South Western Telecasters

"Stokes continued to look beyond shopping centres. Planning and building regulations were multiplying faster than the population. The fun had gone out of it, and while there was still money to be made, the golden days were over. Having founded CPI as a public company, in 1977 Stokes and Bendat decided to privatise – but through a strange mechanism. Instead of the pair buying directly, their associated private companies, Retford Pty Ltd and Villaro Pty Ltd, employed a mining company, North West Mining NL, to make a takeover bid. The money for the takeover was raised through a loan organised by North West from the merchant banker Hill Samuel, which later became the Macquarie Bank. The loan was to be repaid by declaring a dividend funded from revaluing the shopping centres after the takeover deal was complete. The complicated deal was put together by Geoffrey Cohen, for years Stokes’ corporate lawyer, and director of many of his companies. Also acting for the pair at this time was David Gonski, then with the law firm Freehills. A key feature of the Stokes–Bendat success, as it had been with that of the Stokes and Merifield partnership, was their ability to hire the best advisers and work closely with them. Why was the deal done through the proxy company? Stokes later told journalists there was ‘nothing untoward about it’. The reason had been legal problems to do with tax and capital distribution. ‘It would not have been possible without the interpositioning of another public company.’8 It was less than a complete explanation. Retford and Villaro were trust companies, and the beneficiaries of the trusts were members of the Stokes and Bendat families. The directors were Cohen and a chartered accountant. Stokes and Bendat did not technically control the companies but had the power to appoint and remove their trustees. In fact, they were clearly their companies, used both for this transaction and for their interest in South Western Telecasters. When it came to CPI, Stokes and Bendat were selling their shares to their own associated companies and asking other shareholders to follow. It was effectively a related-party transaction but without the level of transparency that would have been necessary if the deal had been done directly, rather than through North West. The offer document declared that the shares would ultimately be transferred to Retford and Villaro, and it also disclosed that Stokes and Bendat had ‘an association’ with those companies but was less than completely transparent about the nature of the association."

"The decision was good news for Stokes and Bendat. The transaction got the green light and the shopping centre barons became small media players with large ambitions. They were elected to the South Western Telecasters board soon afterwards. Each denied wanting to control the company, saying it was just another investment opportunity. Stokes was quoted as saying he was surprised that outsiders like him and Bendat could spy so much potential and yet ‘so few local people’ seemed to be buying shares in the broadcaster. They wheeled out their families’ respective investment companies Vetlabs and Paulla Investments, which had been used to take CPI private not long before. Between them the two companies bought a block of 500,000 South Western Telecasters shares, which was more than 20 per cent of the broadcaster. By then other companies associated with them had already crept into the share register. By late 1978 Stokes and Bendat controlled 37 per cent of South Western Telecasters. Enough to make their presence felt in the media world."

"Since Stokes had arrived in Perth, there had been only two commercial television channels there — Seven and Nine. For the past few years the rumour mill had been whispering that the market was ripe for a third. The key to Stokes’s bid for this third licence would be his ‘principal solicitor’ Neville Owen, who also became a trusted commercial advisor, friend and executor — ‘more than just a lawyer to him,’ says Owen. In 1983 Stokes had persuaded Owen, a partner at Robinson Cox (later Clayton Utz), to devote most of his time to Stokes’s expanding affairs while remaining with the firm. Owen would spend the rest of the decade at Stokes’s elbow, often working alongside Anthony Kiernan, a lawyer with radio and television experience. Owen had shown his natural ability and amiable nature while doing legal work on earlier media deals involving South Western Telecasters and the new radio station, 96FM. Now Stokes asked him to help draft a formal application to the Australian Broadcasting Tribunal to be granted the third commercial licence. He knew plenty of others would want it and was determined to go into the battle better equipped than anyone else. ‘I was preparing from 1983 for the [licence] inquiry in 1984,’ Owen recalls. ‘I was principal solicitor, led by Daryl Williams QC, later Commonwealth Attorney General. The junior was Michael Slattery, later a Supreme Court judge in Sydney. It really was a combined effort of lawyers and commercial people. A full-time commitment.’"

"WHEN PETER GAMMELL paid a visit from Scotland to see his ‘godfathers’ Stokes and Parker in mid-1987, he was impressed. Australian Capital Television had flourished to become what Gammell calls ‘an engine for growth’: its operating profits had paid off the $13 million purchase price so rapidly that only $4 million was owing on an asset now valued in tens of millions. With the golden goose 96FM and Jack Bendat’s Golden West Network (as South Western Telecasters had become), Stokes and his…"