News National Costello ‘could decide future of Fairfax’

Costello ‘could decide future of Fairfax’

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Normally, in a well-functioning democracy, media companies try not to overly associate with political parties or politicians, such is the need for independence and neutrality in their storytelling or news gathering.

So just what is going on with this trend of Melbourne-based Liberal Party identities and venerable Sydney-based media companies?

First we had property developer, Rich Lister, former Melbourne Lord Mayor and former Liberal Party Treasurer Ron Walker being invited in to chair the “independent always” Fairfax Media between 2005 and 2009.

Costello is Nine’s new chairman
• Fairfax profit up 4.2 per cent on stronger real estate
The Age editor resigns in Fairfax restructure
Fairfax moves a step closer to ending print run

That didn’t end well but on Thursday Nine Entertainment Company announced that former Federal Treasurer and Liberal Party deputy leader Peter Costello is just the man to be their independent chairman going forward.

With the Senate soon to consider legislative changes that, if passed, would usher in a range of media mergers, Mr Costello is suddenly in the box seat to help reshape the Australian media landscape.

With Costello at the helm, Fairfax could be one step closer to ending the seven-day print run of its main mastheads.

For Nine, the most often mentioned dance partner is Fairfax Media. They run the Stan video-on-demand business together and both need to get bigger to ward off the neverending threat posed by the big gorilla of the Australian media scene, Rupert Murdoch’s News Corp.

We all know that the free-to-air television industry is structurally challenged by the internet, through a combination of new content providers like Netflix and alternative advertising platforms such as Facebook and Google.

However, free-to-air television is not regarded as structurally terminal like newspapers, which few can see continuing long term as a daily print proposition.

At some point, hard decisions are going to have to be taken, just as occurred last week in Britain when The Independent newspaper closed its print edition after 30 years.

It appears that News Corp, the world’s biggest commercial newspaper company, has lost its appetite for expanding its print footprint.

If you believe recent reports in The Australian, News Corp is attempting to sell The Sunday Times, its weekly title in Perth, to Kerry Stokes’s Seven West Media.

News Corp is also an influential 15 per cent shareholder in APN News & Media which this week announced it was trying to sell its stable of regional newspapers. Who would buy it?

Costello maintains he’s loyal to Nine. Photo: AAP

Which brings us back to Mr Costello and his attitude towards the print industry. If Nine and Fairfax merge, one of the key hard decisions to be made will be just how long The Age and The Sydney Morning Herald will continue to be printed seven days a week. It would have to be a major topic in any merger negotiation.

Who knows, one day in the relatively near future, it could even be Mr Costello presiding over the end of print at a combined Fairfax-Nine operation.

At least he is currently showing great faith in print, as one of his main gigs is penning a fortnightly column for News Corp’s Herald Sun in Melbourne and The Daily Telegraph in Sydney, as you can see on his personal website.

Frankly, I can’t see how the chairman of Nine, a major company capitalised at $1.3 billion, can simultaneously be a media commentator for a rival company.

I challenged Mr Costello on this point (plus his regular appearances on Ten’s The Bolt Report) at the 2014 Nine AGM in Sydney and he laughed it off by pointing out that he was loyal to Nine by being a regular on its various election night television broadcasts.

Peter Costello has made regular appearances on Network Ten’s The Bolt Report. Photo: Network Ten

There’s also the question of whether it is appropriate for a major media company chairman to be associated with a political lobbying firm.

ECG Advisory Solutions is a registered lobbying firm run by two former political staffers and Costello associates, David Gazard and Jonathan Epstein.

ECG stand for Epstein, Costello and Gazard, but the story goes that Mr Costello is only involved in the separate corporate advisory outfit ECG Financial, which doesn’t do any lobbying but is co-located in the same office.

Successful lobbying is often about perceived proximity to power, so this is not a good look. Given that a Fairfax-Nine merger requires legislative change from the Turnbull government, it is logical to appoint an influential former Liberal to try and help achieve the right result in Canberra.

Maybe Mr Costello could hire ECG Advisory Solutions to try and persuade the Greens, Labor or the cross-bench to abolish the current “2 out of 3” rule which is standing in the way of a Fairfax-Nine merger.

Communications Minister Mitch Fifield is pushing for an end to the "2 out of 3" rule. Photo: AAP
Communications Minister Mitch Fifield is pushing for an end to the “2 out of 3” rule. Photo: AAP

Two out of three bans a single company from owning a newspaper, television station and radio station in the same capital city. Communications Minister Mitch Fifield has announced he wants to abolish this but Labor Senator Steven Conroy is pushing hard to block the move as he fears it will lead to greater media power falling into the hands of Rupert Murdoch.

For mine, Mr Costello needs to make the jump and become a full-time professional businessman like other former senior politicians such as Steve Bracks, John Brumby, Nick Greiner, Mark Vaile and Lindsay Tanner, just to name a few.

He should stop being a political commentator and stop being indirectly associated with lobbying to influence the political process.

Chairing Nine is a big gig. Based on the figures disclosed in last year’s Nine annual report, his annual fee after being promoted to chair will soar from $180,000 to $425,000. And this is a part-time job!

Throw in the $200,000 from taxpayers for chairing the Future Fund, plus his parliamentary pension and surely Mr Costello doesn’t need to also be taking the coin of Mr Murdoch or doing corporate advisory deals with companies which could very well also have dealings with both Nine and the Future Fund.

Stephen Mayne was the founder of and is a City of Melbourne councillor who also dabbles in shareholder activism.


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