James Packer’s secret weapon for Ten – Harold and The Big Banana
In the excited coverage of James Packer’s move on Network Ten, there’s been a slight air of puzzlement.
What is it that makes it so attractive to Packer?
The answer, I submit, is the Big Banana factor.
The clues come in Harold Mitchell’s bio, which was published last year.
Mitchell, as most will know, is the boss of Mitchell Communication Group, which is Australia’s single biggest media agency with a spend of more than $1bn. It’s also in the process of being bought by Aegis. Harold will remain at the helm, but with the additional spend of Carat and Vizeum under his control too. Admittedly it’s not quite as big as the Group M agencies’ joint spend, but it’s a big chunk of the market.
Historically, in the three-way battle between Seven, Nine and Ten, Harold’s given Ten little love.
Indeed, in Living Large, Mitchell describes it as a “feud”.
He explains: “This one goes back to the heady 1980s, when Frank Lowy bought the Ten Network for the eye-watering sum of $842m.”
Lowy’s son Peter and Harold fell out. “Peter felt we weren’t sending enough business the way of the Ten Network. He believed we favoured the Nine and Seven networks, which were usually the ratings winners. This strategy had served us well over many years.
“Peter launched into me. He said Ten wanted 25 per cent of the money we spent. We were spending 15 per cent with Ten.” (By way of comparison, across the market as a whole, Ten currently gets roughly 28%.)
The row escalated and Frank Lowy joined in.
Mitchell reveals that his no-love-for-Ten policy continued even after the Lowys bowed out, and into this decade: “The incident began something of a feud with the Ten Network. And between John McAlpine and me. John was the Ten Network’s sales director when Lowy bought Ten. He became Ten’s chief executive in 1997, a position he held for eight years.
“Overnight we reduced Ten’s share of the advertising budget. John McAlpine never understood why I did this.”
McAlpine, reports Mitchell in the book, “wouldn’t let things slide”.
Evetually the pair had breakfast. “McAlpine started to speak very badly of (Seven boss) Kerry Stokes. It was quite personal. I liked and respected Kerry Stokes, and I wasn’t happy with what was being said. I felt it was unnecessary and disrespectful.”
Mitchell walked out and the feud with Ten continued.
Which is where the Packer family comes in.
James’ father Kerry Packer saved Mitchell from bankruptcy.
Elsewhere in the book, Mitchell reveals that in 1987 he took the disastrous decision of investing in The Big Banana tourist attraction in Coffs Harbour and a series of other businesses. Two years later he was $32m in debt.
Even after working out a repayment plan, he was in trouble, until Kerry Packer rang up and offered a $1.9m loan, something Mitchell says in the book he will never forget.
That in itself would be enough to expect to see Mitchell return the favour he clearly feels he owes the family, but it goes further. He also points out in his book that James Packer was an investor in eMitch, the digital agency he launched in 1999 which eventually became the vehicle for floating Mitchell & Partners on the ASX.
And guess who else invested? Lachlan Murdoch, who was running News Ltd locally at the time. The same Lachlan Murdoch who seems set to join Packer in the Ten adventure.
Lachlan Murdoch is already perceived by the market to be unafraid to ask for extra share.
When Mediacom lost DMG (which Murdoch owns half of) to Universal McCann as a client recently, a source within Mediacom insisted to me it was after a meeting in Melbourne where Murdoch had aggressively demanded the agency shift more spend DMG’s way. (It’s a version of events rejected by DMG, by the way).
Put Packer and Murdoch both on the shareholders register at Ten though and it would be amazing to think they would not get better treatment from Mitchell then Ten currently receives.
Looking at the first six months of 2010, according to Free TV Australia, the market as a whole gave Seven 38% share, Nine 33% and Ten 29%.
Considering the TV market is likely to be worth about $4bn in 2010, a 1% shift toward is worth $40m in a single year. And of course, any increase in spend doesn’t have to come at the expense of Nine and Seven – it can also come from other media sectors.
I wouldn’t be surprised if bailing out Harold’s Big Banana adventure may turn out to be the best $1.9m the Packers ever spent.
