Saturday, February 25, 2006

John Armstrong: Peters hitting right notes

It has taken a while - it was always going to - but Winston Peters is starting to come of age as Foreign Minister.

That might seem a rather generous assessment at the end of a week when he took a wild swing at the United States.

But the brouhaha died down almost as quickly as it erupted, mainly because one of his priorities is enhancing relations with Washington, not undermining them.

He was the victim of his belligerence towards the media. An impromptu press conference after Tuesday's speech to the Institute of International Affairs saw him ratcheting up the rhetoric when he should have stuck to his earlier script.

No slight was intended. But the incident was a reminder that Peters is first and foremost a political scrapper.

Double-breasted suits aside, he is too long in the political tooth to be remoulded into some safe, benign, risk-averse factotum of the kind the Ministry of Foreign Affairs would prefer.

But it is no longer plausible to suggest that his holding the portfolio is his idea of a bad joke. It is not immediately obvious on first or even second reading, but this week's speech shows he and his advisers have thought long and hard about how he intends putting his stamp on the portfolio, given he must operate within the confines of Labour's foreign policy parameters.

It is a plea to be taken seriously. His desire to make a real difference to Washington-Wellington relations should be making his ministry very happy. It may also prove extremely helpful to Labour in countering National's efforts to make the running on that front.

Speaking after Peters' address, National's foreign affairs spokesman, Murray McCully, likewise stressed his party's "unambiguous desire" for a "better, more mutually respectful" relationship with the United States.

Like McCully, Peters has no background in foreign policy. He may carry an awful lot of political baggage, but none of it taints the priority he has set himself. He can play the honest broker with the Americans in a way a Labour minister could not.

That is to Labour's advantage, given the battle fast developing between him and McCully for Uncle Sam's affections.

Peters will go to Washington mid-year. The advance billing of the visit means he will have to shake some very important hands. Otherwise the trip will be deemed a failure.

It is typical of Peters to raise the stakes so far in advance. But it puts the pressure on his officials to ensure the visit is a success.

That is even more essential as it is now odds-on that Don Brash will go to Washington in late April with McCully, ostensibly for a top-level meeting of business leaders and politicians being organised by the New Zealand-United States Council to push New Zealand's case for a free trade deal with the United States.

As Foreign Minister, Peters will get more access to those that matter. But McCully clearly hopes Brash's status will open doors to National that otherwise might remain closed.

McCully has grabbed his shadow portfolio by the scruff of the neck, forcing the party to confront things like defence spending which have been too long consigned to the too-hard basket.

McCully's personal view is that National must put real money where its mouth is and boost the defence budget. His speech was also highly critical of Labour for failing to provide a strategic assessment of potential risks to New Zealand's security in the form of defence white papers.

It is understood he will also get the party to investigate the feasibility of reviving the Air Force's combat wing.

All this must be music to American ears - but not enough to drown out the jarring sound of McCully trying to steer his party into the position of being 100 per cent behind the ban on nuclear-powered warship visits.

That concession to domestic pragmatism necessarily imposes what McCully describes as "limitations" on how far the Americans will go in normalising relations, particularly in the defence arena.

Labour has maintained the pretence that New Zealand-United States relations are so close to normal that the disagreement over nuclear warships does not really matter.

It does to the Americans. Peters has grasped that.

Frustration with the obstruction caused by the anti-nuclear law prompted the previous American ambassador, Charles Swindells, to suggest a dialogue to find a way through or around the obstruction which has dogged the relationship for two decades.

It may have proved impossible. But nothing could happen until the two countries started talking about the problem instead of parking it to one side.

The Americans waited for some signal from the Labour-led Government that it was interested. None was forthcoming. The invitation lapsed. In contrast, Peters realises some kind of initiative on New Zealand's part is required to revive it. Tuesday's speech tried to offer one - more co-operation between the two countries in the Pacific.

It was a neat dovetailing of Peters' two main priorities - better relations with Washington and more focus from Wellington on struggling Pacific Island nations.

His argument was that both Washington and Wellington had a stake in ensuring stability in the region. But it was New Zealand's contribution to maintaining that stability which helped the US meet its security objectives elsewhere.

That may have been "overlooked" by Washington. Nevertheless, the two countries had a connection of interests in the Pacific which might offer fresh scope for pushing their relationship on to a new level.

All the carefully crafted language went down the gurgler immediately afterwards. But it is unlikely the Americans will have taken umbrage at Peters waving a stick at them. Peters has already struck up a friendship with the new ambassador, Bill McCormick.

The more pressing question is whether Peters is infringing Labour's comfort zones by getting so close to the Americans. When he became Foreign Minister, the Prime Minister was dismissive of any notion that the relationship needed to be taken to a new level, saying New Zealand could "paddle its own canoe".

However, Labour knows it must cut Peters some slack. If he can get an unlikely breakthrough on a free trade agreement, all the better.
The word is that the Prime Minister is ringing him and chatting to him on a frequent basis. She is obviously trying to establish a rapport that can survive the crises yet to come, foreign policy or otherwise.

