Why Kerry Stokes is not really leaving Seven Group

Kerry Stokes is stepping down as chairman of Seven Group. Picture: David Moir

The big decisions and the big dollars are in the Seven Group overall parent company. The fun and games – and the direct political influence – are in the 40 per cent owned Seven West Media.

These realities go a long way to explaining the move by Kerry Stokes to step away from being not just executive chairman – effectively ‘CEO-in-chief’, with his son Ryan as the actual and operational CEO - but as chairman entirely of Seven Group.

While yet, staying on as - non-executive – chairman of the media company, which is not only of course the operator of the Seven Network, and with Nine the two dominant players in FTA-TV, but holds a lock on major media in Perth.

Seven has always been and remains the all-dominant FTA-TV station in the one capital city, as we’ve discovered over the last 18 months, that is so utterly separate from the rest of Australia.

It also owns Perth’s one newspaper, The West Australian: a dominance in a single city like no other in Australia, courtesy of a very generous, supposed competition czar, ACCC.

Now the retirement process for long-time entrepreneurs usually happens in the other direction.

They tend to step down from executive roles, maybe moving through executive chairmanship of the parent company to becoming ‘just’ the non-executive chairman.

That though, leaves them sitting at the head of the boardroom table, with – most crucially - the keys to the boardroom in their pocket. Ahead of exiting entirely and/or selling the company.

Billionaire Kerry Stokes. Picture: Colin Murty The Australian

All that’s exactly what Frank Lowy did at Westfield, the multi-billion dollar company he started as a sandwich shop in Western Sydney in the mid-1950s.

Now if Kerry was stepping away entirely from Seven Group – the basis of his wealth and influence, his billionaire status – while staying at Seven Media, that would be unusual,,

He’s not; he continues in an “advisory capacity” at the parent Seven Group.

So, he steps away from the formal role, and these days all the regulatory baggage that goes with it – long-time former Coca-Cola Amatil CEO Terry Davis, who has been with Kerry on the Seven Group board since 2010 – becomes non-executive chairman.

It would be taking things too far to suggest the leadership thus becomes a sort of triumvirate. No, Davis will be a real chairman, son Ryan a real CEO. But the guy who created, built and controls the major shareholding in the company will still “be in the room” when – he thinks - necessary.

He will certainly be in the room, at the head of the table and with the keys to the boardroom – and to the CEO’s office – at the media company.

Unlike a Rupert Murdoch or the other Kerry, Packer, this Kerry did not have media in his blood. But he’s got it now.

He came in at the tail-end of all the media shuffling from the 1980s. In various deals, he was around to buy a media property when a buyer was needed.

He got to like being a media proprietor, especially becoming dominant in his home town.

At the parent Seven Group, though, he has a serious – as in multi-billion dollar – interest in what happens to the now 70 per cent owned Boral and to what will be a $3.5bn pile of cash inside Boral.

In balance sheet terms that cash will be fully consolidated in Seven Group – to mostly offset the $4bn of extra debt to build the Boral holding.

But in real terms, the Boral cash stays – separately - inside Boral, until it is either distributed to shareholders or used for acquisitions or consolidation.

I suggest the “advisory consultant” will play a major role with the Seven Group chairman and CEO in deciding where and how it goes. Much of it will end up inside Seven Group.