Terry McCrann: Sam Chisholm proved his value in the billions
SAM Chisholm played a critical role in two specific situations — one for the Packers and one for the Murdochs — making billions for two great Australian media families in the process.
Terry McCrann
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SAM Chisholm has the unique distinction of having made billions of dollars for both the two great Australian media families — the Packers and the Murdochs.
Now, in the process, Chisholm, who has died at age 78, also made some serious money — but more in the millions — for himself; and ‘they’ — the late Kerry Packer and son James and Rupert Murdoch respectively — had a bit to do with the successes themselves of course.
And by that, as we will explain, I mean more than just ‘getting it right’, in picking Chisholm, giving him his head and backing him down the often very expensive nailbiting cliff-edge careering line.
But it was Chisholm who played a critical role in two specific situations — one for the Packers and one for the Murdochs — at both the strategic decision-making level and even more at the all-important operational execution coalface.
He also did so in situations that were half-a-world away in distance, in time, and even more critically in media dynamics.
He did so first, through the 1970s and 1980s, by turning the Nine Network into a profit-pumping machine for Kerry Packer when a free-to-air-TV licence really was a licence to print money — thanks to the intersection of government-mandated monopoly and technological reality.
Except, thanks to Chisholm who took Nine not just to ratings leadership but absolute ratings dominance and kept it there for more than two decades, Packer got to effectively also pocket a big share of the profits that Seven and Ten’s licences should have been printing for their owners.
This culminated, in the first instance, with the $1 billion-plus that Packer realised (in total, for not just himself, but all of Nine’s shareholders) when he sold Nine to his ‘one Alan Bond’ at the peak of the 1980s craziness in 1986.
In these days of $50 billion and more ‘new media titans’ like Amazon’s Jeff Bezos and Facebook’s Mark ‘Data’ Zuckerberg, that might not seem a lot of money. But back in 1986 a billion really was worth, well, a billion.
In some ways, the money Chisholm (helped) make for Kerry’s son James, second time round at Nine two decades later, was even more impressive.
Kerry brought him back in mid-2005 — ‘borrowing him’, so to speak, from the Murdochs’s Foxtel Pay-TV group — as de facto Nine supremo to refocus a flabby Nine which was facing its first serious competition from a resurgent Seven.
But when Kerry died at Christmas that year, son James moved immediately to sell the network.
As we know and as I discussed yesterday, James was intent on running a million — make that, a billion or actually five, as in dollars — miles from media.
His focus was gaming and global. His timing was exquisite. For the second time a Packer was selling the Nine Network, but this time for a value of $5.5 billion.
The timing was all James’s — just before the digital holocaust would start sweeping down on traditional FTA-TV (and print). Now, you’d be lucky to get a — tiny — fraction of that for all three FTA-TV networks.
But James was also effectively cashing in the underlying value Chisholm had built before 1990 and what he had set about doing since his cost-slashing return.
That adds a certain piquancy to the timing of Chisholm’s death, coming the day after the news broke of James walking away — albeit, presumably only temporarily — from the family company which used to sit at the top of the Packer media empire, through the lives of both father Kerry and grandfather Frank.
Making the timing even more exquisite, is that it comes just before the Murdochs cash in the even richer harvest of Sky pay-TV in the UK and Europe.
When Kerry snaffled Chisholm back from Murdoch in 2005, he was ‘repaying the favour’ of Murdoch luring Chisholm to Britain in 1990 to haul the ‘baby Sky’ — and indeed the entire Murdoch News Corp — back from the brink.
Chisholm hauled Sky back from deep in the red into profit — and today, serious profit — by securing movie rights at ‘sensible’ prices and even more, by locking up exclusive premium sport; in that case English Premier League soccer (oh, OK, football).
Another exquisite aspect of timing: if England wins the World Cup, you can mark up the value of Premier League broadcast rights.
Chisholm was actually only putting into practice what Murdoch had already so audaciously pioneered on the other side of the Atlantic in the 1980s.
When Murdoch made his extraordinary decision to create a fourth national FTA-TV network with Fox — that’s Fox Broadcasting, not the Fox News Channel; that would come later, in the mid-1990s — against the entrenched dominance of ABC, CBS and NBC, he shattered the cosy New York media by bidding premium sports rights through the roof.
At Sky in the 1990s Chisholm was replaying the tune; and Murdoch was backing him 100 per cent.
Just as James Packer did in 2006, Murdoch has now moved to, very profitably, partially cash in all that — facing the 21st century reality of Amazon, Apple, Google and Netflix — by selling the bulk of his 21st Century Fox arm of the empire to Disney.
A sub-component of that deal is Sky in Britain. Comcast has tried to (partly) spoil the Disney-Fox party by bidding directly for the 38 per cent Fox-owned Sky.
Fox is going to have to counter by making its own bid for Sky at somewhere north of $40 billion. It needs 100 per cent of Sky to deliver to Disney.
Chisholm would have died knowing that a chunk of that value was down to his work through the 1990s.
Murdoch incidentally, couldn’t be too unhappy at Comcast’s intervention. It also made a bid for the parent 21st Century Fox. That forced Disney to pay substantially more.
Originally published as Terry McCrann: Sam Chisholm proved his value in the billions