Murdoch

"In the years that followed he shuffled the deck of his assets in a series of big, complex, related-party transactions. The effect, in every case, was that the debt ended up further away from Stokes’ private interests, while his control over the assets was tightened. In all this the independent directors of his public companies – including Dulcie Boling, who had once been Murdoch’s nominee, and Peter Ritchie, the former head of McDonald’s Australia – raised no public objection."

"He had not, for the most part, built businesses from the ground up. He was not a creator of new enterprises. Rather, he had done deals, cultivated relationships, capitalised on booms and aggregated money-earning assets. His great talent was that he could see ways of structuring a deal or a business enterprise that looked obvious in hindsight, yet which nobody had hit on before. He sensed a boom well before others. He had weaknesses, both in capacity and in emotions. Particularly, there was a lack where most of us have a sense of identity and place. He was a hoarder, a gatherer around himself of objects. He liked acquisition. Yet he also had an ability to reconfigure, and to move on when self- or business interest required. He was unlike Murdoch and Packer in that, when it came to business, he was mostly unsentimental. He saved sentiment for the art collection. Which is not to say he was unemotional. There was a chip on his shoulder, an abiding sense, despite his wealth and power, of being hard done by, and a determination to take it up to the establishment. But with all that he was good fun – laconic and outwardly even tempered. His employees liked him, and most were steadfastly loyal and well looked after. He was a dealer, rather than a manager, but he made up for any lack by the quality of the people he hired as his closest assistants, and the manner in which he kept them close."

"By now, I had zero relationship with Marvin Davis and began to play by the strictest interpretation of the joint venture. I disliked the way Marvin had mixed his personal life with the business of Fox, so I called him up and said now that the company was a joint venture, he would no longer be able to dictate or authorize any expenditure on his own. He couldn’t have his Carousel Ball charity dinner paid for by Fox, or have his children officed at the studio, or any of the myriad nonbusiness items he’d been charging to the studio. He said, “I’ll do what I want.” I told him, “I want to be very clear—listen carefully. You own fifty percent of the equity of this company, and you have fifty percent rights with the other owner, News Corp. I’m the chief executive officer, and I have all operating powers. All you have is your half vote, so you can literally do nothing in the conduct of the business other than vote your shares, which unless you have the vote of Murdoch means you can’t do squat.” Fox wasn’t going to be any more fun for Marvin Davis. I was finally learning how to play by big-boy rules."

"He called Murdoch and agreed to sell him his 50 percent for $350 million. I was thrilled to finally be done with him. But my thrill was stayed by one last gauntlet. After all the details had been ironed out, weeks went by, and Davis began braying around town that he wasn’t sure he was going to be out of Fox, because Murdoch probably didn’t have the money to close. I had no idea why he would trash Murdoch, other than he didn’t want people to believe he’d been forced out. It was just nasty. He held on to the final signing papers for days without returning them, crowing publicly th"

"I called Milken, who said, “John wants a billion seven fifty. But he thinks he could sell the Boston station to Hearst for six hundred million. So it’s a billion one for the other stations.” I called Murdoch and reported all that. Rupert wasn’t fazed and just asked how much the whole effort would cost. I called my friend Marty Pompadur, a very senior media executive who had been a key ABC executive and knew everything about broadcasting. An hour later Marty was in my office, and we began chewing over how to build a fourth network."

"Outside the three networks, Metromedia had the best station group in the United States, covering 25 percent of the U.S. population. I was astonished that it might be for sale. I told Murdoch that when I was at Paramount, we had tried to launch a fourth network and that, aside from the economics, our biggest hurdle was not having a big broadcast group to be the backbone of a network service. I told Rupert that if we could ever buy these stations, they could be the catalyst in my longtime dream to compete with the big-three broadcasters. There is no dog with hearing as sharp as Rupert Murdoch’s when opportunity calls. It took him less than a second to say, “Ha! Let’s go after this!”"

"Milken was raving about the historic fundraising for Kluge he’d just completed to take his company private. He announced that now Kluge ought to consider selling the stations that made up the bulk of their company’s assets. He couldn’t have known Murdoch would be there, or that I’d be in my office at the moment they wandered by. Some celestial force seemed to be driving things as Kluge rhapsodized about how reluctant he’d be to ever sell the stations he’d been building up for twenty years—mesmerizing us except for that seller’s gleam in his little Germanic nugget eyes."

"With nothing more than scrap sheets, I called Murdoch and told him we would have to spend about $200 million before breaking even. I added, though, that there really wasn’t any way to actually know the costs, because no one had tried to build a new network for thirty years, and that attempt failed miserably. Despite having been presented with that flimsiest of a business plan, Rupert was ecstatically on board. He didn’t flinch about the costs; he saw only the opportunity."

"And, with that, he had me. There’s a great thrill in working with Murdoch when he sees a daunting hill to climb. He’s never happier than when there are huge obstacles to overcome in pulling off something wildly ambitious; he’s a warrior when fighting to establish something in enemy territory—usually against the Establishment."

"Between our lunch and the time Murdoch finalized buying into Fox, he’d gone to Australia, and then on his way back to New York stopped for two days in L.A. He called and I invited him to come over to the studio for a chat. And, here’s where my North Star of serendipity once again showed up: three seemingly disparate events threaded themselves into the opportunity of a lifetime—at least my lifetime. First, that particular day was Michael Milken’s annual investors’ conference, called by some the Predators’ Ball. Milken was at that time the biggest financier of companies in the United States. He had previously called to say he had just financed John Kluge’s buyout of public shareholders at Metromedia, which owned six blockbuster television stations. They wanted to have a reception away from the place where the conference was being held, and Milken asked, as a favor, if I would give them a soundstage to have it on. The afternoon of that day, Murdoch arrived in my office. And finally, as soon as Rupert sat down in my conference room to talk, my assistant buzzed me to say that Mike Milken and John Kluge were in my reception room to say hello before their party."

