Boot went in after footy coup
When news filtered through the media and sports world that the Nine Network and pay television group Foxtel had clinched the broadcasting rights to the crucial NRL it was the beginning of the end for Kim Williams.
Days before Lachlan Murdoch, who is chairman of Ten Network and a director of News Corp, had been given the heads up that Foxtel was planning to stick with Nine to bid for the rights rather than form a partnership with Ten. Murdoch was livid. He had held many talks with Williams over the months of June, July and August last year and was under the impression that Foxtel would side with Ten, a move that was commercially sensible and would breathe new life into the struggling network and, even more importantly, deliver a king hit to arch-rival Nine, which was in the middle of talks to renegotiate a mountain of debt to hedge funds. If Nine lost the rights, it would weaken it considerably.
It was high stakes. The ratings at Ten had been slipping and the NRL broadcasting rights had been seen as the network's panacea to stop the ratings rot.
When it became official that Ten had been left in the NRL wilderness and that Williams had backed Nine, Murdoch felt he had been kicked in the guts.
One source said Williams is always the smartest man in the room but he overestimated the strength of his relationship with Murdoch. "He obviously believed Lachlan would get over the NRL. It was a complete misjudgment," he said.
His fate was sealed. From then on it became death by a thousand cuts. "It became a shit sandwich and finally took its toll," he said. "Kim had enough and quit. I'm not saying he wouldn't have been pushed eventually, because Lachlan, the favoured son, had lost confidence in him and Rupert had to listen to him," he said.
Up until then Murdoch had been a huge fan of Williams and was behind the push to install him - and oust John Hartigan - as the chief executive of News Ltd in November 2011.
Williams had been brought into News to transform it during a massive transformation of the media industry. He was seen as an inspired choice. His background was in broadcasting and digital, rather than the old world of newspapers. He was tough, smart and seen as a cleanskin in terms of not coming from a newspaper heritage, so could make tough decisions without missing a beat, decisions that his predecessor had found hard to administer.
But the honeymoon inside the company was fleeting. Within weeks he was coming to blows with editors, the circulation department, marketing and advertising. He brought in his own people, imposed processes and expected results - immediately.
One of his first head-on collisions was with the circulation department. The clash spread like wildfire because it was seen as a man having no idea how "things worked". In the broadcasting world ratings come out first thing each morning and Williams wanted the same intelligence on newspaper sales. "Kim went to circulation and said I want to see how the papers are selling every morning.
"He was told it couldn't be done and he went ballistic. For six months he was screaming at the circulation guys and wouldn't hear that it wasn't the way the system works, unless you want to spend $30 million to change it," a source said.
But when he turned to editorial and replaced some of the group's editors and hired Boston Consulting Group to identify cuts.
Those editors with a direct line to Lachlan and Rupert Murdoch started to fight back - behind Williams' back.
"They were leaking about him and he was leaking about them," a former News Ltd executive said.
"This was unprecedented as any problems we previously had never left the building. It was an unwritten rule and now everyone was leaking, even to Fairfax," he said.
A source close to Murdoch and Williams says Williams had been terrific for News but too many people with a direct line to the Murdochs thought otherwise.
When News Corp announced it would split the empire into two, one focused on the new media world, including pay TV, broadcast and movies, and the other focused on the traditional newspaper businesses, plus its stake in Foxtel, it shone a light on the Australian business from an investor perspective and management perspective.
Brokerage Citigroup recently issued a report that described News Corp's Australian arm as "the problem child, heavily dependent on advertising revenue, with a bulging cost base, facing operating losses".
Media analysts calculate that The Australian loses $3 million a month, or $36 million a year, and the other publications are losing circulation. A top-level source inside News Ltd said: "The business is pretty shit and editors at war. Rupert Keith Murdoch got tired of mediating." Enter Col Allan, who landed in Australia to add some life to the newspapers and stir the pot. Williams knew the writing was on the wall when Allan landed without his prior knowledge.
The departure of Williams, who has been replaced by 69-year-old Julian Clarke, a long-time Murdoch man, has prompted speculation he is warming the seat for Lachlan Murdoch's return. But that is unlikely. Murdoch has been there and done that and is now steering a successful FM radio business, DMG Australia, and helping turn around Ten Network. His father no doubt has a bigger play for him and that one day he will run the Murdoch empire and all that that entails.