Australia's mining barons looking towards media sector

The Australian media sector has always been very prominent on the worldwide stage with characters such as Rupert Murdoch, Kerry Packer and Kerry Stokes very much at the forefront of the worldwide media market. While these particular media moguls may well be coming towards the end of their business lives there would appear to be a new kid on the block in the shape of Australia’s mining barons who are looking to influence the Australian media more and more.

From mining to media!

It is well documented that the natural resources reserves of Australia are absolutely enormous and, as we saw in the recent floods, even the merest of glitches in the supply chain can have a major impact upon the worldwide price of some commodities. So not only is Australia very big in the mining industry but we’ve also seen a major increase in oil and gas exploration activity, especially towards the northern areas of Australia. So why are mining moguls now looking towards the media sector?

We have seen some absolutely enormous takeovers and mergers in the history of the Australian mining industry and many believe it is time to branch out and look elsewhere. As a consequence, last week we saw Gina Reinhart pay in excess of AU$140 million to increase her stake in Fairfax Media from 4.9% to 12.6%. There are now rumours of other mining barons looking towards the media sector but what benefits does this bring in the long term?

Unearthing those hidden gems

Those who have followed the Australian economy will be well aware that it continues to go from strength to strength in relative terms against a very weak worldwide backdrop. However, many people may be surprised to learn that the authorities, under the leadership of former Prime Minister Kevin Rudd, had looked at introducing a mining supertax.

The idea was that as well as the traditional business taxes the authorities would look to take a larger percentage of the profits from the ever-growing Australian natural resource sector. Even though many saw this as an opportunistic move by the authorities to increase revenue there were a number of prominent politicians who stepped forward to support the move. However, ultimately the ever-growing influence of the mining barons undermined the position of Kevin Rudd and eventually he was overthrown by his successor Julia Gillard who is currently the Prime Minister of Australia.

Is the tale now wagging the dog?

Julia Gillard won the backing of the mining lobby groups although in many ways she had to sell her soul to the devil and agree to water down Kevin Rudd’s mining supertax proposals. While this was the most visual example of the influence which mining barons have over the Australian economy and the Australian political scene, it seems that this forced shift in policy was not enough.

Ms Reinhart, through her various lobby group contacts, is now looking at ways of introducing a so-called “North Economic Zone” which would see specials taxation advantages for companies and individuals maintaining a presence in this particular area of the country. When you take into account the fact that the lady in question has very publicly increased her media presence there are very few who would back against the creation of this economic zone.

Better the devil you know

Over the last few years, prior to the introduction of mining barons into the media sector, there had been a significant push towards scaling down the power and influence associated with Australia’s leading media moguls. Therefore, there are few people who can realistically complain that these mining business people are now looking towards the media industry and increasing their own influence. By increasing their own influence they are in many ways watering down the influence and presence of individuals such as Rupert Murdoch.

Whether we will see a two horse race between the mining moguls and the media moguls to gain control of the sector remains to be seen but there is no doubt that the natural resources industry in Australia has made a small number of people very wealthy indeed – giving them massive financial clout. Whether there will use this wealth to influence political decisions and taxation levels in the future remains to be seen but they do have serious money to throw at their media and public relations operations.

M and M

Media and mining have been major areas of the Australian economic success story over the last 20 or 30 years. This is an area of the world which has a major influence upon worldwide media and mining operations in every corner of the globe. We have seen some of the most feared names in the world emerging from the Australian media sector with Rupert Murdoch for example maintaining a significant influence in the UK and America for example even after all these years.

There is no doubt that the Australian authorities have been very proactive with regards to natural resources and media companies and have in many ways helped some of the richest people in Australia to earn their wealth. Whether it is a case that the two sectors are becoming too influential and potentially too intertwined remains to be seen but it would take a very brave government to rein in their power at this moment in time.

Will the Australian media become a mouthpiece for individuals?

There are serious concerns that individuals from the mining industry in particular will attempt to use the Australian media as their personal mouthpiece to further their own ambitions. Even though many experts have highlighted the very close link between business and politics in Australia this has often gone on behind-the-scenes and kept away from the public arena.

It will be interesting to see how the likes of Rupert Murdoch react to the “new kids on the block” and whether indeed they will take a step back or step forward. At this point in time it seems that we are set for a battle royal between some of the biggest business names Australia has ever seen with politicians very much caught in the crossfire and probably forced to take sides in the future.

Australia’s mining barons looking towards media sector

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