Caught in Murdoch's media web

Last Friday Crikey listed the range of media interests Lachlan Murdoch would have if, as expected, he buys half of James Packer's stake in Ten Network. It was impressive, but not half as impressive as the web of interests that emerges when the Murdoch and Packer media interests are looked at together and it the context of the other relationships they have.

Murdoch would have half Packer's 18 per cent or so stake in Ten and a board seat at the network. He is a director (and will ultimately own a big slice) of New Corporation, owns half of the DMG Australia radio network and is deputy chairman of Prime TV, a Seven Network regional affiliate in which he has a 9 per cent shareholding.

News, of course, apart from its newspaper and magazine interests, owns 25 per cent of Foxtel, half of Premier Media (which supplies mainly sports programming, the Fox Sports channels, to Foxtel) and (via BSkyB) has an indirect interest in a third of Sky News Australia.

Packer would have the Ten interest and through his 50 per cent-owned Consolidated Media Holdings, a 25 per cent interest in Foxtel and half of Premier Media. (Packer and Lachlan Murdoch looked at jointly privatising Consolidated Media about two years ago but Murdoch was unable to secure the funding).

Another media mogul, Kerry Stokes, who effectively controls the Seven Network and its magazine business as well as West Australian Newspapers, owns about 24.5 per cent of Consolidated Media. Seven has a one-third interest in Sky News Australia.

Packer's best friend, David Gyngell, was last week appointed chief executive of PBL Media, the former Packer-controlled group which owns the Nine Network, the stable of Australian Consolidated Press magazines and regional TV group NBN TV. PBL also has a one-third interest in Sky News Australia. Packer's Consolidated Media has allowed its interest in PBL to be diluted to less than one per cent.

Packer has been supported in his quest for board representation and influence over Ten's affairs by Bruce Gordon's WIN TV group, which has a 13 per cent holding in Ten and has just been granted a board seat. WIN's regional stations reach about 42 per cent of the Australian population.

So, there is a convergence of media mogul interests around Foxtel, Premier Media, Sky News Australia and now Ten, with linkages between all the free-to-air networks and the major pay TV operator, two of its key local programming suppliers, the dominant newspaper proprietor and the another big player in that sector.

If one were into conspiracy theories the incestuous nature of Australian media ownership would create instant paranoia.

The interests are probably too small, indirect and in some instances probably too informal to trigger the thresholds in the Broadcasting Services Act, although inevitably the Australian Communications and Media Authority will look at them.

That, however, isn't an obstacle to the Australian Competition and Consumer Commission, whose test is simply whether or not an acquisition or proposed acquisition is likely to lead to a substantial lessening of competition in a market or markets.

That's a reasonably subjective test with, as was seen in the ACCC's rejection of National Australia Bank's proposed bid for AXA Asia Pacific, plenty of scope for the commission to come to idiosyncratic conclusions.

Packer's preparedness to halve his holding by selling down to Murdoch will be of particular interest to the ACCC because it suggests the gameplan may be broader than simply adding value to Ten – otherwise Packer would want to maximise his exposure to those potential gains.

With Ten resisting the pressure from Packer and Murdoch to give them three seats on its board they could argue that Ten is demonstrating that they don't have control or the potential to control the network and would in any case only have three of ten board seats.

WIN and another Ten shareholder, Perpetual, have, however, expressed support for Packer's gameplan, which would see the network's One digital sports channel shut down and Ten's plans for an expensive upgrading of its news and current affairs offering shelved. Between them, the like-minded shareholders would have the capacity to direct Ten's affairs.

One is a key competitor to Fox Sports for sports rights, while there have been suggestions Packer wants to air Sky News Australia on Ten's free-to-air platform.

There are enough connecting threads between the various players for the ACCC to be keenly interested, and it is. Whether it will conclude that the proximity of most of the big fish in the small pond that is the Australia media sector is an issue disturbing enough to intervene is impossible to pre-judge. It would certainly generate some fireworks.