Monday, April 28, 2008

How the West was WAN: A Tale of two Stokes

On Thursday a media billionaire named Kerry Stokes missed out on ownership of the unfashionable West Australian newspaper. Two days later, a goal for Hull against Crystal Palace denied a football team from unfashionable Stoke gaining automatic promotion to the billion-dollar English Premier League. While they are both disappointed in their unrelated ways they haven’t quiet got what the wanted, it seems likely that both Stokes will eventually achieve their ambition sooner rather than later.

Stoke is one of England’s poorer cities. Your house is less likely to be robbed than elsewhere in the UK but “violence against a person” is almost twice as likely in Stoke as elsewhere. The reasons for this may or may not be explained by the fact that while men are just 47 per cent of the population of Stoke but they are 52 per cent of those under twenty. 30 percent of all children in Stoke are likely to live in families on out of work benefits. The unemployed rate is slightly higher than the national average and you are one and a half times more likely to be disabled or permanently sick in Stoke but there is nothing special about the number of retirees.

However if you believe the “Jobs and Careers” section of the City of Stoke-on-Trent’s website, the council is “leading the transformation” of “a rapidly changing city that has a proud past and a very exciting future”. But the reality is this Staffordshire town halfway between Birmingham and Manchester remains neither here nor there, neither Northern fish nor Southern foul and relies on its football team to provide a bit of passion and pride in the city. Championship team Stoke City’s 1-0 win at Colchester on Saturday leaves them just a point away from football in England’s top flight and the kudos that brings.

For a team over 20 years out of the top division – and never in the money-rich Murdoch era – this is a return to the brief glory years of the club. Stoke City have never won the league but was at its strongest in the early 1970s. They pushed the then mighty Arsenal to two successive cup semi-final replays and in 1972 they won their only ever trophy, the League Cup. Things went bad in the eighties and they were relegated from the old First Division in 1985 with a then record low points (about to be demolished by Derby). With a succession of bad management, they have languished in the lower division until their unlikely breakthrough this season.

Western Australian Kerry Stokes has rarely been associated with bad management and he also is unlikely to be a Stoke fan despite the name. His Seven TV network is more associated with the power of AFL rather than football. Stokes built his media career in the West of Australia buying a station in Bunbury. He then established himself in the national capital Canberra before Stokes bought stakes in the major networks in Adelaide (Seven) and Perth (Ten). His blessing was to get out before the 1987 crash when he sold his assets to Frank Lowy. In 1996 a cashed-up Stokes acquired one fifth of Channel Seven in the five major capitals. He slowly grew that to half a stake and bought a third of Sky news. With almost total penetration through his TV interests, Stokes has now become a very powerful player in the Australian media scene.

In his home town of Perth, Stokes wanted to go one step further and buy out the city’s only newspaper, the West Australian. Stokes already owns 19.4 per cent of WAN hampered in the past by Australia’s fairly stringent cross-media laws that didn’t permit a TV owner to control a newspaper. But after the former Communications Minister Helen Coonan loosened the laws under the Liberal administration, the way was clear for Stokes to gain a monopoly on media opinion in his home town.

Early this year, Stokes made his move on the West. In February he announced he was appalled at the lack of leadership in the current board. He announced he expected to win two seats on the board of West Australian newspapers. But the board doesn’t want him to take over, not because of concern over media ownership but because the canny businessman in Stokes doesn’t want to pay a premium for the price of owning the news outright. If Stokes meets the board’s asking price, he will take over.

In the meantime, there is shadow play. When the current board said they would rather resign en masse rather than allow Stokes control it, he called it “suicide pact theatrics”. He is probably correct. The board is bluffing against Stokes' ambition. Kerry Stokes has made no secret of why he wants the West. He said the paper has “always been the central point of conveying on news and current affairs to West Australians”. Stokes went on: “It holds a very special place because it’s a monopoly and a responsibility,” he told the (Murdoch owned) Australian on 17 April. He went on to say why the responsibility of owning a monopoly attracted him: “I find that near and dear: to be able to perform in the manner in which it should”.

For now, Stokes won’t be able to do that. Despite wanting to invest $500 million in the company, the majority of the Western Australian News’s shareholders voted on 23 April that the board should remain intact. 60 per cent of the vote went against Stokes. However as much of that 60 percent was tied up in interests belonging to WAN chairman Peter Mansell, it may not take much to change the outcome. Mansell came out of the shareholders’ vote to say "We have a 20 per cent shareholder, we're going to try very hard to work with him, we are going to try to find the accommodation.”

It is debatable to say how soon Stokes will be accommodated at WAN. Stokes may not match Mansell’s asking price before Stoke City win promotion to the Premier League this weekend. They just need to avoid defeat at home to Leicester City this weekend or hope Hull fail to beat Ipswich. Then it’s the nirvana of Murdoch’s big money in the Premier. Stokes is after Murdoch’s money too, outright victory in Perth, Australia’s most vibrant capital economy, will provide a severe jolt to Rupert’s desire to own the Australian media outright.

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