Kerry Stokes' Seven Group Could Halt News Corp. Advance on Foxtel
SYDNEY - Kerry Stokes' Seven Group Holdings could spoil News Corp.’s ambitions to build its stake in pay TV platform Foxtel to 50 percent.
Seven Group, parent company of Seven Network Australia, is also a 24 percent shareholder in James Packer’s Consolidated Media Holdings (CMH), which wants to sell its stakes in Foxtel and Fox Sports to News Limited, the local arm of News Corp.
News has bid AUS$2 billion ($1.94 billion) for CMH’s 50 percent of Fox Sports and 25 percent of Foxtel, although Seven Group executive director Peter Gammell, Tuesday told shareholders that CMH had yet to receive a formal binding agreement for the acquisition by News Corp.
Gammel said Seven was seeking advice from competition regulator the Australian Competition and Consumer Commission about possible anti-trust issues if it were to make a counter bid for CMH.
Gammell said the company wanted to know what alternatives were available to it.
"That doesn't mean to say that we are going to buy it, it just means we want to know whether we can buy it then we'll make that decision as well," he said.
James Packer, CMH’s largest shareholder has previously said he supports News Ltd’s bid, while News Ltd CEO Kim Williams said recently he expected to close the deal later this year. The proposed acquisition has received the nod from the ACCC and is waiting for Foreign Investment Review Board approval.
Seven Group owns heavy equipment company WesTrac, which is the sole Caterpillar dealership in North Eastern China and Western Australia and New South Wales states, has a 33 percent interest in Seven West Media and investments in the Agricultural Bank of China.
Seven West Media, which includes, the Seven Network, Pacific Magazines and West Australian newspapers, last week reported a full year 97.1 percent lift in net profit to $220 million in the first financial year following its reverse takeover of West Australian Newspaper Holdings. That result included the first full year of the merger. Net profit for the previous year was $111 million. Revenue rose from $704 million to $1.84 billion. However today Seven Group said it was writing down the value of its investment in Seven West Media by $445 million.
Gammell said that the outlook for media markets over the next six months is soft and Seven group would provide no earnings guidance for 2013.
Foxtel this month reported f earnings growth of 8.5 percent to $580 million for the year to June 30, 2012 on a 4 percent increase in revenues to $2.14 billion. Pre tax profit grew to $250 million.