While that is simply good insurance, Labour has a bigger investment in Peters feeling he is making a success of his job.

If he is not given room to breathe, he will become frustrated. And a frustrated Peters is a dangerous Peters.

Editorial: The Prince and his principles

Prince Charles is in trouble again. He has sued the owners of Britain's Mail on Sunday for printing extracts of a private journal he had intended to be circulated only among friends, officials and his private staff of speechwriters. The journals contain some frank jottings about political leaders at home and abroad and musings on some of the prince's idiosyncratic concerns.

Some of it is familiar; the description of Chinese leaders as "appalling waxworks" at the handover of Hong Kong in 1997, for example, but it is all getting a wider run in the British papers, which have been supplied with copies of the journal since a court began to hear the suit. Commentators are feasting on entries such as his annoyance at being seated in business class for the flight to Hong Kong, his regret at the decommissioning of the yacht Britannia and his observation that Tony Blair listens to advisers who have no experience of what it is they are taking decisions about.

Comments such as that are a cue for critics to note yet again that the heir to the throne has lived a cossetted privileged life with little experience of many of the things a Government must make decisions about, but those are easy shots. The more serious revelation to emerge from the hearing of the Prince's case has come in a paper written by a former aide who suggests the Prince sees an independent role for himself in political debate, and even in diplomatic conduct.

Mark Bolland, a former deputy private secretary, says Charles sees himself as a "dissident", standing up for unpopular causes, and once took it upon himself to snub a Chinese state banquet because he did not approve of China's regime. He made sure his absence was noted in the national newspapers.

It is not clear from these disclosures whether he sees his dissident role as suitable only while he is Prince of Wales or whether he is preparing to be a more politically active monarch than his predecessors. The suggestion is enough to cause spluttering among Westminster constitutionalists but it might be time to ask, what harm would it do really?

The constitutional monarchy is no longer in any position to seriously rival the power of Parliaments, in Britain or any other place where the Queen remains the nominal head of state. The only real damage an outspoken King could do would be to the public view of the monarchy, and that would depend on the causes he chose to champion and his powers of persuasion.

Prince Charles' "dissident" opinions tend to be those of a conservative country gentleman. He doesn't like much modern architecture, is sceptical of educational fads and keenly supports conservation campaigns. None of those are likely to cause public consternation. He probably does not intend to indulge in acts of disapproval of foreign regimes and the like when he ascends the throne, but if he did, would it matter?

Foreign governments can be left in no doubt it is the elected Government that speaks for. The force of a royal snub or suchlike would depend on the level of popular respect for the monarch's view and the notice taken of him.

Conceivably the public could come to appreciate a head of state who was willing and capable of expressing concerns that might be impolitic or undiplomatic but worth hearing from someone highly placed.

In this country the Queen's representatives have occasionally acted independently of Prime Ministers to meet Treaty of Waitangi obligations as the Governors-General have seen them. The constitutional fabric has survived. If Prince Charles means to keep the power of speech when he takes the Crown, good luck to him.

John Roughan: Best humour is love-based

One of the things that survivors of convent school laugh about in later life is the tales they were told by nuns with names like Sister Ignatius.

I don't think nuns like Sister Ignatius are around any more, tough old crones who would swat you with their rosary beads at the drop of a pencil, but they carried in their heads a fund of gruesome and glorious stories that could keep a class spellbound.

The stories were always about saints and martyrs and quite a few featured characters or relics who bore what the church called stigmata. The dictionary defines stigmata in Christian belief as marks corresponding to those left on Christ's body by the crucifixion. But according to what we were told, they were not just marks, they bled.

So when I read a synopsis of the "Bloody Mary" satire that CanWest proposed to put on television I was not immediately offended. It sounded gross but it also sounded like it could have been made by blokes who had been held spellbound by the stories of Sister Ignatius.

One of the interesting things about offence is that it is rarely committed by people who know their target intimately. Try as they might, detest the subject as they might, they understand it too well to be truly vicious. At the same time their intimacy with the subject can improve the fun they have with it. It has been often noted that the best humour is grounded in love, not hate.

That was the difference between someone like David Lange, who loved human nature, and a dry wit such as Sir Robert Jones who was never half as funny.

The religious element in the South Park satire sounded like it could work, the menstruation reference, less so. That could only be the work of blokes. I could believe Helen Clark would find the programme repugnant, I was less convinced it would be offensive on religious grounds.

The Catholic bishops' letter to their congregations last Sunday had been less than convincing. They had not then seen the programme and seemed to be speaking out mainly to meet the expectations of Catholics looking for a cause. Many Christians who applauded media that deferred to Muslim sensitivities over the recent cartoons had wondered aloud whether they would receive the same consideration.

Here, sooner than they could have hoped, was a comparable case. Those who had defended publication of the offensive cartoons also drew the comparison and were quick to support the television programme.

