THE DISTILLERY: Packer posturing

Give a print business writer the choice of doing normal company news or writing about the media (other media companies, not their own, a little too touchy) and they will opt for the latter, especially if it's in TV or radio where the print writers know nothing, except what they are told. That's what we got this morning with the continuing reaction to James Packer's raid on Ten Network, which also reports its 2010 financial results at midday.

There are some exceptions, starting with Ian Verrender, who wrote in the Fairfax broadsheets this morning: "It could well be that this week's events signal the early stages of a much larger media war between the combined Packer and Murdoch interests against their pay television partner Telstra and their long-time nemesis Kerry Stokes, the owner of the Seven Network. In fact, it is entirely possible that this week's raid on Ten may be the first skirmish of a much bigger battle."

Fellow Fairfaxian, Elizabeth Knight claimed this morning: "James Packer's $270 million raid on the Ten Network is part of a wide-ranging plan that, if successful, would have Rupert Murdoch's Sky News broadcast on one of Ten's high-definition services – replacing its dedicated sports channel, One. Axing Ten's sports channel would get rid of a big competitor for Fox Sports, jointly owned by Rupert Murdoch's News Ltd and Packer. Until now Sky News has been available only on the pay television outlets Foxtel and its regional equivalent, Austar. Under Packer's plan, Sky News would still be screened by Foxtel but would use one of Ten's digital channels as another distribution point and reach a far bigger audience. And just as importantly for Murdoch it would give him a presence in free-to-air television - and some would argue an opportunity to voice his political agendas on a more mainstream broadcast media." It's not Rupert Murdoch's Sky News; Seven and Nine control two thirds of Sky News and dominate the board.

The Australian Financial Review says: "James Packer will demand a dramatic overhaul of Ten Network's strategy when he secures board seats at the media company, including a tighter focus on viewers aged under 40 and the ditching of its plan to add more news programs." And adds that "CVC Asia Pacific's preparations for a $2 billion-plus listing of PBL Media is gathering pace, with the private equity group trying to put together a board of directors for the new listed group." Everyone wants to cash in. Nine is the QR National of the media.

And The Daily Telegraph claimed that "Informed sources said the Packer camp believed there were too many layers of management at Ten, given that both Mr Falloon and Ten chief executive Grant Blackley are both effectively running the TV network. It is understood Mr Packer believes there is no room for both Mr Falloon and Mr Blackley to be bosses." We heard these moans from Mr Packer about the Nine Network as he went about trashing its business model and selling it off.

The Herald Sun's Terry McCrann wrote in a similar vein: "In simple brutal terms, the Packer camp think that Ten has gone off the rails in its core station and failed abysmally with its new digital channels. Ten used to generate the highest gross profit and margins of the three networks. It did so by a very focused youth strategy, targeting 16 to 39-year-olds. Seven and Nine fought for overall market leadership, meaning both a broader target audience – off the back of heavy investment in news and current affairs in the 6-7pm bracket – and lower operating margins because of the higher costs." Ten only has one digital channel, ONE.

Business Spectator's Stephen Bartholomeusz advances a flotilla of what ifs: "It may be that he simply believes that the initial promise of digital multi-channelling by Ten is sufficient to drive a structural change to the future of free-to-airs, which previously were thought to be under dire threat from the fragmentation of audiences created by Pay TV, IPTV and their own multi-channelling. However, it could also be that his interest in Ten has been sparked by his interest in Foxtel. The Foxtel partners – Telstra (50 per cent), News (25 per cent) and ConsMedia (25 per cent) – are thought to have at least contemplated buying a free-to-air network to circumvent the obstacles Foxtel faces in competing for access to prime programming, thanks to the anti-siphoning legislation that provides preferential access for free-to-air networks to sporting rights. If there were an alliance between Foxtel and a network in bidding for, say, the AFL or NRL rights, they would have a major advantage over Seven and Nine and Foxtel would be able to have more say over the quality and cost of the programming it acquired, rather than having the terms dictated to it by the network than won the bidding for the rights."

