A split decision for Packer

PBL media, gaming will separate

James Packer has engineered another restructuring, saying Tuesday that he is splitting conglomerate Publishing and Broadcasting Ltd. into two separately listed gaming and media companies.

PBL also said that it will look to sell off its film interests, which include 50% of Australian exhibition and distribution company Hoyts and 25% of U.S. production shingle Regency Enterprises. Further details on that process were not available.

PBL's media interests will be housed in a new company called Consolidated Media Holdings, while the gaming businesses will become Crown Ltd.

At the same time, Packer is handing control of his media interests to his lieutenant, John Alexander, who becomes executive chairman of CMH. Packer becomes deputy chairman, while the roles are reversed on the Crown board.

In a statement, Packer said it was time to "let these two businesses prosper in their own right." "Investors will have the opportunity to invest in a strong and growing pure-play media company and also in a world-class gaming company," he said.

"The restructure will offer shareholders a clear choice of investment, providing each business with improved flexibility, a clear mandate and improved cost of capital," Alexander added. "It will also provide shareholders a more direct and efficient avenue to access our exciting investments in Foxtel and (pay TV sports broadcaster) Fox Sports."

The move comes just six months after PBL spun off most of its media assets into new joint-venture PBL Media with private equity investors CVC Asia Pacific. PBL raised AUS$3 billion ($2.46 billion) in gross cash from the deal.

CMH's portfolio will include 50% of PBL Media, 25% of pay TV operator Foxtel, 50% of Fox Sports, 27.1% of online jobs company Seek and 100% of Ticketek.

PBL Media includes 100% of ACP Magazines, the Nine TV Network, 50% of ninemsn, 33% of Sky News and majority interests in carsales.com.au and myhome.com.au.

About 65% of CMH's earnings will be generated from its "high-growth new-media assets," Packer said.

PBL shares climbed AUS$1.26 ($1.03), or more than 6%, to AUS$21.99 ($18.03) on news of the deal.

Shaw Stockbroking media analyst Greg Fraser said the separation has long been a favorite topic of analysts but that the timing has never suited PBL until now.

"With the sale of half of ACP Magazines and the Nine Network into the PBL Media joint venture, PBL was clearly signaling its intention to focus mainly on expanding its gaming assets globally," he noted. Fraser said the separation now allows the market to more accurately value each business according to its industry.

Crown is expected to be in the top 50-listed companies on the Australian stock exchange, while Consolidated Media will be in the top 100.

The restructure will be put to shareholders for approval in August.

Shareholders will receive one share each in Crown and CMH, plus AUS$3 ($2.46) cash for each PBL share held, with about AUS$2 billion ($1.64 billion) returned to shareholders. Investors will hold the same number of shares in Crown and CMH after the plan is fully implemented.
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