How Packer slipped on Fairfax

It is 15 years since Kerry Packer withdrew his bid for Fairfax newspapers. Few if any media issues in Australian history have ever provoked such a widespread and strong public response as Packer's bid to buy 14.99 per cent of Fairfax as part of the Tourang syndicate he had organised with the (now disgraced) Canadian press proprietor Conrad Black and the American private equity group, Hellman and Friedman.

Gough Whitlam and Malcolm Fraser had barely spoken to each other in the 16 years following the vice-regal dismissal of Whitlam's Government in November 1975, but in 1991, for the first time ever, they shared a political platform to oppose this threat of yet further media concentration.

Both signed a protest letter, organised by former National Party minister Peter Nixon, and also signed by his former leader Doug Anthony, as well as a range of former senior politicians. Large rallies were held in Melbourne and Sydney.

All concentrated on the negative consequences for Australian democracy, which with Murdoch's domination already had the most highly concentrated press ownership in the democratic world. But there is no doubt personal antipathy to Packer himself also played a major part.

As his biographer Paul Barry reported, Packer “appeared to hate journalists, had a record of punching cameramen, and was ever ready to sue reporters who wrote about him”. At times, he had been an interventionist proprietor, who enjoyed throwing his corporate weight around, and who sometimes had compromised journalistic professionalism.

Realising that he was losing the public relations war, Packer appeared on his channel's A Current Affair, where he said the idea of owning part of Fairfax amused him.

Members of parliament were less amused. The following afternoon a bipartisan petition gathered 128 signatures of the 224 federal MPs within a matter of hours.

Public opinion itself was insufficient to stop the bid, but it was becoming increasingly unpalatable for the government to do nothing. The Hawke Government called on a House of Representatives inquiry (in which, in contrast to a Senate inquiry, it could still control the numbers).

Packer appeared before the committee, an appearance televised live and which has entered Australian folklore. Viewed retrospectively, many of his assertions were at the least questionable, playing to populist prejudices, but more than the content, it was the commanding tone that impressed. He overwhelmed the MPs' questioning by both fair means and foul, simply ruling some areas out of bounds, for example, and sometimes treating elected representatives with contempt.

Paul Barry concluded that “Packer was not just frightening, he was frighteningly smart. As a public performer he was quite breathtaking.” Indeed, it was such a riveting performance that it was mentioned many times in the paeans of praise following Packer's death, and surrounding his memorial service. None of these, however, commented how just three weeks after this apparently wonderful performance, Packer had to abandon his goal for Fairfax.

When the chairman of the Australian Broadcasting Tribunal, Peter Westerway, appeared before the same committee a few weeks later, he announced an inquiry into the takeover. The inquiry was into whether as a member of the Tourang syndicate Packer would be in a position to exercise some control and so be in breach of the cross-media laws.

Two days after Westerway's statement, Packer announced his withdrawal from the bid.

In crucial ways, Packer had mismanaged his bid. Apart from the issue of media monopoly, and hostility based upon his own record, Packer's major political problem was the central involvement of two people perceived to be doing his bidding. The Tourang consortium's designated new chief of Fairfax newspapers was Trevor Kennedy, who had worked for the Packers for almost two decades. Also publicly prominent was Malcolm Turnbull, who had worked many years for Packer before becoming a merchant banker.

Ironically, despite the public perception that these two were Packer stooges, what eventually caused Packer's failure was the internal pressure put on them, and Packer's failure to support them. The two executives from Tourang's foreign companies, Brian Powers and Dan Colson, took command of many aspects of the bid, and sought to overturn agreements Packer had earlier reached with both Kennedy and Turnbull. Packer conspicuously failed to stand up for them.

The first to go was Kennedy, who unexpectedly resigned in mid-October. Publicly he blamed the “McCarthyist” campaign against Packer, but this hid the tensions inside the camp, which were the real reason for his departure.

Turnbull was involved in the bid because of a shrewd tactical move he had made. As Fairfax, sinking under the self-inflicted debt incurred by Warwick Fairfax's privatisation, slid towards bankruptcy, it had sold junk bonds in the US. Turnbull saw that this group was a key to future control of the company, and he had the entrepreneurial vision and energy to secure control of them. He teamed up with an initially reluctant Packer and the other Tourang partners.

Like Packer, Turnbull had been vocal in expressing what he saw as the shortcomings of Fairfax journalists. The other Tourang partners saw Turnbull as a political and management problem. At the parliamentary inquiry, Packer had been insultingly dismissive about his participation, saying there would be no future role for him, except that he desperately wanted to be a director of Fairfax.

When the Tourang partners were putting pressure on Turnbull in November, Packer refused even to return his telephone calls. Turnbull later told Four Corners that he no longer considered Packer a friend, that Packer's behaviour had ended 17 years of friendship. Eventually Turnbull resigned.

Westerway's appearance in Parliament came a few days later. What sealed Packer's fate in the announcement of the inquiry was the precision with which Westerway identified the documents the tribunal would subpoena.

Kennedy had made notes at key moments during the enterprise, including a long record straight after his resignation. These notes revealed that privately Kennedy had the exact opposite understanding of Packer's role from what he (and Packer) had said publicly, including to the inquiry. In Kennedy's notes, Packer did intend to exercise control.

It was clear that Westerway must have had an internal source to know these documents existed. He has refused to publicly identify this “prominent public figure”, except to say it wasn't Kennedy. In addition to Paul Barry's account of these events (The Rise and Rise of Kerry Packer), Neil Chenoweth's recent book (Packer's Lunch) adds some graphic detail.

Westerway waited in a parked car in a darkened street in North Sydney on a Sunday night to meet this source, who had said that “he, his wife and his family were all at risk”. In these melodramatic circumstances the key documents were handed over. Having received them unofficially, Westerway was able to demand them officially to use as evidence.

Although not identified by Barry and Chenoweth, the circumstantial evidence clearly points at Malcolm Turnbull, a prominent public figure, with inside access, who had resigned the day before.

According to Barry, Packer later accused Turnbull and Kennedy of “treason”. Rather the whole attempt, and its failure, betrays more of his born-to-rule arrogance, and his dishonesty.

Three weeks earlier, he had emphatically and repeatedly denied to the parliamentary inquiry that he would exercise any control over Fairfax. You are either going to have to believe me or call me a liar, he said. It was riveting television, silencing his questioners, and spoilt only by the fact that he was lying.

Moreover, just three weeks later, he was effectively caught out. Luckily for him, the extent of his dishonesty never came into public focus. But the tribunal's demand for the key documents was enough to undo him.

When Packer's hagiographers talk of his triumph before the parliamentary committee, it should be recalled that it was no coincidence that three weeks later, his quest for Fairfax ended in failure.