Irony bites the Packers as Crown follows Nine

There’s a fascinating irony in the way Helen Coonan has now been charged with saving the Crown casino group.

Then Communications Minister Helen Coonan with Eddie McGuire and James Packer in 2006.

There’s a fascinating irony in the way Helen Coonan has now been charged with saving the Crown casino group and so, also, James Packer’s billions — for she played a key, perhaps the key, role in creating both of them in the first place.

As communications minister in the Howard government, Coonan oversaw the changes in the media ownership rules in 2006 that enabled Packer to pocket $4.5bn free and clear — selling out of the Nine Network and embarking on his long-held dream to build the world’s biggest and best casino gaming empire.

Coonan’s changes, critically for Packer, scrapped the restrictions on foreign ownership of the free-to-air TV networks. The changes also could not have been more serendipitously timed. They enabled Packer to sell out at the very top of not just one market but two.

The main one was obviously FTA-TV. Packer sold — initially only half but eventually all of Nine — at a price that valued the network at a stunning $5bn. Kerry Stokes followed quickly in doing a similar deal at a similar value with Seven.

Add on, back then, a slightly less valuable Ten Network, and as we moved into 2007, the three networks were worth — correction, were valued at — something north of $13bn, an aggregate value never seen before, or since.

Yet it was exactly at that time, on January 9, 2007, when the late Steve Jobs unveiled the first iPhone, unleashing a series of forces and developments — the smart phone, the internet and fast broadband and, iconically, a company named Netflix — that would combine to destroy the lucrative three-quarter-century-old “licences to print money” of the FTA-TV networks.

Packer, and Stokes, were also selling at the top of another “market” — that for asset values generally spurred by the debt-funded buying frenzies of private equity. Packer partnered with CVC, Stokes with the original, and arguably still the best, KKR.

Little did anyone know, as we moved into 2007, the financial tsunami otherwise known as the GFC was formulating out there in the “proverbial Pacific”.

These deals were done late in 2006. Not much more than a year later, Bear Stearns effectively rang the bell when it collapsed as February turned to March 2008 — although it took until September and Lehman’s collapse to unleash the full force of the GFC.

But for Coonan and, critically, the timing of the media law changes, the “rest” — for Packer and for Crown — would have been a very different history.

The history that Coonan effectively bestowed was, for Packer, a rollercoaster of dizzying ups and downs through to this week’s regulatory denouement, as he set about trying to do with Crown — to “Crownise the world” — as John Elliott had tried to “Fosterise the world” back in the similarly heady days of the 1980s.

We saw Packer and Crown’s disastrous foray into Las Vegas, the partnership in Macau with Hong Kong’s Lawrence Ho, and finally the dream of dreams — Sydney’s Barangaroo.

Right now, Crown is back essentially to where he and it started in 2006, with its Melbourne and Perth casinos. Plus a six-star hotel in Sydney, with a lot of empty floor space.

That journey, crazy and ultimately circular, would not have been possible but for the change in the media laws that put $4.5bn into Packer’s pocket.

And which, in Packer selling Nine, set all sorts of other hares running that led ultimately also to a Packer-less Nine merging with the Fairfax print media group under the chairmanship of one of Coonan’s former cabinet colleagues, Peter Costello.

Could you possibly top this for irony of ironies?

For two decades, Fairfax journalists (and management) had lived in perpetual terror at what they saw as the inevitable prospect of first Kerry and then James walking in their door and sacking, if not the lot, then a goodly portion of them.

Yet, it would be journalists from the old Fairfax, operating within the corporate structure of Nine, always regarded as the Packer family company, whether listed or not, that would prove Packer’s nemesis in and around Crown — sparking as they did the Bergin Inquiry.

An additional irony — or, more accurately, counter-irony — is the way commissioner Patricia Bergin’s glowing endorsement of Coonan has vested in her almost absolute control of rebirthing Crown, either with Packer as the major but passive investor, or providing the foundation for him to sell.

Packer, son and especially father, had always been contemptuous of politicians. We have that vivid, literally moving, picture of Kerry confronting a (very) youthful Costello, and colleagues, at that parliamentary inquiry back in the early 1990s.

Yet, a quarter century later, it is Costello that got to have, so to speak, the last laugh — and got to have it, sitting, again so to speak, in Packer’s chair, as chairman of the “Packer family company” Nine.

And James’s fortune and future are now pretty much literally in the hands of yet another politician in Costello’s former colleague Coonan.

Both Bergin and NSW’s Independent Liquor and Gaming Authority chairman Philip Crawford have made it clear that there is a relatively straightforward path for Coonan to make both Crown and Packer “suitable” again for a casino at Barangaroo.

And where NSW goes, both Victoria and WA would quickly and smoothly follow.

Packer has moved quickly to facilitate that process by moving fully to passivity in his holding.

I have explained before that Packer abandoned his dream of global casino domination when he walked away from Ho and from Macau. I doubted that he would remain long-term as even an active controlling shareholder in what might be termed a “passive” Crown, limited to Australia and so hostage both to Chinese high-rollers and Macau.

That’s even more the case now. Just as the seemingly insoluble bond between Packer and Nine was dissolved, the same will ultimately also be the case with Packer and Crown.