When the broadcasters decided to bring it forward to this week they did me a favour. For to my mind this case was different from the Danish cartoons in one respect. We knew the cartoons had been commissioned to offend a religion that neither the cartoonists nor the publishers knew intimately or understood very well.

Not so, possibly, the South Park programme. I didn't need to see the cartoons to know there was no good reason to publish them. I did need to see this programme.

I tuned into C4, where I'd never been before, eager to apply my own test of offensiveness. It is an intuitive test. If the programme was going to hurt me, as the Virgin in the Condom hurt me, I would know it in my heart.

It is this spiritual character of religious belief that makes the subject such a difficult one for thinking people to deal with. As far as they can tell, religion is a purely cerebral orientation much like their adherence to civil liberties and all the values of the enlightenment.

That leads them to see a false conflict, fearing that any deference to religious sensitivity is a surrender of the freedoms they hold dear.

Ignorance of religion leads these people to say the most facile things. Brian Edwards, discussing the South Park programme on Newstalk ZB one morning this week, said, "You have got to distinguish between respect for people who hold a belief and respect for the belief."

After a little diatribe on the absurdity of the idea of virgin birth he went on, "What these people are saying is, you must respect this belief and if you don't we will punish you."

He could not be more wrong. All these recent issues of religious offence are entirely about respect for people, not their creed necessarily. I have no respect for certain tenets of Islam, or of Christianity if it comes to that, but I understand the importance religion has in the heritage and identity of people and I think what's important to them deserves a degree of care.

If religious people cannot easily explain the nature of their wound when they're offended it nevertheless should not be beyond the capacity of people like Edwards to figure it out.

His pretence of respect for the religious as people is mere cant anyway. How exactly does he propose to demonstrate his declared respect for them while reserving the right to defecate on images sacred to them?

Defecate, by the way, turned out to be not too far from what the producers of the Bloody Mary episode did with the Madonna. Did they hit me in the heart? No. It was gross, needlessly so, and it was the least clever element of a clever little sketch. But it didn't meet my test of offence.

It was quite funny in a devilishly juvenile way and it was part of a valid poke at the way religion can be perverted for purposes that relieve people of personal responsibility. It was a far stronger comment on modern social therapy and the destructive psychology of victimhood than on anybody's religion.

I wouldn't be surprised if Edwards was offended.

You will be thinking I don't like him, but it is important to distinguish between him and his beliefs. It his trite liberal orthodoxy that always rubs me up the wrong way.

Whenever I hear that comfortable academic humanism, the pseudo-compassion for the crowd, I have the urge to offend him, if that is possible, in the cold, dead circuitry of his soul.

That is a bit nasty but he wouldn't want me to censor myself, not with his beliefs in free speech and all. Anyway, I'm not being entirely gratuitous. I am trying to help him understand the nature of religious offence.

What hurts people is not what is said about them or their race, religion or other element of their identity, but rather the fact that somebody would wilfully hurt them out of the blue, with a cartoon, a column, a quip, for no good reason that they can see.

When they can see a good reason - and genuine humour can be a very good reason - they don't take offence. Not really, not in there where it hurts.

Paul Thomas: Fame game must be played both ways

Andy Warhol's dictum that in the future everyone will be famous for 15 minutes has long since overtaken Henry Ford's "History is bunk" as the war cry of American cultural imperialism.

"Fifteen minutes of fame" is a short-hand term for the celebrity culture that has pervaded the Western World and which is based on the premise that not only does everyone want to be famous, these days everyone can be famous.

It needs to be said straightaway that "fame" and "celebrity" are increasingly loose terms and neither are what they used to be. It wasn't always the case that you could be famous for being famous; once upon a time you actually had to do or achieve something.

Last weekend's canvas magazine had a story about pets which included a section on celebrity pets. The celebrities in question were three actors and two reporters. This quintet have three things in common, apart from the fact that I've never heard of them: they're photogenic, they don't look a day over 25 and they're on TV.

One's first instinct is to harrumph and dismiss the whole exercise as yet another example of contemporary magazine journalism's tendency to inflate and trivialise, often simultaneously. On closer consideration, though, one's forced to concede that the magazine has a point: what is celebrity in its modern manifestation but having your photograph in the print media and your image on TV on a regular basis?

Some years ago I was the hired hand on All Black John Kirwan's autobiography. Kirwan was New Zealand rugby's brightest star but despite his on-field exploits and iconic status in our national game, it wasn't until he fronted a TV advertising campaign (for bananas) that he had to get used to being recognised and button-holed in the street.

Before that he'd had the disconcerting experience of sitting anonymously in a bar or restaurant and overhearing people he'd never set eyes on talk about John Kirwan as if he was their best mate or partner in a recent one-night stand.

The desire to make a name for oneself - rather than to excel or contribute - has infiltrated all walks of life. How else to explain the fact that cricket umpires can no longer give a batsman out by raising their finger in an understated, unfussy way, as umpires have done for 100-odd years?

