Publishing And Broadcasting Limited Business Information, Profile, and History

Company Perspectives:

Our Strategy: The continuing enhancement of our ability to inform, entertain and service a wide range of consumers through our core television, magazine, gaming and emerging technology businesses. We will reach additional audiences by re-investing our strong cashflows in the latest concepts and formats, the best creative talents and new markets.

History of Publishing And Broadcasting Limited

One of the largest corporations in Australia, Publishing and Broadcasting Limited (PBL) has built its empire through its two main media holdings, Australian Consolidated Press (ACP) and the Nine Network of television stations on the one hand; and Crown Casino gaming group on the other. ACP, Australia's largest magazine publisher, produces a broad selection of magazines in nearly every category, including the highly popular Australian Women's Weekly, the financial journal the Bulletin, and many more. Nine Network is the largest television network in Australia, with a particularly strong lineup of sports coverage, and its own production studios. PBL also holds significant stakes in other television operations, including 25 percent in the Foxtel cable and satellite TV service, 50 percent of Fox Sports, and 33 percent of Sky News Australia. In 2002, ACP and Nine Network were grouped together into a new division, PBL Media, and combined to produce 52 percent of the company's revenues. The other major wing of the company is the Crown Casino gaming complex in Melbourne, which features 500,000 square feet of casinos, shopping, dining, and hotel rooms geared toward an upscale market. PBL's gaming holdings generated 43 percent of PBL's sales of A$2.4 billion (US$1.5 billion) in 2002. Beyond these holdings, PBL has also made a strong push into the Internet market with ecorp, which wholly owns the Ticketek ticketing service, and operates joint ventures with Microsoft--the ninemsn web portal, the country's biggest--and with job-hunt site Monster. Ecorp and PBL have also formed a 50-50 joint venture to operate the CrownGames online casino, and also hold a stake in online broker Wizard Financial Services Group. PBL is led by Kerry Packer and Executive Chairman James Packer, respectively son and grandson of the company's founder, and Peter Yates, CEO. The company is quoted on the Australian stock exchange.

Founding a Media Dynasty in the 1920s

The Packer family involvement in Australia's media industry stretches back to the beginnings of the 20th century. Sydney city official James Smith, having lost his position, sought an outlet to voice his opinions and in 1918 launched his own paper, Smith's Weekly. Smith hired Claude McKay as the paper's editor, who in turn hired Robert Clyde Packer, who already had experience as a journalist, as the paper's manager. Smith agreed to provide the financial backing for the newspaper, putting up an initial £20,000. He also promised to give McKay and Packer a stake in the business if it proved successful.

Smith's Weekly finally turned a profit--at a cost of nearly £100,000 to Smith--in 1921, and Smith made good on his promise, giving McKay and Packer each a one-third share of the company. Robert Packer went on to found his own newspaper, the Sydney Daily Guardian. In 1923 Packer hired teenage son Frank Packer, who began his career as a cub reporter at the Guardian.

Yet the younger Packer was destined for much more--becoming one of Australia's wealthiest and most powerful men. By the early 1930s, Frank Packer sought to strike out on his own. In 1932, he created Sydney Newspapers Ltd. Packer's cofounder was Edward "Red Ted" Theodore, a minister with Australia's Labour Party (then out of power).

Packer and Theodore's original project was to acquire the World, a Sydney-region daily newspaper favorable to the Labour Party, and turn it into a more populist daily called the Star. Yet Packer and Theodore agreed to abandon the project after Associated Press, the company behind existing Sydney newspaper the Daily Telegraph, paid their company £90,000. Part of that agreement stipulated that Sydney Newspapers remain out of the daily newspaper market for at least two years.

Packer and Theodore remained committed to their publishing project, however. In 1933, they were approached by George Warnecke, a journalist who had worked at Packer's father's newspapers. Warnecke had been developing his own newspaper format, a publication geared toward the women's market. As part of his research, Warnecke and his wife began observing newspaper stands, studying women's buying patterns. Warnecke drew up a mockup of his newspaper idea and brought it to Frank Packer--a man Warnecke reportedly admired for his "belligerence and audacity."

Packer took on Warnecke's paper, launching it as a tabloid called Australian Women's Weekly, which sold for twopence. Backed by a radio advertising campaign, the Weekly was an instant success, selling more than 120,000 copies in its first issues. The Weekly's circulation continued to rise strongly, turning a profit after only two years. In 1935, Sydney Newspapers installed a new high-speed rotogravure press, and the Weekly took on a new magazine format that was to help it dominate the Australian women's market through the end of the century.

In the mid-1930s, Packer finally had his daily newspaper--the Daily Telegraph. In 1936, Packer gained control of the newspaper by merging his profitable company with the struggling Associated Press. The new company was called Consolidated Press. Warnecke took over as editor-in-chief of the Daily Telegraph, revising its format and re-launching it at the end of 1936. Within two years, the Daily Telegraph had boosted its circulation to nearly 200,000.

