TV trouble at top staggers market

By Selwyn Parker

Last Tuesday Julian Mounter, the former head of Television New Zealand, was talking enthusiastically about his plans for the recovery of Seven Network in Australia, where he had been chief executive for nine months.

He was cutting costs at the network, which is the official Olympic broadcaster, just as he had done at TVNZ. Non-core activities were being outsourced. The institutional shareholders seemed reasonably happy, if impatient, for results.

It all looked pretty good, with the best to come.

But on Friday Mr Mounter was packing his bags. Officially, he had become a victim of "irreconcilable differences" with the network's chairman and main shareholder, Kerry Stokes, who will now take over executive functions.

According to sources, Mr Mounter left after a blazing boardroom row with Mr Stokes some time between Tuesday and Friday. Mr Stokes, a notorious meddler whose boardroom has become a turntable for disaffected directors, owns 33 per cent of Seven Network and has about $A300 million invested in it.

The issue was reportedly over who should manage the network - the chief executive or the chairman. Mr Mounter's contract was said to contain a non-interference clause after the departure of his predecessor, another television veteran, Gary Rice, who had been three years in the job before also falling foul of the Perth-based chairman.

Mr Mounter had been hired from the Channel Islands, where he had set up a television consultancy after leaving the top job at Rupert Murdoch's Star TV in Hong Kong.

A stunned market, which immediately marked down the network's shares, is at a loss to know what Mr Stokes plans to do that Mr Mounter did not - except perhaps to speed up Mr Mounter's strategy. This was to contract out production, the design of sets and other activities into part-owned subsidiaries.

Mr Mounter, who was born in Cornwall but is a New Zealand citizen, had already axed a couple of flops - the early morning national news programme, Sunrise, and the news magazine, 11 am.

He planned to lead the network into the digital age. Indeed, that was one of the themes of his interview last Tuesday.

Market commentators say Mr Mounter's abrupt departure leaves the Olympic broadcaster in a parlous financial position. The share price has slipped steadily since Mr Stokes bought his majority shareholding and was down to 428Ac at Friday's close, just before the news was released.

It is likely to fall further today.

Already the network has announced plans to write down $A120 million in programme costs after a change in accounting policy. This would give Seven a net loss after abnormals of about $A80 million for the financial year which, says one analyst, "will mean they have no retained earnings left. The picture does not look bright."

Who will replace Mr Mounter after Mr Stokes' almost certainly brief period in the hot seat?

A contender could be Seven's network director of operations, Judi Stack, who was once a transport policymaker for the New Zealand Government. Married to Nigel Milan, head of the SBS multicultural channel in Australia and a former managing director of Radio New Zealand, she was hired by Mr Stokes nine weeks ago.

Judi Stack is already working on strategies that bear a remarkable similarity to those of Mr Mounter.