Now they all have to have their trademark, the distinctive signal that sets them apart. Our very own Billy Bowden is, of course, a trailblazer here but his colleagues are waking up to the fact that Billy's look-at-me quirkiness hasn't done his career any harm.

The downside of celebrity is that you become public property and therefore can't control the timing and circumstances of your exposure.

The media is sometimes accused of building people up in order to cut them down to size.

This can probably be traced back to the Anglo-Canadian press baron Lord Beaverbrook, the Rupert Murdoch of his day, who told Rudyard Kipling that: "What I want is power. Kiss 'em one day and kick 'em the next."

(This brazen declaration caused Kipling to conclude that the press exercised power without responsibility, "the prerogative of the harlot throughout the ages".)

In New Zealand we call this the tall poppy syndrome.

While some of the more feral British tabloids and US scandal-sheets like the National Enquirer do take an unholy delight in helping high-fliers to crash and burn, the mainstream media is far less proactive. It simply works on the premise that celebrities are newsworthy, whether they're standing on the red carpet clutching an Oscar or disgracing themselves.

It's news when Lee Tamahori goes off to Hollywood and gets the gig to direct the new Bond movie just as it's news when he's arrested for soliciting.

The tall poppy syndrome is a smokescreen concealing the fact that many of those who do very well out of the fame game want to have it both ways. They happily use the media to develop their profile, advance their careers, bump up their asking price, plug their films and records and products and portray themselves as saviours of a political party or country. Some of them even hawk their wedding photos or baby snaps.

But then when they slip up - when they're discovered in bed with a rent boy or when the fairytale marriage turns out to be a publicity stunt that's outlived its usefulness or when the bouncing baby grows up to be a shop-lifter or a drug-user - they demand that the media averts its gaze.

They cry invasion of privacy and invoke the tall poppy syndrome.

Obviously some of these people are stupid or hypocritical or both. But most of them have fallen into the fame trap which is to believe that they're extraordinary individuals and therefore not subject to the rules and realities that govern the rest of us.

When that happens they conveniently forget that they couldn't have got where they are today without the media and, secondly, that when they set off down the yellow brick road they effectively entered into a Faustian pact.

And they obviously never bothered to find out why fame is sometimes referred to as the Bitch Goddess.

Fran O'Sullivan: Clinton a role model for life after politics

Helen Clark must have winced when she read in the lead-up publicity to yesterday's global business forum that she would get the chance to grill Bill Clinton.

Okay, Clinton was a no-show at the Progressive Governance group's recent outing in South Africa, where Clark along with a number of the world's leading centre-left luminaries would have tossed around catchy policy solutions at their annual ideas junket.

But the Prime Minister has met the President several times now.

She took no time at all to correct an impression she was simply out to go one up on talk show host Paul Holmes who compered Clinton's last Auckland performance at a BMW-hosted dinner.

It's a funny thing how normally hard-bitten journalists go a bit gooey when they bracket a female political leader in the same sentence as the world's leading political rock star. Even crusty sub-editors can't help having a bit of sport where Bill Clinton is concerned.

I experienced a bit of it myself when I read the front-page pointer "When Fran met Bill" directing readers to "an interview with the Herald's foreign affairs editor Fran O'Sullivan" the time I traipsed across to London for a Clinton book interview as part of what was clearly his presidential redemption tour.

Like Jenny Shipley, her immediate predecessor as prime minister, Clark might indeed appear just that little bit girlish alongside this extremely charismatic male politician.

But these two female politicians are pretty hard-boiled. They know Clinton's undeniable sex appeal has an obvious political utility. Just ask Hillary Clinton, who will need his wattage to warm her own cool image if she gets the nomination as the Democrat candidate at the next United States presidential election in 2008.

There'll also be more than a bit of reflected glory in the offing for Clark when British Prime Minister Tony Blair traipses to New Zealand late next month for a fleeting visit. Blair and Clark also know each other pretty well. He helped get the US Government off her back after her very public gaffe at the start of the Iraq invasion. She successfully borrowed his Labour pledge card as collateral for her own election campaigns, raiding her Leader's Budget for the exercises.

Then there's the upcoming visit by Chinese Premier Wen Jiabao. It's fair to say that Wen - who does not have any obvious sex appeal - will not publicly overshadow Clark. She towers above him (physically).

His political utility is of a different kind. As the latest in a fast-growing list of top political leaders to visit New Zealand his presence will also help cement opinion that Clark is a leader who is capable of making it offshore with a big international job.

Which is just as well as we do not treat our past political leaders all that well.

Just ask Mike Moore, the former Labour Prime Minister (for eight weeks) and former Director-General of the World Trade Organisation, who returned home last year to live, but struggles for local relevance.

Or the late Labour Prime Minister David Lange who turned down a diplomatic posting to India but (sadly) went on to make a parody of himself touring pubs with comedian Gary McCormick instead of making better use of his talents to forge a post-politics career.

Former National Prime Minister Jim Bolger burnished his own image with a period as New Zealand Ambassador to Washington then went on to cement a career back here as chairman of New Zealand Post.

