Power player: advertising ace Harold Mitchell in fight of his life
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Power player: advertising ace Harold Mitchell in fight of his life

"This is scary for me. Because all that I can do is lose. And with that is 40 years of reputation, and I'll walk out and you'll just say he wasn't as good as we thought."

Harold Mitchell, the well-known businessman, philanthropist and Australian of the Year finalist uttered these words back in 2017.  He spoke in jest, as he took the stage for a debate at an event hosted by media trade publication Mumbrella. But the sentiment he expressed may well have entered his mind again this week, as the multimillionaire was hit with a bombshell lawsuit by the corporate regulator that could cast a different light on his glittering career.

Former Tennis Australia director Harold Mitchell (centre) at the Australian Open.

Former Tennis Australia director Harold Mitchell (centre) at the Australian Open.Credit:Alex Ellinghausen

The Australian Securities and Investments Commission this week sensationally alleged Mitchell acted unlawfully during tennis domestic broadcast rights negotiations in 2013 when he was a director of the sport's governing body, Tennis Australia. The news sent shockwaves through the close knit and notoriously gossipy media industry.

"He’s got a track record of impeccable corporate behaviour," says John Hartigan, the former News Limited chief who sat on the other side of the table from Mitchell many times. "It's a huge surprise."

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The regulator claims, among other things, that Mitchell passed on confidential information to Seven Network during those negotiations, and downplayed the interest of rival broadcaster Ten Network and sports agency IMG in acquiring the rights.

Tennis Australia did not put the broadcast rights out to a competitive tender, and Seven ended up renewing them (at a below market price, the regulator implies).

He was always tough but fair. But if you pissed him off it was like being run over by a mack truck

James Warburton, former Ten CEO

Mitchell subsequently resigned, voluntarily, from his post on the board of FreeTV, a lobbying group for commercial TV stations.  And, if ASIC is successful in its court action, he could be disqualified from sitting on any corporate boards - he is currently a director of Crown Resorts - as well as face substantial fines.

Mitchell declined to comment for this story, beyond saying he would vigorously contest the charges. He has assembled a powerful legal team, led by solicitors from Gilbert & Tobin, and will throw all of his resources behind an effort to get the charges quashed, as soon as next week.

"I don't think Harold's done anything wrong and I am sure he will clear himself," Seven West Media billionaire Kerry Stokes, who sent emails that ASIC cited in its case against Mitchell, told The Sydney Morning Herald and The Age this week.

Bruce McWilliam, Seven's commercial director, whose email correspondence was also cited by the regulator, concurred.

Illustration: Joe Benke

Illustration: Joe BenkeCredit:

"Harold Mitchell was conducting rights negotiations. We took most of his statements as being salesmanship. He said someone was interested, we took that as being a way of getting us to increase our offer. You can never tell in negotiations whether people are spruiking you. He's a salesman from way back."

James Warburton, who was CEO of Ten between 2011 and 2012, and involved in early discussions over the tennis rights, was also supportive. "I've known Harold my entire career. He once called me a recovering a---hole, but we always got on really well.

"I certainly never got the sense that he was favouring one side over another [in the early talks over  Tennis rights]. I just think that people really don't understand negotiations and how these things work."

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As for Mitchell’s negotiating style, Warburton says: "Harold would never leave you in doubt. He was always tough but fair. But if you pissed him off it was like being run over by a mack truck."

Others were less complimentary, privately suggesting the legal action is a case of comeuppance for a man who has played the game hard throughout his career.

"He was a completely domineering figure in media buying in Australia," one senior industry figure says. "Very cunning, street smart. He played both sides of the street absolutely fluently."

At the time, Ten's shareholders included powerful billionaires such as Lachlan Murdoch, James Packer, Gina Rinehart and Bruce Gordon. "Anyone involved in Ten at the time would be pretty shitty [towards Mitchell now]" a source close to one of these billionaire says.

Mitchell hasn't gone to ground. Just a day after the ASIC court proceedings were announced, he delivered a eulogy at the state funeral for Sisto Malaspina, a beloved restauranteur in Melbourne, who was tragically killed in a terrorist attack earlier this month.

Harold Mitchell and Derryn Hinch at the state funeral for Sisto Malaspina.

Harold Mitchell and Derryn Hinch at the state funeral for Sisto Malaspina.Credit:Eddie Jim

That appearance offered a perfect illustration of his exuberant character. Midway through the eulogy, he switched from his black jacket into a gold sportscoat and cravat to honour his deceased friend.