Consolidated Press launched the Sunday Telegraph in 1939, which proved highly popular, running to more than 200,000 copies before the end of its first year. While Theodore returned to active office in the Australian government during World War II, Packer continued building up the company--and his own political influence. By the 1950s, Packer was already one of Australia's most powerful and wealthiest men. After Theodore's death in 1950, his son John inherited his father's share in Consolidated Press.

Multimedia in the 1960s

Consolidated Press, which had meanwhile gone public, launched new magazines in the 1950s, including Weekend Telegraph and Junior Telegraph, both in 1954, and the Observer, a weekly current affairs magazine, in 1958. That magazine was merged into business magazine the Bulletin, established in 1880 and acquired by the company in 1960. By then, Packer had bought out the Theodore family's stake in the company, which was renamed Australian Consolidated Press (ACP) in 1957. Packer was joined in the business by sons Robert Clyde Packer, born in 1935, and Kerry Packer, born in 1937.

The Packer family sought to expand their media interests, and in 1956 won the license to operate a new television station in the Sydney market, TCN9. In 1960, Frank Packer bought a controlling stake in a second television station, GTV9 in Melbourne. The two stations were connected together by a coaxial cable link in 1963, forming a new "national" television network, Nine Network. In 1960, also, ACP acquired another newspaper, the Maitland Mercury, which had originally been established in 1843.

A dispute led to Frank Packer disowning eldest son Robert Packer; Kerry Packer then became heir of the Packer business empire. In the early 1970s, the Packers decided to exit the newspaper market and focus their media holdings instead on ACP's magazines and on Nine Network. In 1972, Packer sold the Telegraph newspapers to Rubert Murdoch for A$15 million. Once again, ACP looked to the women's market for its next successful project, as the company attempted to gain the rights to publish an Australian edition of the recently launched and highly popular Cosmopolitan. Denied those rights, however, ACP instead launched its own younger women's magazine--Cleo--which, with its centerfold of a naked man, sold out within two days. The company eventually began publishing Cosmopolitan as well in the 1980s.

Frank Packer died in 1974. Kerry Packer took over control of the family's businesses and showed himself to be his father's equal. By 1976, Packer had bought out his brother's stake in the family's operations, paying A$4 million (Robert Packer then immigrated to the United States). The launch of color television the year before, had, in the meantime, boosted the Nine Network to the top of the Australian television market. Nine Network distinguished itself in particular as an innovative sports broadcaster and, in 1976, launched an attempt to gain broadcasting rights to Australia's cricket matches. Denied in its bid--despite offering a price some seven times higher than the government-run ABC network--Packer launched a rival cricket league, hiring away the sport's top Australian players. Packer's ploy was a success, and the company gained control of the sport's broadcasting rights in 1979.

Packer took full control of ACP in 1983, de-listing the company; at that time, Packer set up a second, family-owned business, Consolidated Press Holdings (CPH), which began investing into other business interests, including cattle ranching and manufacturing, itself becoming one of Australia's largest companies. During the early 1980s, ACP stepped up its expansion of its magazine titles list, acquiring a number of titles, including Australian House & Garden, Wheels & Motor, and Belle & Mode. In the later 1980s, ACP expanded still further with the acquisition of rival Fairfax publishing group's magazine division in 1988. That purchase added titles such as Woman's Day, People, top-selling teen magazine Dolly, and Good Housekeeping, and gave ACP a 50 percent share of the Australian magazine market. ACP also entered the New Zealand market at this time.

By then, Packer had taken advantage of the booming media market to sell off Nine Network to Alan Bond, then in the process of establishing a multinational conglomerate, for more than A$1 billion. Packer's timing proved right--by 1990, Bond's empire was collapsing. Unable to pay off his debt to Packer, Bond was forced to sell back Nine Network for just A$250 million in 1990. By then, Nine Network had grown even bigger--Bond had added two more stations, STW9 Perth and QTQ9 Brisbane, making Nine Network a truly national network. At that time, Packer brought in Al Dunlap as the company's CEO. Dunlap promptly earned himself the nickname "Chainsaw" for his dramatic pruning of the company's staff and holdings.

Australia's Media Powerhouse in the New Century

Packer, through ACP, attempted to return to newspaper publishing, in partnership with Canada's Conrad Black, via a bid to gain control of the Fairfax publishing group. Yet strict Australian cross-media and foreign ownership rules prevented Packer's bid. Instead, Packer returned ACP to the Australian stock exchange in 1992; in 1994, Packer merged ACP and Nine Network together to form the publicly listed group Publishing and Broadcasting Limited (PBL).

PBL continued to expand its magazine portfolio, launching a number of new titles including NW, Take 5, SHE, men's magazine Ralph, Harper's Bazaar, and others. The merger between ACP and Nine Network also enabled a number of cross-market opportunities, as the company launched a number of television programs based on its magazine titles. PBL had also been expanding internationally, starting in the early 1990s with the launch of Cleo in Singapore, Malaysia, Taiwan, and Thailand, and continuing with the introduction of other ACP titles in those countries.

Kerry Packer, by then seriously ill with kidney disease--and later the recipient of a controversial transplanted kidney donated by his helicopter pilot--retired from his active role at the company, placing son James Packer as chairman of the company. The elder Packer nonetheless remained a controlling figure with the company.