But for the most part, as the expat businessman Douglas Myers has also found, when our top people get out of the water, it closes after them.

So when our top New Zealanders return visibly enhanced by their offshore success, it seems just that much easier to cut them back down to New Zealand's size, than use them to lift ours.

If they complain they are told where to go. If they want to help out they sometimes get the same reaction from those that have yet to grow by spreading their wings. But sometimes it's because their very success threatens incumbents who find them difficult not challenging.

You see it a lot in New Zealand where we are just not that good at embracing talent. It is a fundamental but very human absurdity that gets in the way of our progress as a nation.

Clinton got round the problem by turning himself into a one man NGO (non-governmental organisation) after leaving the presidency.

He probably could have won it again, notwithstanding the Lewinsky affair, if he was not constitutionally bound from seeking a third presidential term. Clinton would have overshadowed others - not to mention his own president - if he had opted for a run at a lesser political job.

Now he travels the world with President George Bush snr at the request of President George Bush junior, a roving presidential ambassador dealing with issues such as the Asian tsunami and even Hurricane Katrina, and, putting his own Clinton Foundation to work in the fight against HIV-Aids.

A far better option than the one Lange took.

He still rates highly on Kiwi adman Kevin Roberts' Lovemarks list. What people have said about Bill Clinton include: "I would vote for him again in a heart beat", "He truly cared", "A fascinating man", "History will judge him on his accomplishments not his peccadilloes".

That's the Clinton effect.

With some creative thinking, we should be able to come up with options that do not cut short the contribution our own people have yet to make in their prime. Just call it the Kiwi NGO.

Brian Gaynor: Kiwis not buying merger sales pitch

It wasn't a great week for Grant King, managing director of Origin Energy. King, who is also chairman of Contact Energy, was in New Zealand to promote a proposed merger between the two companies.

King's charm offensive was unsuccessful as most analysts and institutional investors believe he is trying to gain full control of the New Zealand generator without paying a premium for control.

The Australian will have to put up a much more compelling argument if Contact Energy shareholders are to vote in favour of the proposal.

The story began at 8.31am on Monday when Contact Energy requested a trading halt in respect of its shares.

Three hours later, simultaneous releases were made to the NZX and ASX regarding the proposed merger of Contact Energy and Origin Energy, the interim result of both companies and the resignation of Contact's chief executive, David Hunt.

Hunt's resignation was a major surprise as he only took up his position on October 1, 2005. He has a base salary of $550,000 and the ability to double this through bonuses.

The resignation suggested that the merger did not have unanimous approval although the press release, and Hunt's personal statements, claimed the two issues were unrelated.

Contact announced net earnings of $146.6 million, including a one-off gain of $33.4 million from the sale of subsidiaries, compared with $91.9 million for the six months to December 31, 2004.

The result was better than expected and Contact's share price would have risen if the merger proposal had not been announced.

Origin reported net earnings of A$193.7 million ($216.5 million) for the six months to December 31, 2005, compared with A$169.8 million for the previous corresponding period.

The result was below market expectations and Australian analysts said the group's share price would have fallen if the merger proposal had not been revealed.

Contact Energy contributed A$226.5 million, or 51.3 per cent, of Origin's earnings before interest and tax (ebit) in the six months to December 31, 2005, compared with $85.7 million, or 26.2 per cent, in the previous corresponding period when it was included for only three months. (Origin accounted for its 51.4 per cent stake from October 1, 2004.)

Contact has supplied almost all of Origin's ebit growth in the past 18 months.

King and Contact Energy director Phil Pryke hosted a telephone conference for analysts from Wellington after an earlier presentation to the media was abandoned because of a communications breakdown with Origin chairman Kevin McCann in Sydney.

The early afternoon conference was a great opportunity for King and Pryke to gain first advantage and put a strong case for the merger to analysts and fund managers.

They failed miserably.

The brunt of their argument was that the two companies should combine for these reasons:

* It would eliminate the conflicts at a strategic and operational level arising out of the present ownership structure.

* It would enable them to manage the two companies' financial position on a unified basis.

* New Zealand faces fuel shortages, and the combined company would be in a better position to face this challenge.

King and Pryke mentioned several additional reasons why the merger should proceed, but they were frustratingly short on detail and financial projections.

Most of the financial benefits - a stronger balance sheet, strong cashflow and a 60 per cent dividend ratio - are more advantageous to Origin shareholders as the New Zealand company already has a strong balance sheet and cashflow. In addition, Contact normally has a dividend payout ratio in excess of 75 per cent whereas Origin's has been around 35 per cent.

The first question from the floor was about the absence of the normal takeover premium for Contact Energy shareholders. The reply was that this was not a takeover; the two companies were coming together to reduce risk.

The next were about Contact's three independent directors, Pryke, John Milne and Tim Saunders.

Why do they support the offer before the independent appraisal report has been prepared? Why did they appoint an investment banker to prepare this report when these organisations can have conflicts of interest because they are constantly seeking different mandates from listed companies?

