BotW: In the week Lachlan took control, a radio thesis; Paramount project gets bigger
Welcome to Best of the Week written in hotel rooms, planes, and back home this morning in beautiful Tasmania.
Today: Now Lachlan Murdoch is secure at the top of News Corp, a theory on what that could mean for the radio market. And big moves at Network Ten’s new owner.
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With Lachlan Murdoch’s future secured, the News Corp deal opens the door for a shakeup of the radio market
It’s been a week. It feels like an age since the radio ratings arrived on Tuesday morning. Since then, Mamamia, YouTube and Foxtel held their Upfronts, Nine’s value fell by a third; and a Paramount - Warner Bros Discovery marriage started to look like a real possibility.
The media story of the week, and perhaps of the year, though was the Murdoch succession.
Unless Rupert Murdoch lives until the age of 119 (which I wouldn’t entirely rule out), his succession plan for News Corp and Fox Corp is now locked in.
For some time the chosen one, Lachlan Murdoch is now also effectively the proprietor.
This week’s announcement maintains the status quo. The alternative, where a deal did not happen, would have been far more dramatic.
In that world, when Rupert eventually dies, his four voting shares in the family trust would have been cancelled out. The combined votes of James, Prudence and Elisabeth Murdoch would then have been enough to thwart Lachlan.
His tenure as executive chairman could have come to an immediate end, if his less conservative siblings chose to take the organisation in a new direction.
Now, Lachlan is secure for as long as he can stay on top of the large debt his new family trust has incurred to pay out his siblings. Like father, like son; more than once Rupert gambled the business on the next big move. Satellite TV in the UK or the American Fox empire would not have happened without staring down bankruptcy.
For the most part, it will be business as usual, which is to say that the remaining Murdochs will be looking for the next deal.
In the big picture, that’s likely to be another attempt to re-merge News Corp and Fox Corp. That deal was thwarted in 2023, but the question comes up at most News Corp quarterly earnings calls, and CEO Robert Thomson never shuts down the possibility of it being revisited.
I presume the bankers will already have developed a playbook.
A Nova Entertainment- Nine Radio swap?
And locally, it unblocks a route for an asset swap.
Outside of News Corp, Lachlan Murdoch owns Nova Entertainment which he bought from the Daily Mail and General Trust in 2012. Its easy-listening network SmoothFM is currently top station in Sydney and number three in Melbourne. And his Nova network is profitable across its four-and-a-half capital city network (the Perth station is a joint venture with ARN Media).
Meanwhile, Nine owns the talk stations 2GB in Sydney, 3AW in Melbourne, 4BC in Brisbane and 6PR in Perth. These conservative-leaning Nine Radio stations would be a much better fit with the world view of News Corp.
As well as its city tabloids and The Australian, News Corp owns Sky News Australia.
In the UK, Times Radio demonstrates that News Corp has an appetite for radio.
Meanwhile, Nine would fare better owning music-led FM networks like Nova and Smooth which map more closely to its favourite advertising demographic of 25-54. Nine Radio only contributed $9m to Nine’s profits in the last financial year. The last time Nova’s profits were reported they were $25m.
Last month’s suggestion that Nine might buy Southern Cross Austereo may prove to be a red herring. I have a hunch that Nine’s CEO Matt Stanton might prefer to avoid any additional exposure to regional markets if he could instead buy an all-metro network like Nova.
The succession battle was a barrier to that sort of deal. While Lachlan owns Nova Entertainment in his own right, his connection to News Corp meant that as far as the ownership rules are concerned, the Australian Communications and Media Authority viewed both entities as connected. The ownership limit is two licences per market.
That precluded News Corp from going after the Nine radio assets.
Yet Lachlan would have been foolish to fold Nova Entertainment into News Corp while he knew his siblings could remove him from the business.
That barrier is now removed.
If it happened, it would likely be a deal where Nine paid partly in assets and partly in cash, as Nova Entertainment is worth more than Nine Radio. That would also suit the newly debt-burdened Lachlan. And thanks to the Domain sale, Nine currently has cash.
Nine would get the four FM licences covering Nova in Sydney, Melbourne, Brisbane and Adelaide (and presumably the two FM licences for SmoothFM in Sydney and Melbourne).
I suspect ARN Media may have a change of ownership clause in Perth that could let it buy out Nova Entertainment if Lachlan sells. If so, ARN could then use the Nova-branded licence to instead network both Kiis and Gold into Perth (ARN also owns 96FM in Perth). Maybe Christian O’Connell wouldn’t have to be on digital-only in Perth after all when he goes national next year.
On the other side of the deal, News Corp would get the four AM licences covering the Nine Radio talk stations in Sydney, Melbourne, Brisbane and Perth.
