Building another Murdoch empire
November 19, 2011
Siobhan McKenna helps drive Illyria’s success, writes Miriam Steffens.
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In the frame … Siobhan McKenna juggles a busy corporate life with raising three young boys.
In the frame … Siobhan McKenna juggles a busy corporate life with raising three young boys. Photo: Ben Rushton
More than half an hour into our chat with Siobhan McKenna, the second-in-command at Lachlan Murdoch’s private investment vehicle, Illyria, and she hasn’t dropped her guard.
The publicity-shy executive is politely fielding questions – responding to some, batting away others – about her McKinsey past, her professional partnership with the oldest Murdoch son and Illyria’s long struggle to find assets to let him build a media empire of his own.
It’s only when the conversation turns to her passion for ballet, and how she juggles life as a high-profile media executive with her young family that she loosens up and allows herself to relax.
“I might get a little reductionist but I definitely am a wife and mother and I only have one hobby, and that is my professional life,” she laughs. “And I love, love my professional life.”
It’s the first time McKenna has agreed to talk about her role as managing partner of Illyria.
Dubbed by The Australian as “arguably the Australian media’s most powerful under-the-radar female executive”, the 39-year old plays a crucial role in the corporate overhaul of Network Ten and the turnaround of DMG Radio, Illyria’s biggest investments, and sits on the board of regional TV company Prime Media.
Outside Illyria’s investments, she is a director of NBN Co, the company overseeing the construction of Australia’s National Broadband Network, a part-time Productivity Commissioner (currently on leave-without-pay) and on the board of The Australian Ballet, with Lachlan Murdoch’s wife, Sarah.
The interview, set up over several months and recorded by a PR adviser, coincides with another week of drama at the Murdoch family’s global media empire.
Asked whether the turmoil at News Corp had any impact on Illyria’s operations, McKenna is quick to brush aside speculation she may be doing much of the heavy lifting while her high-profile boss was distracted supporting his father.
Lachlan “made the decision to leave News Corp. He’s still on the board, but he’s very proud of Illyria and what we’ve been able to build,” she says. “He is of course very close to his family, so what happens at News Corp is of course really important to him and his family.
”[But] Lachlan and I’ve worked very well together for the last five years. I am able to complement his skills and Illyria is of course his main focus.”
Talk to McKenna about the people and companies she has worked with in her career and you very quickly get a sense of fierce loyalty and discretion in her business dealings.
Her language is dotted with the management speak common among corporate consultants, but warms when she speaks of her three boys aged 4, 7 and 8 – joking how the gap between the older two was ”almost the technical limit”.
Starting her career at McKinsey straight out of university with an economics degree, McKenna went through what she calls the consultancy’s “apprenticeship” for business and government executives.
Having written her thesis on native land title regimes and their significance for mining agreements just after the Mabo decision, she was sent to Woodside’s liquefied natural gas plant in Karratha for her first project, donning overalls to talk to workers before helping to formulate a strategy for management. Then she consulted Johnson & Johnson’s local medical devices division, and did various projects for Telstra.
She rose quickly through the ranks, becoming partner by 29, the second-youngest ever at the consultancy globally. Asked what triggered her speedy ascension, she says only that she was “very lucky to work with partners who were excellent at what they did … it means your skills increase so much faster than they might otherwise.”
It was also at McKinsey that she met her high-powered husband, James Flintoft, who later became a senior ANZ executive before becoming acting deputy secretary of the Department of Agriculture, Fisheries and Forestry.
McKenna’s career with Lachlan Murdoch began in 2005, just after she returned to Sydney from studying international relations at Cambridge. Murdoch had also just returned to Australia, having walked away from his executive role at News Corp in New York to start his own business. Having known each other since the mid 1990s through mutual friends, the two caught up.
”He said ‘why don’t you come and help me set up Illyria?’,” McKenna says. ”I loved working at McKinsey and had found that I’d learnt so many different skills, but was ready to make a transition to an executive role.”
The pair spent the first two years ”lamenting that the industry was at such a peak in terms of valuations”, she recalls. ”Many of the assets and companies and opportunities were either very expensive or the timing wasn’t quite right.”
Illyria built up an eclectic mix of investments, with stakes in the Indian cricket team Rajasthan Royals, online DVD rental company Quickflix, toy marketer Funtastic and digital media company Destra, while Murdoch waited for a two-year non-compete agreement with News Corp to end.
Then, in late 2007, came the seemingly big break to make a mark on the Australian media landscape: a $3.3 billion plan to privatise Consolidated Media Holdings with Murdoch’s long-time friend and former business partner James Packer, which would deliver stakes in Foxtel, Fox Sports and PBL Media, owner of the Nine Network and ACP Magazines.
Behind the scenes, McKenna was running the bid, which over the next months turned into a high-stakes game that saw her and Murdoch jet to San Francisco and New York scrambling for co-investors in the global financial crisis.
In the end, Packer delivered the final blow, deciding he wanted to sell down his CMH stake rather than a joint venture, and playing hardball on price.
It turned out to be a blessing in disguise: as Rupert Murdoch pointed out later, his son had been ”lucky” as debt and the advertising downturn would have crippled the business.
Asked about the rollercoaster, McKenna deflects. ”It was a very trying year for everyone in the business community with the global financial crisis and I think that we are pleased with how well we conducted ourselves over the course of that year.”
When the buyout fell over, she maintains there was a ”mood of ‘plenty of other irons in the fire’,” pointing to the more than $250 million in investments Illyria has made since in DMG, Prime and Ten.
McKenna won’t elaborate on lessons the pair learnt from the deal they were lucky to miss out on.
”The things we might have learned from that particular transaction we have incorporated of course into arranging the investment of Prime, the investment in DMG and the investment in Ten,” she said.
”For us it was something that happened that was only one opportunity we were considering at the time… That one fell over, others came to fruition.”
The companies Illyria has invested in since are all media businesses in need of a strategy overhaul.
At Ten, which Lachlan Murdoch runs until appointed chief executive James Warburton starts next year, McKenna is intimately involved seeking to ”revitalise the organisation which has become somewhat moribund”.
Having removed the former TV boss Grant Blackley early this year, the pair have trimmed costs, sacked 190 people, walked away from costly sports rights negotiations and axed underperforming programs.
McKenna says Ten’s margins should get back up to its former industry-leading levels.
Murdoch freely acknowledges McKenna’s influence on his investments. ”Siobhan has made a huge contribution to our businesses,” he says.
”She consistently brings independent thinking and rigorous analytical skills across all our operations.”
While her main professional life is in the private sector, the daughter of a public servant has been keen to play a public role, too.
Her first government office was on the Advisory Board of the Bureau of Meteorology, appointed by another former McKinseyite, the Liberal MP Greg Hunt. She moved on to the Productivity Commission after a couple of years, taking leave in 2009 to join the NBN board.
With work her only hobby, what does she do in her downtime? Perfect weekends are spent with her family, she says. There’s the occasional visit to the ballet, but mostly, “my Saturday nights are at home with takeaway pizza, a glass of wine and a Shrek DVD”.
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