In reply to more questions, King and Pryke said there were virtually no cost savings from the merger but Origin's exploration and production activities would reduce the risks to Contact shareholders.

How could this be when the exploration and production division makes a much smaller contribution to Origin's ebit than Contact?

Not surprisingly, most New Zealand analysts were negative on the merger while Australian analysts covering Origin were positive.

James Miller, of ABN-AMRO, who has a great deal of credibility as far as Contact is concerned, was particularly negative about the merger terms. He revised his Contact DCF valuation from $7.34 to $8.24 a share after the superb interim result and concluded: "The offer will be voted down by the Contact shareholders at the EGM, which, in our view, will result in a revised bid from Origin."

Miller also went on the offensive in 2001 when Edison Mission made a takeover offer for Contact Energy and Pryke, Milne and Saunders recommended acceptance.

Miller played an important role in the failed 2001 bid. He also opposed a $5.57 a share offer from Origin in 2004, as did the independent directors.

King and Pryke held one-on-one meetings with institutional investors and the media on Tuesday and Wednesday, but they had surprisingly little to offer.

They continued to emphasise the main terms of the merger as:

* Contact will purchase Origin's New Zealand assets and buy back its 51.4 per cent shareholding. As a consequence, about $1 billion of debt will be transferred from Origin to Contact.

* Contact shareholders will own 24.3 per cent of the merged business and Origin shareholders 75.7 per cent. The ratio is based on share prices over the past nine months.

The transfer of $1 billion of debt from Origin to Contact is a loss to the New Zealand Government as the merged group will pay less tax in this country and more in Australia.

It is difficult to understand why the merger terms are based on share prices instead of earnings, particularly as last year's annual meeting had a big impact on Contact's share price.

One week prior to the meeting, which was held on October 12, Contact's share price closed at $7.66. The meeting was surprisingly negative - particularly in view of this week's result - with King placing a great deal of emphasis on the group's gas-supply problems in 2008 and 2009.

Contact's share price fell to $6.75 less than two weeks after the meeting.

By the middle of this week, King and Pryke were on the back foot and were claiming the Explanatory Memorandum, which will be published in May, will contain compelling arguments in favour of the merger.

But one of the most important objectives of a merger proposal is to gain first advantage, and King has failed in this regard. The Explanatory Memorandum will have to be particularly convincing or King will have to change the merger terms if New Zealand shareholders are to vote in favour of the proposal.

Liam Dann: How Mitterrand fell for Mickey Mouse

Michael Eisner

"I don't mean to name-drop," says the man widely credited with saving Disney in the 1980s. Thankfully, he did. He's had the sort of career that allows him to drop the names that make for arresting anecdotes.

How about the time George Bush Snr helped him save EuroDisney by pulling a fast one on Francois Mitterrand? Mitterrand had dealt the Paris-based amusement park a terrible blow on opening day by declaring he didn't think much of it and the crowds were staying away.

At a chance dinner meeting with Bush Snr, Eisner recounted the story. Bush promised to pull a few strings next time he was Paris.

True to his word, he lured Mitterrand to a dinner at the EuroDisney hotel, where the disgruntled French leader was ambushed with a surprise media outing - and told to smile and wave.

Act on your ideas, Eisner said. "We all have great ideas all the time but most people never act on them."

And don't be afraid of bad ideas.

Eisner - who prior to leaving Disney last year was the highest paid executive in the world - admits to a few shockers. Like his plans for a Colossus of Rhodes style Mickey Mouse hotel straddling the street outside Disney HQ.

And the Disney brand car? He was dead serious about that for a while.

Eisner is a funny guy. Of the magic he worked at Disney, he said: "Honestly, it was in much better shape than people think ... I guess saying that kind of lessens the impact of my speech." It didn't.

Jack Perkowski

When it comes to having a captive audience you can't beat opening for an American President.

For security reasons, the China expert's speech was compulsory viewing for the media if they wanted to see Big Bill.

At least he could see the funny side.

"My parents gave me the name Jack. The Chinese have given me a local name. I've only been in New Zealand for eight hours and I already have another nickname: Who is ... ?"

Perkowski looked like an old-school American capitalist. You'd get Joe Pesci to play him in a movie and he really should have had a single malt in one hand and a cigar in the other.

But for the numerous exporters in the crowd, Perkowski's frank advice on doing business in China was one of the highlights of the day.

Example One: No matter how hard it is to put in place, you have to build your own local Chinese team to staff your business. That's the only way you'll get the understanding of costs you'll need to succeed.

Example Two: Asked about what the Chinese want to buy as their wealth grows, he had already polled his Chinese staff. "Ten years ago, the answer was TVs, fridges and cars. Today, it is healthcare and education."

This is from a man who has been there and done it in China. He left his job as a Wall Street banker to set up a car components company in 1994.

His company, ASIMCO, now has 18 factories and sells US$400 million worth of car parts a year in China.

