Rabbitohs teach News a lesson in losing

Financial review 7 July 2001

It can't have been hard to work out which News Ltd executive ended up phoning Rupert Murdoch to tell him about the little setback on Friday in the Federal Court.

He would have been the guy wearing the asbestos clothing.

What else do you wear when you wake up a global media baron to tell him that George Piggins, who left school at 13 to become a wharf labourer and now runs a chain of plant nurseries, had beaten him ... again.

The two-to-one decision by the court on Friday, upholding the South Sydney Rugby League Club's appeal over its exclusion from the National Rugby League, is a devastating setback for News Corporation.

For six years now, Super League and its successor, the NRL, have been like a ghastly taxi ride that has clocked up a $550million bill for News. The decision on Friday means the meter is still running.

Today the NRL is in disarray, several clubs are in desperate financial straits and in the wake of the One.Tel debacle, News Ltd management in Australia is a shambles, reeling from two self-inflicted wounds that together have cost News more than $1.1 billion.

As South Sydney supporters celebrate, the wonder is how it all became so personal. 

When 10,000 people marched in Sydney in 1999 to protest against the dumping of Souths from the NRL competition; when 80,000 people marched last year over the same issue; and when 8,000 fans showed up last month to watch a Souths exhibition match at Redfern Oval, the issue for News was always a no-brainer. 


Somehow, News needed to find some way to bend its own rules to let George Piggins and his beloved club back into the stadium.

The fact that that didn't happen suggests either that News feels its grip on the NRL is too tenuous to risk changing the rules, or that someone at News really doesn't like Piggins.

Rupert Murdoch's survival instinct is what makes him a great businessman. When he has a losing hand, he is a great pragmatist. He does whatever he has to do to fix the problem.

The announcement on Friday that News is merging its Italian pay-TV business, Stream, with Vivendi's Telepiu business, is a typical example. Murdoch loathes Vivendi chief Jean-Marie Messier, but he needed to do a deal with him, so he did.

Murdoch can handle being beaten by the rich and powerful. He has much more of a problem being beaten by the little guy.

Rupert Murdoch must feel as if he has been looking at George Piggins's back for half his life.

Back in 1968, before he headed off to London to save the ailing News of the World from the clutches of Robert Maxwell, the last major public event before he flew out was the Sydney rugby league grand final.

One of the clearest memories Murdoch must have from the last days that he lived in Australia is of the Rabbitohs winning a back-to-back premiership under John Sattler, with a team that included a lively young George Piggins.

But the saga of Souths and NRL and Super League has not been about winning. It has been about who is the best loser.

As Justice Heerey put it in his dissenting judgement on Friday, in any game there are winners and losers. The important issue in the case was the manner in which you lose.

South Sydney must be the world's champion losers. They're great at it. On the field the great club that had won 20 premierships were now the wooden spooners, unable to afford the highly-paid stars of its rivals.

They were dumped from the NRL. They challenged the decision in court and got beaten. They tried again in the Federal Court and got beaten.

They marched, and The Daily Telegraph reported it on page 65. They marched again, but got no joy. Yet the Rabbitohs kept on coming.

"So here we go to appeal, our last shot at justice through the legal system," Piggins told supporters last month, a man with no great hope of success but still in there slugging.

And with one lucky punch on Friday, as it seems, they are back on top of the world.

In reality, they were already winners.

Any organisation that can put 80,000 supporters on Sydney streets - the biggest protest since the Vietnam War - is way in front of its opposition.

The decision underlines how bad News is at losing.


There are wider lessons. Sport in Australia has not been the battering ram that Murdoch has found it to be everywhere else in the world, when it comes to television programming.

Winning control of football broadcasts has not been the great turning point for Foxtel, as it was for News Corp's BSkyB in Britain, or its Fox network in the US.

Second, the effect upon News Ltd management of the rugby league fiasco has been incalculable.

The Super League war began with a secret meeting in the offices of News legal firm Atanaskovic Hartnell on March 30, 1995, between Canterbury Bankstown players, John Ribot of the Brisbane Broncos, and Lachlan Murdoch.

One can summarise News Ltd's version of Super League history under the heading, "It Wasn't Lachlan's Fault". There is a lot of truth in this. Lachlan was just 23 years old, and some five months into his first job, at that first confused meeting, where the players managed to sign the wrong pieces of paper.

But the pressure to find culprits for Super League, and the ascension of Lachlan, has seen the departure of News Ltd's long-time chief Ken Cowley and his natural successor, Bob Muscat.

Rod Eddington was supposed to run News after Lachlan went to New York. His departure left Peter Macourt as the only senior News Ltd executive with significant financial and business expertise.

However, he was passed over when Lachlan chose former editor John Hartigan as CEO at News Ltd.

The court decision on Friday puts Macourt in the spotlight again, though the decision to drop Souths from the NRL, and to resist any move to revive it, can only have come from the higher echelons of News Corp. 

Neil Chenoweth's book, Virtual Murdoch, was published by Secker & Warburg on Friday.