Feature Article: When the walls falls.

The relentless, unstoppable force that spooked Murdoch and Lowy


  • By John McDuling

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It is hard to think of a more fitting conclusion to 2017 for corporate Australia than the two seismic deals involving Rupert Murdoch and Frank Lowy that sent shockwaves around the world [in Dec 2017].

Fox-Disney
Fox Entertainment sold to Disney

 

Murdoch has made little secret of the fact he was concerned that his Fox entertainment businesses didn’t have the necessary scale to compete with the likes of Netflix and Amazon, so he sold them to Disney.As you almost certainly know by now, the two iconic, octogenarian billionaires decided to sell assets they had spent decades building up, at least in part due to concerns about threats posed to their businesses by internet led rivals.

Westfield
Westfield is being sold to Unibail-Ramenco

Even Murdoch is buying into it.“I read this week about my Australian friends at Westfield. They can see what Amazon is doing to bricks and mortar retail,” he told the Financial Times over the weekend.

As one of the next generation of globally significant Australian executives, Mike-Cannon Brookes, pointed out last week, every industry is being threatened by some form of digital insurrection at the moment.

The advent of Amazon, which terrified retail executives and investors in the sector; Elon Musk and Cannon-Brookes’ intervention into the national energy debate in South Australia, and the rise of crypto-currencies upending the established order in finance were just a few of the big stories that played into this theme.

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Elon Musk is ready to deliver in South Australia’s energy crisis.

There is a belief the Murdoch and Lowy mega-deals could merely represent a taste of things to come, with the theme of technology motivated mergers and acquisitions set to continue next year.

Senior investment bankers this column has spoken to say rapid technological change remains a top concern among directors on the boards of our biggest companies.

This is forcing them to invest more in innovation and technology. Selling assets (including infrastructure and property, but also non-core businesses) that aren’t central to their business is one way to fund that.

One such example could be Telstra’s decision to take steps to reduce its stake in pay TV company Foxtel.

A recent survey of companies and private equity firms by consulting giant Deloitte found that companies in the US expect to do more acquisitions next year.

They are sitting on more cash than they were a year ago – potential changes to America’s tax regime could provide them with even more firepower – and they expect to use that cash to buy other companies.

The biggest motivating factors for acquisitions, according to the Deloitte survey, were a desire to acquire technology, and the need to build out a digital strategy.

The Deloitte survey dovetails with a forecast by Goldman Sachs, which expects M&A spending in the world’s largest economy to rise 6 per cent to $US355 billion next year.

Almost every company these days is trying to position itself as a tech firm. This includes our big banks, Telstra, and in a global context, century old industrial giant General Electric.

The distinction between business and technology is becoming increasingly blurred, the firms with the best tech over the long run will win.

For people exposed to the technology industry, it can be nauseating to hear old school executives rattle off terms like digital disruption, the blockchain and artificial intelligence.

But in fairness to them, in an era of rapid technological change, fighting progress will be futile, so they have little choice but to embrace it.

Unless, like Lowy and Murdoch, you can find a way out.

 

Originally published in the Sydney Morning Herald (online) on 18 December, 2017

#32 The Good in Bugandi Secondary

This is a piece I recently got cross-published on the blog mylandmycountry. It is about Papua New Guinean’s celebrating all that is good about our country.

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Media attention awarded to Bugandi Secondary School of late, has tainted the name of this pillar of education within the Lae City community. I do not want to dwell on the events that have garnered such infamy, but it would be fair to say, there exists a sense of bitter distrust from the part of the greater Lae community.

But the nature of trust is that

it can also be earned back because bad does not necessarily mean ‘there is an absence of good’. At least that was my experience with the Bugandi Secondary School students on Friday, 6th October. An incident transpired during that day that showed hope and goodness that often goes unacknowledged about that institution.

I am not at liberty to fully disclose the details of the incident, least to say it was a hit and run and I, along with the students were first witnesses. I’ll add though that it was the quick thinking on behalf of the Bugandi students that led to the survival of the victim; the emergency ward named ‘Mr Friday Unknown’.

In a show of spirited heroism, the young men from Bugandi Secondary School gathered the seemingly lifeless pile of aged bones and soft tissue onto my ute. Without time to spare we rushed the Mr Friday Unknown to the accident and emergency ward at ANGAU Memorial Hospital.

