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Economics, Governance, Investing

Slow recovery for advertising

Harold Mitchell, one of Australia’s top advertising brains, is interviewed by Business Spectator’s Robert Gottliebsen.

Mitchell does not comment on the Packer/Stokes strategies, but he forecasts a big rise in the advertising market share of the internet. He also believes that the Foxtel model is going to be enormously successful. Remembering that Foxtel is half owned by our largest mobile phone company Telstra (plus News Corp and Packer’s Consolidated Media), it will combine all the right features – content, the link to the Telstra mobile phone network, a subscriber base, a vast choice of programs to mould it to individual tastes and, of course, it will also link the TV set to the internet in an easy-to-operate way.

The whole Foxtel combination will take off once the free-to-air TV anti-siphoning laws for sport are removed.

Kerry Stokes, James Packer and Rupert Murdoch all understand the potential future power of Foxtel. Telstra shareholders, particularly the institutions, have no idea of the future worth of their half-stake in Foxtel and keep urging their directors to sell it.

Kerry Stokes knows that the best way to give his Seven Network a long-term future is to be part of the Foxtel action.

I am not privy to his plan, but he clearly believes that James Packer is a seller, at a price, and that there might be a chance to winkle Telstra out, given it has a new CEO. At the right price, even Rupert Murdoch might consider selling.

Stokes realises that given the first right-of-refusal agreement between the existing Foxtel shareholders, it’s best to be in the tent, which is why he is buying into Consolidated Media. Stokes will have a game plan to cover the various strategic twists, but his task will not be easy given this agreement between the major shareholders.

However, Stokes is a long-term player and is unlikely to be deterred from his major goal – Foxtel.

Harold Mitchell maps out an advertising world which may take longer to recover than many in the stock market are now predicting and one where there has been a fundamental change in the make up of advertising/media channels.

But Mitchell believes all the majors now understand those changes and are developing strategies to adapt their businesses to it. No one is more active in that adaptation than Kerry Stokes.

Full article from Business Spectator here

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About steveblizard

Steve Blizard commenced his financial planning career in 1988 from a background of life insurance broking, a field in which he still works. He is a member of the Financial Planning Association and the Responsible Investment Association. His experience ranges from administration of Superannuation to advice regarding insurance, retirement, remuneration and investment planning. Steve is an accredited Remuneration Consultant, specialising in salary packaging. He is a columnist for the Swan Magazine and the WA Business News

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