Penners
Spare a thought for two elderly philanthropists...
Number's up for Murdoch/Packer venture
The Guardian - United Kingdom, May 31, 2001
BY PATRICK BARKHAM IN SYDNEY AND DAVID TEATHER
The heirs to the Murdoch and Packer media empires suffered a humiliating
blow to their reputations
yesterday when a hi-tech company they jointly championed fell into
administration with huge debts.
Rupert Murdoch's News Corp and Kerry Packer's Publishing and Broadcasting
Ltd stand to lose
almost ADollars 1bn (pounds 360m) from the failure of One.Tel which had been
the fo cus of a rare
alliance between the two dynasties.
The company had operated a mobile phone network and internet service
provider in Australia as well
as a more mundane discount telephone calls business in Britain.
Mr Murdoch's eldest son, Lachlan, and Mr Packer's son, James, are said to
have dragged their
reluctant fathers into investing in the operation. They saw the business in
which they held a combined
51% stake as a potential platform to distribute programming and other
content from their wider media
operations.
A joint statement from the two young executives spoke bitterly of their
involvement in the company.
"Like all shareholders we are angry. We have been profoundly misled as to
the true financial position of
the company. We intend to explore all remedies available to us."
The failure of the business is also likely to cement Mr Murdoch Sr's already
entrenched cynicism about
the potential of the internet. He recently pulled the plug on a pounds 500m
internet investment fund
called ePartners.
One.Tel was placed in administration after Lachlan and James discovered the
business was ADollars
180m in debt, far worse than had been believed. The young heirs were poised
to guarantee a ADollars
132m rights issue to bail out the business.
Lachlan and James are the chairmen of their fathers' Australian operations
and both had also sat on
One.Tel's board of directors. They were talked into the investment by
One.Tel's joint founder, Jodee
Rich, an old schoolfriend of James Packer.
News Corp and PBL have pumped ADollars 909m into One.Tel over the past two
years.
Australia's corporate watchdog said it was commencing an investigation into
"serious allegations about
One.Tel's solvency and disclosure" after News Corp and PBL complained that
its financial position
"was not as reported to the board on May 17, nor at earlier board meetings".
For Kerry Packer, Australia's richest man, the failure of One.Tel is the
latest in a series of ill-fated
investments in the hi-tech sector since his son took over the day-to-day
running of the company.
Mr Packer, who underwent a kidney transplant in November, has seen ADollars
2bn sliced from his
ADollars 8.2bn fortune in the last 12 months.
During the dot.com boom, One.Tel's share price soared to ADollars 2.84,
valuing the company at
ADollars 5bn. Before trading was suspended on Monday, the shares had slumped
to 16 cents.
In an example of its hubris, the company had been among the bidders for a
next generation mobile
licence in Britain last year - which cost the eventual winners up to pounds
5bn.
After the internet crash Mr Rich and co-founder Brad Keeling continued to
make upbeat assessments
of One.Tel's profitability, predicting in April that the business would
break even by the end of this
month.
Mr Rich and Mr Keeling further antagonised their paymasters by awarding
themselves multimillion
dollar bonuses last year. They were forced off the board as a condition of
the planned rights issue.
Administrators said it would be business as usual for customers of the
company until further notice.
Full article at:
http://globalarchive.ft.com/globalarchive/articles.html?print=true&id=010531
014033
Michael Keaney
Mercuria Business School
Martinlaaksontie 36
01620 Vantaa
Finland
[EMAIL PROTECTED]