"Half an hour later the TVNZ team returned. Downey talked to them about contract law, about the nature of offer and acceptance. ‘This morning we made you an offer and you did not accept it so, to clear the air and make sure of exactly what we are saying now, that offer is gone because you did not accept it,’ he said. ‘We are starting again.’ In a brilliant deal for Sky, by the end of the negotiation TVNZ agreed to pay $5 million over three years—the same cost of Sky’s full package of rights from News Corp over the same period. ‘The beauty of the story for us,’ says Heatley, ‘is that for the first three years that Sky had wall-to-wall rugby, and while our subscriber numbers went through the roof, it cost us nothing. In exchange for a package of delayed rights and nothing live, we got TVNZ to pay us the same amount of money that we were paying Murdoch. I don’t want us to sound like smartarses, because I don’t mean it like that, but if TVNZ had been willing to pay that amount to News Corp, TVNZ could have won the exclusive rights for itself. But for various reasons the board of a government-owned company is a lot slower than the board of a private company. So instead of getting the rights itself, it had unknowingly just agreed to pay the full cost of us getting them.’ Ironically, just as Sky’s board had gone into the negotiation feeling under pressure from the government because Sky had the full package of rugby rights, TVNZ’s board had probably gone into the negotiation also feeling under pressure from the government because TVNZ did not have any rights. Board members may even have thought their jobs could have been on the line. After all, if the prime minister was angry that the live games were all going to be on Sky, how much angrier might he have been if TVNZ had emerged from the negotiations without even delayed coverage rights? For Sky, the deal was a triumph. ‘We felt very happy. It was fun,’ Downey says."

"As D’Arcy would describe the manoeuvre, when the market opened that Monday, Murdoch bid $4 a share for shares that had been trading at $2.70. He made it known he was looking for half of the 63 million Herald shares on issue, and commissioned JBWere to buy them. Millions of shares changed hands, but by the end of the day Murdoch realised he could not force his way into controlling the company because Queensland Press and Fairfax were playing ‘white knight’ to rescue the Herald & Weekly Times. Fairfax mainly wanted to protect its interest in The Age, which far preferred to maintain its cosy competition with the Herald & Weekly Times than with a hostile News Limited. Stokes would later comment, ‘Egos made strange bedfellows.’ Fairfax threw millions at the market and secured enough shares to rebuff Murdoch, but made what Stokes calls a ‘technical error’ of flagging their intentions ahead. While the rescuers were buying with both hands, eyes wide shut, Murdoch sold them a dummy. Suddenly and silently, he started selling — but not through JBWere, the firm that had done the buying for him. Instead, he quietly briefed another stockbroker, May & Mellor. Before anyone at Flinders Street — or at Fairfax’s Sydney office or Queensland Press — realised what was happening, May & Mellor had quietly unloaded Murdoch’s 3.5 million Herald shares at a premium: $5.52 per share. By midday of day two, the shares had slid back to $3.75 and Murdoch had announced he was out of the race, at least for the time being. But he had made $3 million cash between breakfast and lunch."

"enemy more easily, Fairfax’s directors had sacrificed an irretrievable asset in their rush to defend the Herald & Weekly Times against Murdoch. As Stokes and the wily Ken Parker would find out, Fairfax had held a unique advantage for a decade: it enjoyed what was dubbed the ‘grandfathering’ exemption from media laws passed in the 1960s to prevent any one owner from controlling three television licences. Because Fairfax already owned interests in television stations in Brisbane, Sydney and Canberra — and what Stokes calls ‘a cobweb of interlaced shareholdings in regional TV stations’ — before the legislation was passed in 1969, it was allowed to retain the three capital city licences. Latecomers had to be content with two. By buying a 15 per cent stake in the Herald & Weekly Times to fight off Murdoch’s apparent raid, they had breached the ‘grandfather’ clause — and, in effect, would be forced to sell either QTQ-9 in Brisbane or CTC-7 in Canberra. Not only had Fairfax breached the rules, and in doing so abandoned an edge it enjoyed in the media marketplace, but it had also borrowed a fortune to do it. With Potter Partners leading the stampede, Fairfax had spent $50 million on 9.5 million HWT shares. Queensland Press had spent $20 million. Hindsight would show that in doing so they had both squandered the contents of their war chests — paying too much for newspapers that had reached their peak of influence and profitability and were now blundering towards a cliff no-one could then imagine, let alone see. Later, Stokes would link the decline of the once great house of Fairfax with this panicky response to the first Murdoch raid."

"To that end, Stokes put a deal to Fairfax in mid-1987 that valued what would become the Seven Network at around $700 million; he proposed paying a third cash, a third in shares and a third on credit. It seemed a sensible compromise — what he calls ‘real’. (Fairfax had cemented its hold on Seven by buying Melbourne’s HSV7 from Holmes à Court shortly after Murdoch sold it to him.) The supercilious Fairfax executives had amused Stokes when he’d dared buy their Canberra station six years before. Now they astonished him with their unworldliness. Mr Falkingham of the pinstripe suits and patronising manner had gone but he might have handled the sale better than his successors did. Stokes thought the ‘pretty nice combination’ of cash and shares upfront and the sustainable terms he was offering would appeal to a realistic seller. So he was dismayed to get a telephone call at 11 p.m. one night from a Fairfax advisor, Tony Bourke, to say they had done the deal with another bidder: former business reporter Christopher Skase, one of the more colourful figures in a colourful era. When Stokes asked why Skase, the Fairfax man said: ‘He’s got cash.’ When Stokes heard that Skase had given an undertaking to pay nearly $900 million for the network, he almost laughed."