Much has been written about the death of Sam Chisholm, 78, storied media executive who was head of Kerry Packer’s Channel 9 at its zenith, and sealed the dominance of Sky in the UK for Rupert Murdoch.
But it was Chisholm’s role on the Telstra board where, instead of helping Australia’s media landscape adapt to the digital wave beginning to overwhelm it, he made sure it stayed exactly the same.
In executing a one-two punch of remarkable corporate bastardy at what was then Australia’s largest company, he sent ripples through a now much-changed media-comms sector still being felt at the time of his death.
Joining the Telstra board in 2000, Chisholm was installed immediately as chairman of Foxtel and was instrumental in giving Foxtel its pay TV monopoly, stitching up a deal with underfunded, poorly managed rival Optus Vision.
All the while, he was not keeping his eye out for Telstra shareholders but the interests of Australia’s media mavens Packer and Murdoch, who had had made him rich and powerful. After a remarkable double lung transplant and recovery in 2003, he was back in business: leaking to then Channel 9 business reporter Ross Greenwood in February 2004 about a potential tie up between newspaper group Fairfax and Telstra’s Sensis directories business.
Telstra chairman Bob Mansfield denied that Telstra wanted to buy Fairfax, but told the ABC that the board wanted to see if there was a structure for “doing something with Fairfax that made sense”.
The media at the time was outraged: a majority government-owned company trying to do a deal with a venerable private media company. With the benefit of hindsight, that could have released value for Telstra shareholders from Sensis, then worth billions of dollars, churning $1.5 billion in revenues and $600 million in margins, before its value collapsed. Only a decade later Sensis was sold to private equity for $454 million.
Without Chisholm’s actions, Fairfax may have had the chance of a digital future with Sensis technology expertise.
Shortly afterwards, Chisholm lead a board revolt against Mansfield so vicious it lead Mansfield to say something almost unthinkable for an Australian board director: “The bond of trust necessary for the board to operate effectively has been ruptured”. This inevitably lead to the sacking chief executive Ziggy Switkowski.
Mansfield’s replacement, Donald McGauchie brought in little known US telco exec Sol Trujillo as his CEO. Chisholm quickly left the board but McGauchie and his cabal of co-conspirators allowed him to remain chairman of Foxtel even when, in September 2004, he rejoined the board of Packer’s Public Broadcasting Limited. This meant Packer, who didn’t have any thing to do with the creation of Foxtel, had his man at the top.
The Trujillo story barely needs retelling — big talking, he brought in dozens of carpetbaggers and consultants who ripped hundreds of millions in fees and salaries out of the company. He picked a fight with the government, cut the companies share price in half and handed the Labor party the basic plan for a national broadband network before he and McGauchie were eventually shown the door in 2009.
The NBN is now reshaping the Australian telecoms sector, but not at all in the way the original creators intended. That’s thanks to the destruction of the once all-fibre network by then Communications Minister Malcolm Turnbull. Telstra’s shareholders are once more underwater after being forced to give up its monopoly on fixed line networks, Fairfax is worth diddly squat and Australian consumers are screaming for decent broadband.
In many ways, we have Sam Chisholm to thank for that.
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