Cossie ethics, Qantas, Rupert rant, Nine MSN AFL internet rights
July 22, 2008
Here are Stephen Mayne's four stories from the Crikey edition on Tuesday, 4 April, 2006.
3. How ethical is Peter Costello?
By Stephen Mayne
Peter Costello is generally regarded as being pretty honest for a politician. Indeed, while John Howard has largely sacrificed his reputation through backsliding over issues like Tampa and kids overboard, the Treasurer has largely kept his intact – until now.
John Howard happily put one of his children on the political payroll and also took a consultancy from Clayton Utz while opposition IR spokesman in the early 1990s. The PM was also happy to bail out his brother's firm, National Textiles, in 1999.
In fact, the way the PM sent most of his former flatmates to juicy diplomatic postings and completely junked the ministerial code of conduct, suggested he was more from the Graham Richardson school of "whatever it takes" politics than most people realise.
It is hard to imagine Peter Costello committing any of these political sins – although his political integrity is increasingly coming under question. Firstly, there was the way he ducked and weaved through the Rob Gerard scandal. Sure, the RBA needed someone with a manufacturing perspective and Costello can't be expected to be across individual tax investigations. However, it was the dodgy arguments after the story broke that most raised questions about his judgment and integrity.
Costello's hard line against AWB and, to a lesser extent, James Hardie, is more in keeping with someone who has a strong moral code.
But where was that moral code when Qantas offered to upgrade three of his children from economy to business class for a flight from LA to Melbourne in January? To accept such a gift worth almost $15,000 just before Cabinet was to take a decision on Singapore's pitch to fly the Pacific route was no less politically inappropriate than Paul Lennon's five-star upgrade at Crown Casino last year.
The latest mistake was appointing one of his personal financial supporters, Jeffrey Browne, to the Future Fund board when the merit of such a move is genuinely open to question. Jeffrey who, you say? Exactly. Without contributing more than $17,000 to the Higgins campaign we very much doubt Browne would have got the gig.
As someone considering a serious tilt at the Victorian Parliament later this year, I can vouch for the fact that the whole question of political fundraising is very ethically challenging.
Witness the attacks on Petro Georgiou covered by Glenn Milne in The Australian yesterday for supposedly not raising enough cash in Kooyong. Cash is usually king in political elections – just ask the Tasmanian Greens. Therefore, it must get mighty tempting for politicians to start dishing out things of value to those who financially support them.
Tony Blair's outfit is now up to its eye-balls in the loans for peerages scandal and I've no doubt there has been a strong correlation between Liberal and Labor donations and both Australia Day and Queen's Birthday gongs dished out by the Hawke, Keating and Howard governments over the past 23 years.
However, when it comes to personal benefits and political fundraising, an honest church-going politician like Peter Costello simply has to hang tough by his moral code to keep his hard-won political reputation for honesty intact.
It is sad to see the standards drop and Peter Costello in 2006 is clearly not the same Treasurer who in his first two years in office rejected lobbying efforts by his best mate, Michael Kroger, on two occasions when he booted Solly Lew off the RBA board and rejected NAB's attempts to break down the Four Pillars policy and buy either ANZ or Westpac.
This sent a message to everyone that paying Kroger was no guaranteed ticket to ride with Costello. Maybe NAB and Solly should have written out a cheque for Cossie's re-election campaign or helped fund a family holiday to Disneyland.
4. The consumer cost of protecting Qantas
By Stephen Mayne
Has anyone calculated the size of the benefit that Qantas conferred to the Costello family when three of the Treasurer's children were upgraded to business class on a January flight from LA to Melbourne?
A legal eagle has kindly done the numbers for us and takes up the story:
I went to the Qantas site and searched for the lowest Qantas business class fares for return flights from Melbourne to London (competitive route) and Melbourne to Los Angeles (non-competitive route). I picked flights departing on 1 November 2006 and returning on 21 November 2006 because those dates were not school holidays, were sufficiently advanced to get the cheapest advance fares and the period away was sufficiently long to also ensure the cheapest flights were available.That's a very nice 36.7% premium passengers pay to fly the non-competitive Melbourne-LA route which goes straight to Qantas profits. In those circumstances a few upgrades for the Treasurer and his family seem a very good investment.
The cheapest Qantas business class fare on the Melbourne-London route was $10,981, for LA it was $11,322. Where it gets really interesting is when you look up the air distances to those two cities – 16,939km to London, 12,791km to LA and then convert those fares into cents per km:
Melbourne – London return business class: 32.4 cents per kilometre
Melbourne – LA return business class: 44.3 cents per kilometre
In terms of the benefit conferred to the Costello family, we're talking almost $15,000. The Qantas website is currently offering an economy return flight from Melbourne to LA for $1448 if you're flying between April 4 and April 23. That makes a one-way leg worth $724, far below the implied one way price of $5490.50 as calculated by our legal eagle.
Therefore, out Treasurer benefited to the tune of $4766 for each of his three children, or a total of $14,298. Nice.