There is always a moment of sho

ck that follows accidents so gruesome as that that reminds us humanity is nothing but skin and bones. It is the spirit that connects us to each other.

Seeing the spirit the Bugandi students showed to save a life gives me faith enough to say that the school is raising integral community members and citizens of Papua New Guinea. That lesson cannot

be overlooked. That lesson is more important then any piece of information that can be found in textbooks.

But this is not an isolated event. This act of selflessness is evidently engrained in these students. Almost a month before this incident a head on collision between two vehicles on Jawani Street (next to Bugandi) was witnessed by Bugandi Secondary School students who were unwilling first respondents to the scene, doing what they could to save the lives.

The description of the incident is not important here, but the character

demonstrated by the students is, again, testament to their strength and value as members of the greater Lae City

community.

I would like then to commend the teachers and for their commitment towards their students. For believing in the goodness in your students. To the Principle, Mr Tony Gaul and your leadership team, it takes real courage and strength to believe in your mission with limited resources and the clout of negative media – for that I applaud you and your team.

Bugandi Secondary School has quite the journey ahead of it yet I believe that in the not too distant future, the institution will give the great city of Lae reasons to look upon it with the endearing fondness that it deserves..  

#19 Lessons Learnt, Lessons Earnt

Remember –

sugar free

lemonade

is the most

bitter taste.

–  by Hans Lee

Being the first officer of a plane experiencing dual engine failure is always going to be daunting and nerving experience. It must be worse when you know that you are still a subordinate to the captains orders. Knowing that the initial impact will determine whether you survive or not makes critical every effort to ease the severity of the impact.

I pose that scenario to begin my reflection on the science of an undoing of a company. I have often prayed to be exposed to failure at a grand scale and I think I am about to see it go down like the twin towers. After all, the best lessons are the ones learned through experience. I hope that the insight gained through this experience will give me exceptional foresight in the management of my future company.

So where do I begin?

Firstly, always remember that a garden must bear fruits before you can start eating from it, but if you want more from it, you must be wiling to take some of that product to the market to sell it for money. That money can either be reinvested into growing the garden or exploring other money growth opportunities. The K50 earned from the market sales should be reinvested for the future, sacrificing today’s rewards.

The basic principle is that, before something can look after you, you must look after it.

Asset rich – Cash poor brings creditors knocking at the door.

Whether you are working for yourself or working for someone else, remember that operations get harder when there is limited cash moving through the veins of the company. A company can feel and look like it is rich i.e. have a lot of property, plant and equipment, but if they aren’t making money, or the company doesn’t have cash reserves, they are in a very risky position. Imagine what would happen if you only had K5,000.00 in the operating account and the credit accounts due (your debtors) were chasing after K10,000.00 payment immediately.

Lack of vision is lack of direction 

It is easy to follow blindly especially when the leader thinks what they are doing is for the best. They risk everything including killing the company to carry out a flawed plan.

Be mindful of someone you are following who has not thought out and explained a plan properly. When they cannot see where they are going, they will always get lost. When you join organisations, ask them what their plans are for the short, medium and long term, even if you do not know whether you will be there for the long haul or not, it is encouraged that you find out where the company is going and whether you could fit the carrying out of that vision.

Never get too comfortable, all can be taken away

One thing I am terrified about is being comfortable, or the though of it. I have always believed, and will always believe, that comfort breeds complacency. For me it is a fate that precedes death. Think of all the people who are forced to retire, if they chose to kick back and relax, it is the beginning of their demise to the box, but for those who remain active, for them are rewards of a life fulfilled.

Comfort can often blind us to the temporary nature of life’s pleasures like friendships and social activities but when you realise that you are not entitled to those things anyway, it makes you work harder. It can all be taken away at the shortcoming in cash flows and court notices.

Know when you are in trouble and let go

Very few people are able to admit when they are wrong or are about to fail. The saying too big to fail doesn’t apply equally across the board. Sometimes we need to stop and reassess if we are too comfortable or whether the people around us are changing or not changing.

Too few too know how to break out of the mould they have built for themselves. Knowing when you are wrong and asking for help from those around you who are smarter then you is the first step in fixing a problem.

 

That is about from me so far.
Hansley