Semi-retired, Mitchell spends a lot of time on his cattle station in Western Australia these days, and is also a director of the New York Philharmonic. But to many, he remains Mr Melbourne.

His bulging portfolio of board positions speaks to this. He is the chairman of the the Florey Institute, the largest brain research facility in the southern hemisphere, based in the city's inner north. He holds the same position at the Melbourne Biomedical Research Precinct, and The Australia Indonesia Centre, also based in the Victorian capital.

He is the recipient of the University of Melbourne's highest possible accolade (an honorary doctorate in laws).

He even bankrolled the Melbourne Rebels professional rugby team in the early years of its existence, simply because he was asked to, and thought it would be a good thing to do.

Of course, Mitchell, a tennis enthusiast, also spent about a decade on the board of the body in charge of arguably Melbourne's most globally significant sporting event: the Australian Open.

And it was this board seat that has landed him in hot water.

'Top of the tree'

The rise of Harold Mitchell's is a classic 'pulled himself up by his bootstraps' tale.

The son of a Stawell sawmiller, Mitchell left school at 16 and moved to the big smoke of Melbourne with just $10 in his pocket. He landed a job in the advertising industry and, within a few years, had struck out on his own, founding Mitchell and Partners.

That was in 1976, a time when advertising agencies were still integrated, and dominated by 'creative' functions (think Don Draper or John Singleton pitching a commercial in a boardroom). Mitchell spotted a market opportunity and in exploiting it, ended up changing the way advertising is bought and sold in Australia.

"The great thing about Harold Mitchell is, he is the best-ever at media planning and buying in this country," says David Leckie, the former Nine and Seven boss. "It's always good to be at the top of the tree, and he is. He's the best in his chosen field."

Mitchell's niche was media buying - working with brands to secure the best advertising slots on TV, radio or print at the best possible price. It's all well and good to have a wonderfully creative ad, but for it to be effective, people need to see it.

"He could always get the advertising placed where you wanted it placed," one person who has negotiated with Mitchell says. "You'd underestimate him at your peril."

It meant he controlled the purse strings to some of the nation's most lucrative marketing budgets. And that put him in a powerful position with owners of media inventory - none more so than the moguls that controlled TV networks at the time.

'He ended up building an amazing business though sheer strength of will,' says Free TV CEO Bridget Fair.

'He ended up building an amazing business though sheer strength of will,' says Free TV CEO Bridget Fair.

"He could move the market through sheer force of personality," says the source. "He would make a decision and it would have a huge impact on who was getting the business or not getting the business."

Over the next four decades, he built Mitchell Communication into an operation generating over $1 billion a year in bookings.  "He ended up building an amazing business through sheer strength of will and intellect and that's pretty admirable," says FreeTV chief executive Bridget Fair.

This required a lot of blood, sweat and tears. "He was always on," says Warburton.  "I was an early starter, but the phone wold ring at 6am in the morning and then 9pm at night. I don't think he ever slept. He just worked and worked and worked."

For a long time, Mitchell was quite literally a larger than life figure in the Australian media landscape. In 2006 he reportedly weighed 165kg. By 2010, he had dropped nearly half of that weight following gastric lapband surgery.

That year, he sold 40 per cent of his business to British advertising group Aegis, in a deal valuing the firm at $363 million. He opted to be paid in Aegis shares, and when that firm was taken over by Japan's Dentsu in 2013,  Mitchell and his family reaped nearly $200 million.

"He knew how to strike a fantastic deal," says FreeTV's Fair.  "He was very wily and he didn't end up with all that money by accident. He was good at what he did."

During his career, Mitchell forged strong relationships in the halls of power. He is considered close to politicians from both sides of the aisle, such as former Victorian premier Jeff Kennett (a Liberal, and  fellow Crown director) as well as Steve Bracks and John Brumby (both Labor).

"If I went to Canberra with Harold, there was never a shortage of people who wanted to meet with him," says Fair. "He was well-regarded by both sides of politics and he was always able to prosecute our case effectively."

Media moguls also respected him.  At one point in the 1990s, when he was struggling under $32 million in debts due to some bad investments (including a purchase of the Big Banana tourist attraction on the New South Wales north coast) Kerry Packer came to his rescue. Packer provided Mitchell with a $1.9 million, interest-free lifeline.

Mitchell also grew close to Seven's billionaire owner Kerry Stokes, who once owned a small stake in his media buying business. Too close, the corporate regulator is now effectively arguing.

