Packer Confirms New Media Sell-Off

30May07

Nick Tabakoff, The Australian, May 29, 2007

JAMES Packer’s PBL empire has confirmed it is in discussions to once more halve its stake in PBL Media, in a move that would see it relinquish management control of its flagship assets and move the family fortune away from "old media" assets.

The discussions, exclusively revealed in The Australian last Wednesday, were about PBL selling down a further 25 per cent interest in PBL Media to "funds advised by CVC Asia Pacific and CVC Capital Partners", its joint venture partner, the company said yesterday.

If the selldown proceeds, it will release about $500 million into the coffers of PBL to invest in "new media" assets, in areas like pay television and the internet.

The deal could also free up a CVC-led PBL Media to become a major player in Australian media consolidation, after some reputed disagreements with PBL on acquisition targets since the private equity firm first took joint control of the vehicle in October.

Under the selldown, PBL Media CEO Ian Law would be charged with executing CVC’s media plans in Australia.

The deal would see the PBL Media-controlled Nine, Ninemsn and ACP Magazines – the latter of which includes a number of iconic Packer family brands such as Australian Women’s Weekly and Woman’s Day – removed from PBL’s grasp.

It is understood PBL wants to finalise its PBL Media selldown ahead of the split of PBL into two companies: Crown, which will hold PBL’s gaming assets; and Consolidated Media Holdings, which will hold the PBL Media stake, as well as a number of "new media" plays it wants to remain undiluted, including its 25 per cent stake in Foxtel and holdings in Fox Sports and Seek.

It is proposed that the split will be executed, subject to shareholder approval, in August. Documentation detailing the terms of the split is still to be finalised.

But Mr Colman did not believe it necessarily represented the end of PBL’s media ambitions, saying the funds PBL and Consolidated Media raise from the selldown could be put towards a possible Foxtel takeover of Austar.

"It looks like it could be an Austar refinancing, if Foxtel decides to go for Austar without James putting extra money into Consolidated Media."

Talks between Foxtel and Austar about an acquisition recently stalled over price, but Foxtel is believed to maintain a long-term interest in a takeover.

Sources close to Park St have told The Australian that PBL Media’s capital structure of 70 per cent debt and 30 per cent equity could see it remain as an attractive vehicle for PBL to make media purchases through.

Given Consolidated Media’s likely 25 per cent stake in PBL Media, it would only have to contribute $75 million in equity towards every $1 billion purchase PBL Media would make.

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