* If there is one New Zealand company that could use a chat with Perkowski it is Fonterra, which has just embarked on a joint-venture in China. So it was great to see the dairy giant's strategy man, Graham Stuart, had him cornered at the coffee break.

Too bad for Stuart, he couldn't shake those pesky politicians, John Key and Phil Goff, who seemed desperate to crash the conversation.

Bill Clinton

Without a doubt the Elvis of American presidents. The sense of excitement around the fact that Clinton had entered and/or left the building was palpable.

Just like The King in his Vegas years, he started slowly - head down, mumbling quietly, almost threatening to disappoint - before building to a crescendo of passion and enthusiasm for saving the world that will have turned hardened business brains into campaigners for cheaper Aids drugs, bio-diesel and wind power. For the rest of the day at least. This was an audience that had paid a lot of money to be star struck and they weren't disappointed. What made it special was that he wowed the crowd with his message, not his humour.

* For those who wanted to get really close to Clinton there was a meet-and-greet session held just before his speech ... allegedly costing $5000 a pop. We'd love to tell you who queued up for the chance to touch greatness but the lights went out just as we were expecting the chosen to troop back into the auditorium for his speech. Coincidence ... hmmm.

* Clanger of the day:

Master of ceremonies Jim Bolger introducing TelstraClear boss Alan Freeth (who was in turn introducing Michael Eisner).

After explaining that Freeth was previously head of rural services company Wrightson, Bolger declared that "there must be some connection between selling fertiliser to farmers" and selling telecommunications ... (cue awkward silence). Luckily, Freeth turned out to be articulate.

Carly Fiorina

Introduced by Theresa Gattung (clearly a fan), the mediaeval history graduate was frank about her dumping as chief executive of Hewlett Packard (HP) last year. Despite more than doubling the company's revenue, she fell victim to a public falling out with the board.

"I was fired. It's okay to say it," she said. "I guess you'd say sacked in this part of the world."

Fiorina's story is a remarkable; her first job was as a receptionist. Twenty-five years later, she was leading HP into a merger with Compaq to create one of the world's biggest companies.

Fiorina encouraged the audience to embrace change and talked about the leadership technique needed to help people overcome their innate fear of change.

Find the "fear warrior" within.

* Changes for Kiwibank ... Following on with Fiorina's themes of fear and change, Bolger chimed in. This week he had been chairing a board meeting at which he had observed that "change is the most terrifying word in the English language". Bolger is chairman of of Kiwibank. Was that a clue?

Richard Inder: Landcorp sends clear message to Fonterra

A new player in the dairy market quietly flexed its muscles this week, sending national champion Fonterra an unmistakable signal - it would not be pushed around.

The state-owned Landcorp sent the message in the form of an agreement with Open Country Cheese, the south Waikato cheese factory led by former deputy prime minister Wyatt Creech.

At the start of the next season, Landcorp will pull production from eight of its Waikato farms - equal to about one quarter of its supply - from Fonterra and deliver it to Open Country.

The 1.8 million kilograms of milk solids, amounting to less than 0.2 per cent of Fonterra shareholders' 1.16 billion kilograms of annual production, is of no great consequence.

But, over the next few years as Landcorp develops 25,000ha under pine forests in the central North Island - land formerly owned by the old Fletcher Challenge Forests - it will command attention.

It will take 18 years for this land to come into full production since it is being converted only as the forests are harvested. However, at full production, it will conservatively be producing about 25 million kilograms of milk solids a year or 291 million litres of milk. This is equal to 2 per cent of Fonterra shareholders' 2005 production and equal to more than four-fifths of New Zealand's 350 million litre liquid milk market.

More to the point, it is sufficient to give a rival exporter such as Open Country critical mass in the export market. And it could easily strike a deal with one of the major supermarket chains to supplant Fonterra in the highly lucrative domestic fresh milk supply.

Australia's National Foods, a former Fonterra target and owner of the Yoplait brand, has indicated it may set up a retail milk operation in Auckland. Across the Tasman, it is already a supplier to Woolworths, which has just bought local supermarket giant Progressive Enterprises, and may seek to negotiate a transtasman contract.

Goodman Fielder, which sources milk from Fonterra for its Meadow Fresh, Tararua and Puhoi brands, may also be keen to switch supplier.

Open Country's frustration with the terms Fonterra supplies fresh milk are well documented, so it is a fair bet Goodman feels the same way.

But Fonterra's shareholders - or for that matter the dairy giant itself - need not fear its rise.

Chris Kelly, Landcorp's affable chief executive, recognises that he can keep Fonterra and Open Country on their toes by leaving the door ajar to both. This week as he disclosed the deal, he spoke in considered tones.

The move would mitigate risks as Landcorp would not be dependent on orders from just one customer. It would not cash in its $10 million of shares it needed for the Waikato farms to supply the co-operative. Instead, they would be used to offset the extra shares it requires as it converts the forested land into farm land.

Sure Landcorp may be able to use its clout to extract more favourable supply terms than are available to smaller players. However, its interests will often be aligned with the wider shareholder base.

