Over the past year, media veterans have been scratching their heads as an improbable story played out.
Billionaire Kerry Stokes, a self-made billionaire and corporate brawler par excellence, was walking away from his beloved Seven West Media group without a whimper after selling it into a merger with a radio company best known for broadcasting the dad rock and sport Triple M stations.
Stokes gave up his chairmanship to Southern Cross Austereo’s Heith Mackay-Cruise in February, and watched as Seven West’s pick for the CEO job, Jeff Howard, got axed almost immediately.
This month, Southern Cross was canvassing the sale of its newspaper division containing The West Australian tabloid. Combined with Channel Seven’s Perth outpost, the papers gave Stokes political influence in the Big State that fellow mining billionaires Andrew Forrest and Gina Rinehart could only dream about.
Mackay-Cruise wanted to focus on integrating the national Triple M and Hit radio networks with Seven’s TV channels. That made sense, but it left the state-focussed newspapers an orphan amid the national TV and radio assets.
Publicly, Stokes didn’t make a sound. Perhaps the billionaire’s bruising past couple of years with his media assets had taken a toll, industry insiders wondered.
Seven West and then Stokes’ personal company funded the colossally expensive – and doomed –defamation action by one of its executives, Ben Roberts-Smith, against this publication.
A court found that, on the balance of probabilities, Roberts-Smith committed war crimes in Afghanistan. He is now on bail on criminal charges that he denies.
But there was also the wider problem of scandals at the broadcaster, which included allegedly reimbursing Bruce Lehrmann for his use of cocaine and sex workers as the network sought to secure an exclusive interview.
The association with Seven West and its dwindling fortunes was proving to be a headache for the vastly bigger mothership: Stokes’ $16 billion industrial giant Seven Group Holdings (now SGH).
Seven West was a shadow of its former financial might as the influence of the radio and television legacy platforms waned in response to digital platforms that have been destroying the media group’s share of audiences and advertising dollars.
But it was still hard for seasoned observers to believe Stokes was really walking away from media, and they appear to have been correct.
Mackay-Cruise delivering his own head on a platter on Monday morning – to be replaced by Seven West stalwart Teresa Dyson – is the clearest sign of Stokes flexing his muscles. He still owns 20 per cent of the company, and it’s hard to imagine the chairman would have departed if he was still basking in Stokes’ support.
It hints that his industrial and media interests may not be done with each other yet.
But as with the Game of Thrones drama series, there is more than one storyline playing out here.
Activist investor Sandon Capital managing director Gabriel Radzyminski has had his own axe to grind over the betrayal of Southern Cross investors by their own board.
Radzyminski’s Sandon has been agitating for change at Southern Cross since 2024, well before the media merger reared its head last year. Sandon stepped up the campaign in response to the proposed deal which Southern Cross investors did not get to vote on thanks to the structure devised by their own board.
On Friday, Sandon sent notices to the Southern Cross board seeking the removal of the three Southern Cross directors who were on the board before the merger and had denied their own investors a voice: Mackay-Cruise, Ido Leffler and Marina Go.
“This is obviously a response with which we are pleased about,” Radzyminski says of Mackay-Cruise’s resignation announcement.
But let’s return to Stokes.
His storyline took an unexpected turn last month when his long-time lieutenant at Seven West, Bruce McWilliam, acquired a 5 per cent stake in Southern Cross.
Within weeks, another Seven West veteran, Rohan Lund – who joined the Southern Cross board this year – was moved in as the new chief executive.
Last week, McWilliam was being mentioned as a potential replacement for Mackay-Cruise as chairman.
Some insiders still expect this to happen, but chair-elect Dyson – a former member of the government panel that regulates corporate takeovers – would be well versed on the implications if Stokes and McWilliam were deemed to be operating in concert.
Would their combined stake necessitate a bid for Southern Cross?
But the big question would have to be: what rekindled Stokes’ interest – assuming it ever waned.
Recent events have provided one good reason for Stokes to get a firm grip on the media business again.
The Albanese government has been considering new levies on gas producers to capture the windfall profits generated by global energy price spikes. West Australian Premier Roger Cook has been among those vocally pushing against the proposal, which now appears to be losing favour with a federal government that does not wish to pick a battle with WA voters.
The implications for Stokes go beyond the energy businesses that SGH owns. A big concern is what the gas tax, or a withdrawal of the multibillion-dollar diesel fuel rebates that our miners enjoy, might mean for Australia’s mining businesses.
The immense wealth Stokes has built on the back of mining services, via his stake in SGH, gives him plenty of reason to return to his trusty tool of influence.
Stokes reportedly extracted $180 million in tax benefits from SGH’s losses on the Southern Cross deal, offloaded a troubling Seven West debt burden, and halved his equity exposure – via SGH – from 40 per cent to 20 per cent.
To still end up with control of an enlarged media empire is exactly the sort of play that media veterans would expect from the billionaire. He’s done it so many times before.
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Colin Kruger is a senior business reporter for the Sydney Morning Herald and The Age.Connect via email.