Adelaide is a special case. Lachlan’s Nova Entertainment already owns AM talk station 5AA. So this could mean a five-city talk network for the first time.
Following the same naming convention as Times Radio, and renaming the network after The Australian, looks out of reach. The Australian Radio Network is a little too similar to ARN.
There would also be a loose end of the second set of AM licences owned by Nine and currently leased by Ace Radio - 2UE in Sydney, Magic 1278 in Melbourne and 4BH in Brisbane. Could Ace be a (presumably relatively cheap) buyer if News Corp didn’t want them?
As I said, this is all entirely hypothetical. I don’t have an insider tip. But it’s what I’d do.
That’s not all folks
Meanwhile, another media family is starting to make the Murdochs look like small fry. The wheels of global consolidation turned again on Friday. Credible reports suggested that David Ellison’s Skydance is aiming to buy Warner Bros Discovery. The WBD share price is up 55% this week, suggesting the market is taking it seriously.
Some way down the food chain in Sydney, that would have made for an interesting morning in Network Ten’s Saunders Street headquarters. Skydance completed the takeover of Ten owner Paramount just a month ago.
While Ellison’s appetite for owning non-US networks remains untested, assuming that Ten stays within the empire, such a takeover would remake the local media landscape in a number of ways.
Most immediately, the two streaming services of Paramount+ and HBO Max would likely merge into one much more comprehensive service. Game of Thrones, Star Trek, White Lotus, Dexter, the Yellowstone universe and so on. That would also include access to the movie output of two of the biggest US studios.
In the free to air world, Nine’s pipeline of Warner Bros TV content could dry up in the same way it did for Foxtel when Max launched locally. It would also likely mean the end of Nine’s sales representation deal for Max just months after it began.
And in the streaming and broadcast world, could WBD’s CNN make it onto one of Ten’s free to air channels?
In the bigger picture, it’s a further sign that Ellison intends to play hard. He already did a billion dollar a year deal for the US UFC rights.
The Ellison family has also previously been linked to a bid for TikTok’s assets. The US passed legislation to block TikTok from operating in America while it is in Chinese ownership. Donald Trump has kept extending the deadline for it to be sold. The latest extension expires this coming Wednesday.
David Ellison’s father’s Oracle provides much of TikTok’s plumbing and has previously been linked to a potential takeover of the social media platform.
Imagine the power of a local player that owned Ten, TikTok, CNN and some of the best movie content. Plus an appetite for sports rights. It would be a balancing local force to the influence of Google and Meta.
You certainly wouldn’t expect Ten to remain third in the free to air market for long.
Unmade Index rebalances
Nine’s share price bounced by 2.8% on Friday as the market continued to reevaluate the business after its sale of Domain. Nine closed the week with a market capitalisation of $1.8bn, almost a billion dollars less than the same time a week ago.
Meanwhile, Ooh Media gained 1.3% yesterday.
Audio rivals Southern Cross Austereo and ARN Media both had down days, with SCA losing 4.4% and ARN 2.1%.
Two of the more volatile stocks on the Unmade Index also gyrated. Vinyl Group lost 13% after gaining 15% yesterday. And Sports Entertainment Group gained 7.8% after losing 7.3% yesterday.
The Unmade Index closed up by 0.96% for the day, on 468.7 points.
In case you missed it…
On Tuesday, we shared more numbers suggesting big media companies are not practicing what they preach when it comes to investing in marketing through a downturn
On Wednesday, we looked at the radio ratings, with Nine Radio’s 2GB in trouble across its daytime schedule and Kyle & Jackie O edging forwards in Melbourne
On Thursday we reviewed YouTube’s Brandcast Upfronts event in which the company announced the arrival of ads which viewers cannot skip for a full minute
And on Friday it was time to look at Foxtel Group’s future direction under new owner DAZN. In summary: doubling down on sport.
More from Mumbrella…
Foxtel leans into sports and new advertising models at energetic upfront
Opinion: A tale of two very different upfronts: Youtube and Foxtel
Time to leave you to your Saturday morning.
If you’d like to hear a little more from me, I basically didn’t stop yapping this week. In last night’s episode of Medialand, on ABC Radio National, we talked about The Murdoch succession, the Foxtel Upfronts and a comprehensive academic project exploring trauma around media events.
Earlier in the week, I also chatted to Fear & Greed about the Murdoch family deal.
And on Wednesday’s Mumbrellacast we covered off 2GB’s bad ratings round, and Google’s Brandcast event.
It’s been a week.
Have a great weekend…
Toodlepip…
Tim Burrowes
Publisher - Unmade + Mumbrella
tim@unmade.media