The younger Packer was nonetheless responsible for the company's entry into a promising new market, that of the Internet. PBL launched its own Internet operations, called PBL Online. That unit began acquiring properties in 1999, starting with Online Brokers Holdings, and continued with the purchase of Ticketek, the largest computerized ticket sales agent in Australia and New Zealand, held by Packer's CPH company. PBL Online changed its name to ecorp that year, and signed a joint-venture agreement with eBay to launch eBay sites in Australia and New Zealand (ecorp abandoned that venture in 2002). Ecorp went public in 1999, although PBL maintained an 80 percent stake in the company.

PBL, which had made a new attempt to gain control of Fairfax's newspapers, instead branched out into a new market at the end of 1998 when it announced its acquisition of Crown Limited, which operated the Crown casino and entertainment complex in Melbourne. That operation quickly became one of the largest parts of the PBL empire, contributing more than 40 percent to PBL's revenues. Meanwhile, PBL continued to expand its media holdings with the acquisition of a 25 percent stake in the Foxtel cable and satellite television service, a 50 percent stake in Fox Sports, and a 33 percent stake in Sky News Australia. These purchases were made through PBL's PBL Enterprises division.

The company also attempted an entry into the telecommunications market, investing heavily in upstart One.tel. By 2001, however, PBL's losses at One.tel had reached A$200 million. The company pulled out of the investment, and, as PBL's share price went into a slump, Kerry Packer came out of semi-retirement. Packer placed Peter Yates in charge as CEO and James Packer was relegated to the role of executive chairman.

In 2002, PBL merged its ACP magazine division with Nine Network to create a new division, PBL Media. Observers saw the move as a possible preview to an eventual splitting up of PBL into separate media and gaming entities. The move was also seen as a means of positioning the company for a fresh attempt at acquiring the Fairfax publishing group, as cross-ownership restrictions were expected to be eased as early as 2003. ACP in the meantime had continued to expand, acquiring Liberty Press, of New Zealand, at the end of 2001, and TV Week in Australia in mid-2002.

In March 2003, PBL acquired 100 percent control of ecorp, removing it from the stock market. By then, ecorp had grown to include a joint venture to operate Monster job-hunter sites in Australia and elsewhere in the Asian Pacific, as well as the online mortgage lending house Wizard Financial Service. Ecorp had also built, in partnership with Microsoft and the Nine Network, Australia's largest Internet portal, ninemsn, and, in 2002, had entered a joint-venture with PBL itself to launch the CrownGames online casino. PBL--and the Packer family--remained a dominant force in Australia's converging media market.

Principal Subsidiaries: ACP Partnership Holdings GT Pty Ltd; Australian Consolidated Press Ltd; Crown Ltd; ecorp Ltd; Nine Leisure Pty Ltd; Nine Network Australia Pty Ltd; PBL Marketing Pty Ltd; PBL NZ TV Holdings Ltd.; Peteles Pty Ltd; Queensland Television Ltd; Ticketek Pty Ltd.

Principal Divisions: PBL Media; Crown Casino.

Principal Competitors: AOL Time Warner Inc.; Bertelsmann AG; News Corporation Ltd.; Clear Channel Communications Inc.; Fox Broadcasting Co.; Gannett Company Inc.; British Sky Broadcasting Group PLC; Hearst Corp.; Granada PLC; Tattersall's Holdings Pty. Ltd.; TABCORP Holdings Ltd.; Seven Network; CanWest Global Communications Corp.; Independent News & Media plc; Sky Network Television Limited.

Chronology

• Key Dates:
• 1932: Frank Packer, son of journalist and newspaper owner Robert Packer, sets up Sydney Newspapers with Edward Theodore.
• 1933: Company launches Australian Women's Weekly.
• 1936: Company merges with Associated Press, publisher of Daily Telegraph, and changes name to Consolidated Press, with Packer in control.
• 1939: Sunday Telegraph debuts.
• 1956: Frank Packer acquires license to TCN9 television station in Sydney.
• 1957: Packer buys out Theodore family's holding and gains majority control of Consolidated Press, renamed Australian Consolidated Press (ACP).
• 1960: Packer acquires Melbourne television station GTV9; acquires the Bulletin.
• 1963: Coaxial cable link between Sydney and Melbourne creates "national" Nine Network.
• 1972: Cleo magazine debuts; Packer sells newspapers to Rupert Murdoch.
• 1974: Kerry Packer takes over company after Frank Packer dies.
• 1983: Packer acquires 100 percent control of ACP.
• 1987: Company sells Nine Network to Alan Bond for A$1 billion.
• 1990: Company reacquires Nine Network, now with two additional stations, for $250 million.
• 1992: ACP goes public again.
• 1994: ACP and Nine Network merge to form Publishing and Broadcasting Limited (PBL).
• 1998: PBL acquires Crown Limited casino group; launches PBL Online.
• 1999: PBL Online becomes ecorp and goes public.
• 2001: PBL acquires Liberty Press of New Zealand.
• 2002: Company acquires TV Week; new division, PBL Media, is formed.
• 2003: PBL takes 100 percent control of ecorp.