Will Rupert Murdoch’s management changes spark a media shake-up? Gottliebsen

The appointment of Kim Williams to head News Corporation’s Australian operations and Rupert Murdoch to be his chairman is the forerunner to one of the greatest shake-ups ever seen in Australian media.

Kim Williams is close to Australia’s most talented media executive and it’s his genius that has transformed Foxtel from a monthly fight between its shareholders (Telstra, Packer and News) into a force that is starting to hurt free-to-air TV. And he also has plans for internet TV. Greg Hywood at Fairfax will now have a much more aggressive competitor. And if Hywood has any doubts about the enlivened News Corporation threat to Fairfax, he should ask the free-to-air operators about how Williams works.

But attacking Fairfax will not be at the top of the Williams agenda because other matters are more pressing.

I have no doubt that Williams will have given Rupert Murdoch the ‘news’ Rupert did not really want to hear. But that ‘news’ would have made the 80-year old media mogul even more determined to appoint Williams and to take the Australian chair himself.

The Williams news was that all three Australian free-to-air networks are in trouble, and it’s not just because Williams and Foxtel have been taking audience. The free-to-air stations have made their own mistakes, including wasting money and audiences on second and third channels. For Rupert this was bad news because his eldest son, Lachlan – who is beneficiary of the Murdoch estate – has borrowed large sums to buy a major share of the Ten network. James Packer has a similar shareholding but is no longer on the board. Rupert will be greatly concerned because he knows his eldest son is talented but error prone.

Seven Network’s Kerry Stokes let the free-to-air cat out of the bag when he said Nine would be in the hands of its bankers within the year. Williams would have confirmed this to Rupert Murdoch. What Stokes did not say was that in the light of the turmoil at Nine, Ten and even Seven will also be under great pressure.

Williams’ brilliance was never better illustrated than when he walked away from the latest AFL negotiation with the right for Foxtel to broadcast all AFL matches live up against Seven. The increased penetration that AFL live coverage will deliver to Foxtel will make Seven’s task challenging but the problems of Nine and Ten will mean Seven will be the market leader and should get through the turmoil.

Rupert Murdoch and Kim Williams may have to decide whether to let Lachlan hang out to dry or rescue him. That decision will not yet have been made but both Williams and Rupert Murdoch know what is likely to be ahead.

The second major decision Rupert Murdoch and Williams must make is whether to extract Australian newspapers from News Corporation. There is no doubt that Chase Carey is, more and more, going to run News Corporation. Chase is not a newspaper person and over time he may look to sell the newspapers. With Kim Williams at the helm and Rupert Murdoch in the chair, the Australian newspaper operation (perhaps including the Ten network) could be floated as a public company.

But we are getting ahead of ourselves. There are many decisions to be made first.

This article first appeared on Business Spectator.