The Australian's Tim Boreham noted some interesting points yesterday: "There'll be plenty of conspiracy theories bandied around in coming days and Criterion can't profess to read the mind of a mogul. Still one nagging thought is, why doesn't he just bid for the whole of Ten if he really wants it, rather than flag his intentions? With Ten capitalised at $1.5 billion, the funding would almost come out of the family cookie tin. The raid has the air of a strategic option, a blocking stake or an irresistible nibble at a TV station – the only pure free-to-air exposure apart from Paul Ramsay's Prime Media – seen as being in need of a nip and tuck on costs. Or it could be part of a more convoluted grand plan to deliver prime sporting events to Foxtel, half-owned by the 50.5 per cent Packer-controlled Consolidated Media."

In the real world and far from the media fairyland, BHP Billiton or Rio Tinto, the now continuing question of the global resources industry, and Chinese and Indian growth attracted the attention of Fairfax's Malcolm Maiden: "Rio will be the best place to be if the supply-side response is weak and China continues to grow strongly and safely and the iron ore price stays strong. But if global iron ore production leaps and China either cracks down too hard on growth or fails to deflate its asset price bubbles, setting up the preconditions for a boom and then a bust, BHP will be a safer bolt-hole." And the AFR's Chanticleer says: "Rio Tinto's decision to forge ahead with $US6 billion in iron ore projects in WA marks a critical turning point for the economy and sends a strong signal about corporate confidence in China's growth."

Matthew Stevens wrote in The Australian this morning: "Suddenly these are fraught and troublesome times for BHP Billiton. The week opened with surrender in the battle with global competition regulators over the proposed $US116 billion ($118 billion) Pilbara joint venture with Rio Tinto. It has been punctuated by the apparent implosion of the pre-election mining tax deal brokered substantially by boss Marius Kloppers. Meanwhile, delays to a $US4.8 billion iron ore expansion have been confirmed. Most threatening of all, there are firm indications from insiders that the Saskatchewan government will formally object to the global Australian's plans to spend $US39 billion taking Potash Corp of Saskatchewan."

And The Australian reports: "Mining giants BHP Billiton, Rio Tinto and Xstrata have called an urgent meeting today to consider abandoning their troubled tax agreement with Julia Gillard. This comes after the government admitted it was seeking to back away from a key part of the deal. The possible collapse of the deal comes amid revelations Treasury is refusing to hand over legal advice that raises constitutional concerns about the planned mineral resources rent tax to the government's "policy transition group" charged with finalising the tax design."

John Durie wrote in The Australian: "Wesfarmers is today expected to show its Coles supermarket chain has maintained its momentum over rival Woolworths. However, the key point of interest will be general merchandise, where the Aussie dollar is playing havoc. Woolies yesterday reported a turnaround in consumer electronics and gaming but Big W was weak and food and liquor growth anaemic. Comparable store sales at Woolies was 2 per cent in the first quarter and in real terms just 0.2 per cent. Today Coles can be expected to report circa 4.3 per cent sales growth."

And finally, yesterday morning wise local media commentators said the Future Fund's sale of more of its Telstra stake at low prices was bad news for other investors. Later in the day Telstra and its financial advisers reported the telco had been knocked down in the rush of offshore investors for the company's 500 million euro bond issue. APP reported: "Telstra has placed €500 million ($A708 million) 10.5-year bonds with more than 150 investors. European buyers rushed to the offer which closed one hour after it was announced, it said, resulting in an order book exceeding 1.7 billion euros worth in bids. More than three quarters of the sale, jointly led by BNP Paribas, Deutsche Bank and HSBC, was split between French and German investors, a joint lead said. Such a strong demand allowed Telstra to give a margin of 95 basis points over swap, from a 95-100 basis point initial range." So what do the gnomes of Europe know about Telstra that the Future Fund and a lot of local investors and analysts can't see? Perhaps our Future Fund should be investing in Telstra bonds? Telstra shares hit a new low of $2.58 yesterday, thanks to the Future Fund's selling.