Farmers are already fired up about the price Fonterra pays for their milk. At the Dairy Farmers of New Zealand conference in Christchurch this week, Fonterra chief executive Andrew Ferrier fielded questions over why Australian suppliers got more for their milk than local suppliers.

The questions may have been flawed. As Ferrier noted, domestic Australian demand has a much greater influence on returns than it does in New Zealand. Nevertheless, Landcorp has the clout to demand an audience with Ferrier and chairman Henry van der Heyden. It also has the skills, resources and the incentive to argue the suppliers' corner on this issue and others as they arise.

Landcorp, joined with other majors such as the Canterbury-based Synlait, may become a far more effective check on the co-operative than the Fonterra-funded shareholders' council ever has been. The New Zealand industry and the economy, already heavily dependent on dairying, will be the better for it.

Punchy numbers

Winemaker Delegat's has been selling a picture of robust growth ahead of its long-awaited and potential $300 million flotation. But would-be investors would be wise to stress-test these projections.

The winemaker has told professional fund managers that its trading profits will grow from $18 million in the year to this June to around $40 million in the following year - a more than doubling of profits. It is counting on the strength of its brands, a weakening kiwi dollar and a big increase in production.

These are all projections that make sense given the wine industry's recent history.

However, it is worth remembering that Delegat's has made similar projections before and not delivered. In 2004, when it issued $35 million of capital notes, it forecast a June 2005 net profit of $5.15 million, but delivered only half that.

Delegat's blamed the high dollar and higher interest rates. That may be the case. However, a repeat of such a failure would be a disaster for the market.

Paul McIntyre: Telco moving away from its mammoth fixed line business

Slowly, slowly over the next couple of weeks the Australian masses are going to get a fair whiff of Telstra's straight-shootin' American boss Sol Trujillo and his "customer-centric, next-generation" telecommunications company.

Trujillo has copped a bucketload from the federal Government and the markets over his gloomy profit outlook as he attempts to overhaul the telco giant.

His repeated warnings to Canberra to go light on competition regulation or things will only get worse have also contributed to the crossfire. But that's the business and political sphere.

On Monday, Telstra is taking an upbeat message to the great unwashed, starting with a new Commonwealth Games marketing spruik for, among other things, TV-style content delivered over Telstra's 3G mobile phones and via its BigPond broadband internet service.

The idea is that Telstra may be on the nose with investors but it can still throw tens of millions at the public in a bid to be at least loved by them and grab more of their money.

Already this week Telstra's internet division unveiled its new BigPond Movie downloading service which allows customers to rent and view recent-release movies and TV shows via an internet download to PCs.

The internet, by the way, is one of Trujillo's core strategic planks as he moves the telco away from its mammoth but faltering fixed line business.

In doing so, however, Trujillo must tread very quickly with his 50 per cent stake in pay TV group Foxtel, which also offers pay-per-view movie services.

Telstra's other partners in Foxtel are Rupert Murdoch's News Ltd and the Packer-controlled Publishing & Broadcasting. As part of a deal with Foxtel's media mogul owners, Telstra has agreed not to offer services similar to Foxtel, which means none of its content can hit TV screens. Technically anyway. The BigPond folks were at pains on Wednesday to ensure that message got through.

However, those that really do want to download their $5.95 movie or $1.95 TV show and watch it on the big screen rather than a PC can do.

But as BigPond's group managing director Justin Milne put it, only "if they can work out the black wire and the yellow wire and the red wire" and connect them to the computer. But that clumsy scenario might too be usurped in the next 12 months. Already a few tech-heads have pointed out that chipmaker Intel will launch a new silicon chip called Viiv next month, allowing computer users to redirect what's on the PC screen to TV sets. It's all going to get very blurry indeed and for Telstra and Foxtel's media mogul owners it could still get nasty.

But back to Telstra's propaganda machine. As part of the oncoming Telstra marketing blitz, a week or two after its Commonwealth Games effort begins next week and before the Games start in Melbourne, Telstra's big-budget branding campaign will roll out.

This is the campaign that has untold heads and hands from the very top at Telstra all over it. That's because it's the single piece of marketing propaganda Telstra needs as a catalyst to shift public sentiment in its favour.

It will have to be bloody good. In the 1990s Telstra spent millions telling us it was "making life easier", which of course was bollocks. Everything actually went the other way.

The new line personally approved by Trujillo was to be "It's great when it all comes together" - alluding to Trujillo's push to make Telstra's phone, internet and information/content services user-friendly to the masses.

But apparently there's some jostling on that one just a few weeks out from launch.

We can assume, however, the theme of the new campaign will be broadly the same and we can also assume there will be a battalion of nervous marketing and ad types bobbing around waiting to see if their communication baby will grow legs for Sol.

If, indeed, Telstra's grand plan to win over the masses does work, Trujillo is halfway to shifting the big ship up a gear. If it doesn't, then in a few months' time Telstra HQ won't be a flash spot to be when the new boss lets off some Mexican steam.