Game on

In 2013, Ten Network was still being chaired by Lachlan Murdoch and counted three other billionaires - Gina Rinehart, James Packer and Bruce Gordon - among its shareholders.

The struggling network wanted to beef up its summer sports schedule to provide a platform for a  ratings revival.  And, according to ASIC,  it had signalled to Tennis Australia's senior executives and chairman at the time, Stephen Healy, it would be willing to pay as much as $50 million a year for rights to air the Australian Open.

 ASIC claims that Mitchell and Stephen Healy (who has also been separately charged) withheld information from the board and failed to advise it to put the rights out to a competitive tender.

ASIC claims that Mitchell and Stephen Healy (who has also been separately charged) withheld information from the board and failed to advise it to put the rights out to a competitive tender.Credit:Simon Alekna

Seven was the longtime holder of those rights and at the time was paying about $20 million year.

ASIC claims Mitchell notified Seven of Ten's interest in the rights, and at the same time, downplayed Ten's interest to the rest of the Tennis Australia's board. It claims that Mitchell and Healy (who has also been separately charged), among other things, withheld information from the board and failed to advise it to put the rights out to a competitive tender.

“Make no mistake, they [Network Ten] are after the tennis," Stokes wrote in an email cited by ASIC.  "We need to make sure we are there at this board meeting - let’s not take any chances."

Seven's commercial director Bruce McWilliam responded.  “I will call Harold again about this. I am also worried. Harold swears we r [sic] safe but I will get onto him again.”

McWilliam had earlier emailed Seven executives to say that Mitchell “insists it is all going to plan".

For its part, Seven has issued an emphatic denial this week that it received any confidential information, or did anything wrong.

"Our contract with Tennis Australia provided for an exclusive negotiating window which we pursued in good faith," it said in a statement.  “There was a material step up in the rights fee agreed and we reached agreement within that exclusive period. We didn't receive any confidential information and nor was it put to us by ASIC that we had,” the statement said.

He's so interested in all facets of Australian life and he's donated a lot to our country.

David Leckie

That position was reiterated by McWilliam at the Seven Group Holdings annual shareholder meeting this week.

Asked whether the emails released by ASIC were at odds with Seven's statement that it did not receive any confidential information, he said: "No, not at all. What information has he got to give us? We have information to give to him, not the other way around."

McWilliam also said he thought Mitchell would ultimately be cleared.

"I don't think he did anything wrong. The accepted practice now is for people to step aside [from boards] and given you don't know how long the court process could go for, he took the decision to resign [from the FreeTV board]."

Asked whether he thought Mitchell's reputation could suffer as a result, he said: "Of course, that's why he has got to fight it. Reputational damage."

Seven ended up offering $195 million ( $173 million of that in cash) to secure the tennis rights for another five years. That was an increase on the previous deal, but below what Ten and IMG had signalled they could offer, according to ASIC.

Mitchell, according to ASIC, told the TA board that Nine wouldn't be interested in bidding for the rights because it was focused on cricket. He also reputedly said Ten "was not in a sound financial position and could not afford to pay for the rights".

The board then agreed to renew the rights with Seven.

One person who was on the board of Ten at the time was Jack Cowin. "I've got no knowledge of it" he said when contacted this week.

Earlier this year, Nine paid $300 million to snatch the tennis rights away from Seven after they were put to tender.

The picture the regulator paints isnt pretty. But if Mitchell's fervent supporters are to be believed, then it may be ASIC that has overstepped the mark (or to use tennis parlance, foot-faulted). The regulator is facing its own reputational issues at the moment, during the banking royal commission it has been widely condemned for soft-touch approach to regulation of the financial services sector.

Whether this episode impacts Mitchell's legacy remains the big question. Supporters are quick to note his generosity with his wallet as a philanthropist, and with his time as an adviser.

"He's so interested in all facets of Australian life and he's donated a lot to our country," says Leckie. "He's been fantastic for the country".

The media buyer has declined in importance in a modern landscape featuring highly targeted digital advertising, which is bought and sold online by trading desks.

But there is little doubt Mitchell indelibly changed the Australian media industry.

"I think a lot of agencies stopped thinking that media was important," says Leckie. "They thought creativity was more important. That's how Harold made his reputation. He filled that breach and did fantastically well out of it."

John McDuling writes about business, media and technology. Previously he was a reporter for Quartz in New York, covered telecommunications and markets for the Financial Review, and worked in the finance industry.

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