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Current as of 17/09/14 08:00AM NZST

John Drinnan 's Opinion

Media writer for the New Zealand Herald

John Drinnan: Hedge funds eyed Sky slice

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Talks on taking over Murdoch's stake in TV company fail over price, but wide-open share register unlikely to last

Photo / File
Photo / File

I hear two hedge funds - Texas Pacific Group (TPG) and Kohlberg Kravis Roberts (KKR) - looked at taking over Rupert Murdoch's 43 per cent stake in Sky Television, but talks failed over the price.

In the end the shares went to various shareholder interests for $4.80 - a 7 per cent discount to the market price, effectively increasing New Zealanders' stake in the firm.

TPG is a key player in TV3 owner MediaWorks, with Oaktree Capital Management and Ironbridge Capital. But what would be the logic of a hedge fund or private equity buying into Sky? There would be no obvious exit strategy for such an entity and the stock looks more like a utility than a growth stock.

But I cannot help but feel that the wide-open share register for Sky TV will not be permanent and a trade cornerstone investor will emerge.

One name that stirs interest in media circles is Gina Rinehart, who has a big stake in Fairfax and the Australian Ten Network.

The question is whether Rinehart - who has attracted controversy for trying to get access to the emails of a Fairfax journalist who wrote her biography - is interested in media as a financial investment or because she would like to influence the information flow.

Twitter pub
I got caught up this week in a Twitter debate about the rights and wrongs of media tweeting plugs for free meals, and whether these plugs should attract the #ad hashtag which identifies them as advertising.

One tweeter believed legal obligations that affect publishers, such as the laws of libel, could not apply and that social media was akin to people having a chat over a beer at the pub. But given that that person had more than 3100 followers, you would have to say the pub conversation would have to be held at a big booze barn.

If tweeters are confident they are outside the law and have views about the ethics of wealthy businessmen they could test out the theory by letting rip online.

Small world
New Zealand is such a small world. I'm always interested in who knows who, but I never had any idea that the television media commentator Therese Arseneau is the partner of the Solid Energy former chief executive Don Elder.

For quite some time Christchurch academic Arseneau has been popular for political commentary on TVNZ and TV3.

I am told that Arseneau, a political scientist and fellow at Canterbury University, is mulling over the controversy concerning Elder and whether it limits demand for her political skills on television.

Head-hunting
Two important news gatherers face different versions of a media revolution - and they have taken different roads to find new leaders.

APN News & Media is looking for ways to monetise digital content while state broadcaster Radio New Zealand is battling more competition as the Government turns its back on public broadcasting.

APN - publisher of the Herald - is getting over a rocky patch that saw a fall in its share price. It has hired executive search company Heidrick and Struggles to find potential replacements for chief executive Brett Chenoweth, who stepped down last month.

The departure of Chenoweth and several directors followed a revolt by shareholders Independent News & Media and Allan Gray - who when combined held more than 50 per cent of the company.

They objected to the company's strategy and a prospective share issue that would have diluted their stakes.

Peter Cosgrove - a long-time board member with close ties to the Denis O'Brien-controlled INM - will work as executive chairman until a permanent replacement is found for Chenoweth.

APN is also looking to replace directors who stepped down with Chenoweth. They include Peter Hunt, Melinda Conrad, John Harvey and John Maasland. Independent director Kevin Luscombe will retire next month, as previously planned.

APN said the current board was too small, and more members would be appointed, but finding a chief executive would be the priority.

Other APN New Zealand assets include NZ Woman's Weekly, the NZ Listener, and 50 per cent of The Radio Network, whose stations reach half the commercial radio market.

Pick 'n' mix
Meanwhile, public broadcaster Radio New Zealand is looking for someone to replace chief executive Peter Cavanagh, who is scheduled to step down about November after 10 years. Many expect he will leave sooner.

His replacement will contribute to a shift in focus for RNZ, finding new funding sources with potential for sponsorship.

Views on Cavanagh's stewardship are mixed.

Some traditional believers in public broadcasting believe Cavanagh has been a firm hand and maintained standards amid intense pressure and displeasure from the National Government.

Others, including some of the Government-appointed RNZ board of governors, believe Cavanagh has resisted change, discouraged innovation and done little to change the dour and set-in-its-ways culture at RNZ.

While APN has gone the traditional corporate route to finding a new leader RNZ has taken a different approach.

RNZ recruitment committee chairman Josh Easby - who made his name in commercial radio and worked with APN - has invited all RNZ staff to talk about what they want in a new chief executive.

A "disciplinarian" and a "broadcaster" were given as two options. Not sure I'd try to be a disciplinarian with Mary Wilson around.

It's not clear at this stage whether any staff member has volunteered his or her opinion on the right kind of chief executive.

Call me Al
Director-General of Conservation Al Morrison is being mentioned in dispatches as someone who has the smarts to head RNZ.

Morrison is a former political editor for Radio New Zealand and editorial writer at the old Dominion.

Several years back he was strongly talked about, but at the time he had less management experience.

In media roles Morrison was regarded as a liberal, especially during the Clark Government years.

But in management terms he has proved his mettle in DoC and I'm told there would be a measure of support within both National and Labour for him getting the job.

That sort of consultation is the way these appointments work.

Indeed, Cavanagh's lack of popularity with National was due partly to the fact that the Labour-appointed RNZ chairman Brian Corban reappointed him for a five-year term close to the 2008 election, without the traditional thumbs-up from the National Opposition.

The long gap since Morrison's on-air past might also be useful.

Previously when talent has taken over the running of state broadcasters it has coincided with periods of deep ructions, such as when Ian Fraser was chief executive at TVNZ and Sharon Crosbie was in charge at RNZ.

This column has been amended after an item incorrectly suggested Saatchi & Saatchi was moving its head quarters to the Wynyard Quarter.

- NZ Herald

John Drinnan

Media writer for the New Zealand Herald

John Drinnan is the media writer for the New Zealand Herald. A business journalist for twenty years, he has been editor of the specialist film and television title "Screen Finance" in London, focussing on the European TV and film industry. He has been writing about media in New Zealand since the deregulation of the television industry in the late 1980s. He is focused on the business side of the digital revolution in media.

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