownership laws
which apply specifically to the media are anti-competitive,
whimsical and antiquated."
with the argument that the edifice of parliament
provides "democracy," one of the central
ideological nostrums of the capitalist class has
been the "freedom of the press"--the
claim that private ownership of the media somehow
guarantees freedom of opinion. In reality, as
the approval of the latest Packer operation illustrates,
the media barons are determined to exercise ever
greater control over all forms of mass communication,
including newspaper, television and the Internet.
credit to WSWS (World Socialist Web Site)
World Socialist Web Site
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