Tim Burrowes
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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$40 isnt a lot
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A fair point. Now amended to the slightly more substantial $40m…
Cheers,
Tim – Mumbrella
Bought Harolds book the other day. The hardcover version. For $2.95! It’s already remaindered so mustn’t be selling very well.
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Tim,
Are you suggesting people in the Australian media industry take large financial decisions based on who their friends are?
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Hi Glen,
Yes. Yes I am.
Cheers,
Tim – Mumbrella
You’d be happy as a mitchells client that your ad dollars are placed based on school girl like fueds “he said this about my mate and I walked out”, “he invited me to his party and so I’m going to invite him to mine, you’re not coming”
Ridiculous
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and media companies pretend to be professional….
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Carrob; i’d be surprised if U oicked it up for $2.95. Pray tell me, and I will go and pick up a quantity to give out to “youngies” starting out today; as it woul;d have to be the best “Industry and Life lesson” they would ever get.
And it would be a pleasure so to do.
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Nice one Tim.
Media has always attracted moguls and entrepeneurs; and why not, the fundamentals are great; self-regulation (ie as little as possible), Government protection (e.g. sports anti-siphoning, limited number of broadcast licences), Politicians suck up to you, models everywhere etc etc…
To the question, is Mr Packer’s investment in Ten a bet on a company with an under-valued share price? Why has no-one considered the potential for all the casino/gambling related game shows that Ten could run (perhaps on a second digital channel) with all the web and telephone betting services… if Live Poker is classified as a “sport” by ACMA and added to the FTA’s Anti-Siphoning Sports list, you’ll know what the chat between Minister Conroy and Mr P behind the curtains at the ASTRA awards was about…
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I can’t believe Mitchell was so stupid to reveal this – or is it hubris? And for years they professed their independence all the while owing Packer money – I wonder how many advertiser clients he disclosed this to at the time as he placed their money with 9 or ACP?
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Nice work there Tim. The favour was somewhat repaid last week when Harold got a board seat on Crown Casino.
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No ones mentioned the elephant in the room. The big fella got $32m into debt investing in things like the big banana.
And this is one of the greatest business men in Australia yeah?
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@Tim – to suggest the principle reason or even a significant consideration in the decison to buy into 10 was that Mitchells would substantially increase their spend is I think pretty silly.
The potentail impact of one agency’s slight adjsutment of media budget would be trivial compared to the value that can be achieved by changing the content and management strategy of the network.
However , having made the decision to move on 10 – no doubt having run the wisdom of it by Harold – you can be sure JP would have quite rightly expected a jump in Mtchells clients budgets.
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Yes I picked ithe book in Perth for $5 about 6 months ago, and enjoyed the read
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Hi Gezza,
I’m not suggesting at all that that’s the main reason for investing. But what I would argue is that by being a Packer, he has an immediate ability to unlock ad dollars that others would not. That makes it a better investment for him than it necessarily would for others.
Cheers,
Tim
@anon You can pick up Harolds masterpiece for $2.95 at the bookshop, and I forget the name of the place, but it’s the bookshop on the Broadway side of that long tunnel that goes under central station and comes out on the Chalmers street side of central.
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Banana? Does that mean James P will start eating healthier food?
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So much for the big banana theory – even though it was fun at the time. Block the buyout more like.
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Fat Harold (he’ll always be that to me) is a smoke screen.
His board seat and media influence has not bit of influence on the main game here. As heard at the Gym first hand from a JP confidant.
Jnrz Packer and Murdoch have long dreamt of a new billion dollar business enterprise that they could pioneer far from the paths of their fathers. One Tel was a clumsy first attempt.
What they are chasing the 10 control for, rests with a much greater global ambition, and one that could well make them more weAlthy than their dads.
Jamee knows television and gambliing.
Lachlans camp owns FoxSport and it’s Content.
Add into the mix of digital, And you have a burgeoning global virtual sports gambling business. And I am talking hi tech, where you can “line bet” on any aspect of any sports event. Next serve, in or out, next ball hit for 2 or 4, you name it. And delivered by the WWW to any digital device.
It will make casinos and tabs look like Gutenburgs printing press . Now wonder Jamee is out grinning and smoozing politicians.
Or maybe scientology told him to do it.
Watch this space.
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