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


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