Packer, Stokes spar over CMH stakes
Packer upped share in group to over 40%SYDNEY -- Rival Australian media proprietors James Packer and Kerry Stokes are facing off over increasing stakes in the Packer majority-owned media investment company Consolidated Media Holdings.
Packer confirmed Wednesday that he’d spent AUS$26.45 million (US$21.01 million) raising his stake in the group to over 40%, after Stokes, the majority owner of the Seven Network, spent $264 million building his stake to 18.3% last week.
Packer’s stock acquisitions Tuesday mean that he’s spent over $40 million to protect his CMH shareholding in the last six days.
At stake is CMH’s investments in the highly profitable local pay-TV companies Foxtel, and the Premier Media Group, which operates the Fox Sports channels here, as well as a shareholding in online employment site Seek.com.au.
Foxtel, which reported half-year revenues of $610 million in March and an operating profit of $157 million, is owned 50% by telco Telstra Corp and 25% each by News Limited and CMH. News has management control of Foxtel. Premier Media Group is a joint venture between News and CMH.
Stokes has currently no investments in pay TV. He famously sued Foxtel, its owners and others in a landmark case which he lost several years ago, costing Seven $128 million, after his C7 pay-TV sports channel failed.
Seven has been quiet on its intentions for CMH with a company spokesman issuing no comment earlier this week.
But industry observers believe that Stokes could be seeking a seat at the Australian pay-TV table in case the federal government requires majority owner Telstra to sell down its 50% stake in Foxtel under a possible telecommunications ownership review. Under Australian law Stokes is not required to declare that he’s making a takeover bid for the company unless his stake reaches 19.9%. However there are suggestions that he will seek seats on the board of CMH with his 18.3% stake.
Local reports have also suggested that either News Limited or Lachlan Murdoch’s private investment company, Illyria, could provide CMH with the buffer to offset any possible takeover by Stokes.
Lachlan Murdoch made an unsuccessful attempt to privatize CMH in a joint venture with Packer two years ago.