THE DISTILLERY: Counting Ten

It's a bit of a mixed bag this morning, but a mixed bag of goodies. There's the best singular account of the decline of Ten Network we've had so far bar none, that's to go with a piece illuminating the billionaire jostling as ‘reach' laws governing the free-to-air broadcasters are up for change. Then we have commentary on the four pillars policy, Rio Tinto's Oyu Tolgoi project, the markets, the US sequester and the Australian auto-manufacturing decline all in this morning's edition from The Distillery.

Let's begin.

Fairfax's Adele Ferguson and Michael Idato have teamed up a few times on the Australian television industry. This time they're taking a look at the decline of Ten Network.

"What makes the Ten story extraordinary is that despite spending most of its corporate life as the younger, cooler sibling to its old, warhorse rivals, whose brand was built on playing the antithesis of the TV establishment, it was now majority-owned by some of Australia's oldest – and richest – families. What makes it even more extraordinary is that inclusive of Grant Blackley, Ten is on to its third chief executive since 2011 with the appointment of Hamish ‘the Hammer' McLennan, and its second acting chief executive. It is a company whose share register is now populated by surnames such as Murdoch, Packer, Rinehart and Gordon. More lately, the billionaire media mogul Kerry Stokes bought 3 per cent of Ten. So, when did the fins fall off the surfboard and send the network crashing to shore?”

The Australian's Nick Tabakoff says news of Kerry Stokes buying into the Ten Network register is just another move in anticipation of looser ‘reach' rules that prevent any individual television network covering too much of the Australian population.

You'll have to read on to find out, but it's the business feature of the weekend.

Meanwhile, ANZ Bank boss Mike Smith has "reignited” the debate about Australia's ‘four pillars' policy after speaking with The Australian's Richard Gluyas.

"In an exclusive interview, Mr Smith said the ban, conceived by Labor federal treasurer Paul Keating in 1990 to maintain competition in the financial services sector, "doesn't actually add anything". "There's this idea that you must have four major banks – why not six, or two?" the ANZ chief said. "Does it really matter? I don't think so." Asked if a merger between two of the Big Four would inevitably lead to a marriage between the remaining two, Mr Smith said: "I wouldn't have thought so, but (a reversal of the policy) is unlikely to happen. That I do know."

To put the word ‘reignites' into perspective, this debate isn't going anywhere. So ‘reigniting' lends itself more to that of a firework as opposed to a fire. There's a quick flash and then darkness again.

The Australian Financial Review's Chanticleer columnist Tony Boyd not only reminds his readers that Rio Tinto boss Sam Walsh is facing a challenge in "Asian resources nationalism" in Mongolia, where elections are putting ownership of the $10 billion Oyu Tolgoi site, but just how damn hard it is to mine that bloody thing.

"The company has already spent about $6.6 billion on developing OT as an open-cut mine. The expenditure has been high, partly because of the isolation of the site 80 kilometres north of the Chinese border, and partly because of the engineering complexity. Rio has had to construct the mine in such a way that it can operate in the extreme temperatures of minus 35 degrees in the middle of the Mongolian winter. Having the mine delivering commercial output will be a significant victory for Rio, but that has not diminished the pressure from politicians to renegotiate the investment agreement to make it ‘fairer' to the Mongolian people.”

Boyd goes on to say that negotiations have been going on for months. Presumably behind closed doors because its winter in the northern hemisphere and as far as this columnist is concerned negative 35 is a scientific idea, not a temperature.

In the markets, Fairfax's Malcolm Maiden makes a pretty convincing case that the share price rally for the Australian market is unusually strong, and The Distillery would tend to agree.

"Shares whipsawed this week after Italy's election debacle and as America's only slightly diminished fiscal cliff once again approached. But the S&P/ASX 200 Index is still up more than 9 per cent so far this year, and up by about 17 per cent since mid-November. That's better than overseas markets have done. As of Thursday US time, Wall Street's Dow Jones Average was up by just over 7 per cent this year, and up by the same percentage over six months. The Euro Stoxx Index was level for the year after falling in February, although it was still up almost 8 per cent in six months.”

While the bulls would hastily point out that this is a long-awaited recognition that our economy is working better than any of those the fall under the aforementioned indices, previous share price rallies of this magnitude were conducted on far greater volumes.

As everyone knows, the greater the volume, the more accurately the share price movements reflect the market's confidence in value.

The Australian Financial Review's Karen Maley looks at Wall Street's inability to get out of its bull-leather shoes when American politicians can't agree on anything and China's economic recovery is showing signs of stalling.

Business Spectator's North America correspondent Alexander Liddington-Cox points out that the headline $US85 billion sequestration number is wrong, according to the non-partisan Congressional Budget Office.

"That number comes from the specific legislative term ‘budget authority', which means the government no longer has the right to spend that $US85 billion ($A83.39 billion). Whether it was going to spend all of it for sure is impossible to tell. Economists and journalists took that figure and concluded that over 0.5 per cent of US GDP had been erased, just as the recovery is taking hold. A late release from the non-partisan Congressional Budget Office, which has been largely ignored, shows the actual spending reduction in net terms will more likely be something like $US44 billion.”

Like Maley, The Australian Financial Review's Washington Correspondent Ben Potter is similarly taken by the contrast between the potentially bearish global signs and the fact that the Dow Jones is close to all time high.

Potter rightfully points out that much of this has to do with the Federal Reserve's money printing ultimately forcing investors into equities, but also runs through the signals that the US is starting to mount a slow, but ultimately reliable recovery.

Sticking with economics, but closer to home, Fairfax's Ross Gittins says Opposition Treasurer Joe Hockey is giving us a firmer picture of how he'll approach the job if – as seems likely – it falls into his lap come September. Gittins says he's likely to be a pretty formidable treasurer who won't be swayed be the temptation for government to do much so solve business' problems, but to simply get out of their way.

The Australian's Glenda Korporaal hits the nail on the head with her piece about the Futuris Automotive plant in Thailand.

"The future for Australian manufacturing companies will not be in mass manufacturing products for Australia's market of 23 million people. If the Futuris story is an example of an Australian company doing something right, it is about using Australian know-how and design skills to expand by finding astute market niches overseas, especially in Asia.”

Separately, Fairfax's Gittins says the arguments that the Reserve Bank had recently lost its ability to control interest rates thanks to a hesitance on behalf of the big four to pass on all the basis points demonstrates a lack of understanding of economics.

Fairfax's Michael West gives the banks another kick for their profits and interest rate margin arguments, adding that the spectre of competition from Macquarie Group and Yellow Brick road makes for an interesting script.

The Australian's John Durie relays comments from consumer watchdog boss Rod Sims that an industry code for retailers and food manufacturers will be a failure unless it actually has the ability to punish abusers.

And finally, Fairfax's Adele Ferguson gives another fascinating insight into the ructions within the House of Rinehart, which is destined to be the subject of another court hearing on March 12.