It would have been so easy to decline the upgrade and leave the kids in cattle class but at least the Treasurer didn't accept the upgrade and then fail to disclose it, as so many have done before.
However, if Singapore Airlines was competing on the route, the Costello family might have been able to afford to pay the extra $10,000 or so to upgrade the kids. Ah yes, the benefits of competition.
15. Guess who had to sit through a Rupert rant?
By Stephen Mayne
Being related to Rupert Murdoch has never been easy given his controversial corporate and editorial behaviour over the past 53 years but the extended family is not often present when a major attack is launched.
Last Thursday night, I was one of four speakers in front of 500 punters at an event called The Thinking Games at RMIT's Capitol Theatre opposite the Melbourne Town Hall. While Australian Conservation Foundation executive director Don Henry covered the environment and Melbourne University's Department of Medicine chief, Professor Graham Brown, dealt with the issue of public health, my designated topic was "the media and corporate governance".
Thinking it was a fairly left-leaning academic audience, there were no holds barred and my designated ten-minute spot turned into the biggest public spray I've ever given the Murdoch and Packer empires. The context was the proposed relaxation of Australia's media ownership laws and some of the points included the following:
- Australia's two richest families have hurt Australia's democracy and held us back as a nation and they both happily trade political endorsements for commercial gain, which is a form of high level corruption;
- The Hawke Government let Murdoch take over the Herald & Weekly Times after The Herald's capital gains tax campaign. Ironically, it was the government-owned Commonwealth Bank which argued most strongly in favour of Rupert retaining the empire during the 1990-91 debt crisis;
- Keating and Murdoch did a cosy Foxtel deal that ended up costing taxpayers billions;
- Journalism is one of the most noble professions but neither the Murdoch nor Packer family is fit to be in charge of it;
- Murdoch degraded British society with The Sun, degraded US journalism with Fox News and has blood on his hands over the Iraq war as he had the power to stop it from happening, particularly in the UK and Australia;
- Rupert is running an outrageous gerrymander with News Corp's two-tiered voting system and the poison pill is an absolute disgrace because it enshrines his control no matter how bad his performance;
- Rupert's outlets lecture people about democracy and fair elections but out of my 22 public company tilts, only News Corp completely censored the platform, refusing to even tell shareholders my age.
18. Why NineMSN is offering big dollars for the AFL internet rights
By Stephen Mayne
Telstra had until the end of March to strike a new deal with the AFL on internet rights but the silence means it is now open to rival bidders and Australia's most popular football code could be about to see a substantial increase on the $5 million a year that the telco was paying.
The AFL is shopping around its internet rights from 2007 covering 3G, broadband, live, delayed, downloadable games and downloadable archival matches which might all be sold off separately. Telstra paid $20 million for the rights from 2002 until 2006 but media buyer Harold Mitchell has gone public predicting the new deal could fetch $100 million over five years.
So who has come in with some very serious enthusiasm and dollars? Crikey hears it's none other than the Microsoft-PBL joint venture, NineMSN, which itself is up for renegotiation next year. James Packer and Telstra CEO Sol Trujillo have been meeting and getting on swimmingly of late, so don't be surprised if Telstra joins the NineMSN bid to reinvigorate the pretty ordinary service it has provided AFL club.
The rationale for both Nine and Microsoft is defensive and quite compelling. Microsoft wants to prevent Apple's iTunes from being able to offer football as convenient podcast downloads. In the US, iTunes offers all major sports shows and match replays as downloads and podcasts, whereas iTunes Australia lacks this killer application.
It would also mean Microsoft could maintain its Windows Media as the default media format, as opposed to the much better (and iPod compatible) Apple Quicktime Format or RealPlayer format.
Microsoft is feeling very threatened by Apple's ascendency in content delivery, which is why some observers believe they are looking to buy Bertelsmann's 50% stake in the Sony BMG joint venture. Microsoft would love to control half of this massive music company and therefore define an online strategy that excludes iTunes, thereby making the music store less attractive.
Nine wins because they can maintain a foothold in AFL, keep their talent, have their own productions and sell AFL to their advertisers – in the new medium which is catching up with free-to-air television and pay-TV at a rate of knots.
Rupert Murdoch is feeling similarly threatened by Steve Jobs. Has anyone else noticed that ABC, NBC, MTV Networks and Showtime all have programs on iTunes in the US, yet News Corp has launched its own poor man's version of iTunes called Mobizzo through US phone companies? Maybe Rupert should just pay Jobs his fee and be done with it.
To see how backward Australia is, just check out the video section of the Australian iTunes site which doesn't have much more than self-licensed Pixar material. This largely reflects the conservatism and power of Australia's broadcast networks and program makers who have not yet embraced iTunes for Australian content, partly because our broadband is so slow.
Seven and Ten will presumably want to ensure that this continues with its new AFL broadcast rights deal, but the NineMSN approach raises plenty of interesting questions. For instance, what would a big NineMSN play for the AFL internet rights mean for its commitment to Fox Sports sharing the burden of Seven-Ten's over the top bid for the free-to-air rights?
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