Australia's Kerry Stokes Emerges as Possible Bidder for U.K.'s Channel Five (Report)

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Kerry Stokes

The Australian media mogul could find himself competing for the channel against Discovery Communications, Viacom and Scripps Networks, all of which have been tipped as interested buyers.

Australian media mogul Kerry Stokes has emerged as a possible buyer of U.K. broadcaster Channel 5, according to reports in Australia.

The Australian newspaper cites British banking sources as saying that Stokes expressed interest in the broadcaster in February when the sale process kicked off, and “he may return with a firm offer this month.”

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Stokes is the majority owner and chairman of Seven West Media whose assets here include the top rating commercial broadcaster Seven Network, West Australian Newspapers, Pacific Magazines and Yahoo7.  It has a market capitalization of $1.76 billion.

Separately Stokes also owns the Westrac Group, with investments in property, and mining and construction equipment. BRW business magazine last year put him on its annual Rich List at number 12 in the country, worth $2.47 billion last year.

The report says Stokes has identified Channel 5 as a way to offset subdued growth in the Australian media market. A spokesman for Seven West Media declined to comment on the report.

Channel 5 owner Richard Desmond has put an auction process in place for the sale of the broadcaster with expectations of 700 million pounds, ($1.16 billion) or ten times its profit last year. Reports in the U.K have recently said he may be lucky to get $330-$500 million. He acquired Channel 5 in 2010 for $171 million.

Bidding for the channel closes on April 14, with Discovery Communications, Viacom and UKTV co-owner Scripps reported as interested parties. Discovery’s bid will reportedly include involvement by BSkyB, which would run ad sales for the channel if Discovery is successful.

If Stokes did move on Channel 5, he could build up the broadcasters programming, which includes shows like Big Brother and CSI, from Seven’s own strong library of top rating reality shows and dramas.

Seven Network has quietly been building up its own in-house production arm, Seven Productions, into a key creator of Australian programming and formats and is now eyeing  international expansion. Seven Productions now makes over 50 percent of the network’s prime time programming .

Last month Seven entered into a U.K.  joint venture with former Maverick Television execs Alexandra Fraser, Liza Abbott and Simon Ellse, to create a new production company 7Wonder. 7Wonder will produce TV shows and formats from London, initially for the U.K. television market.

Seven Productions' programs include current Australian ratings leader, reality competition, My Kitchen Rules and renovation spin off, My House Rules, drama A Place To Call Home and long running observational documentary series like Border Security.

Seven West Media CEO Tim Worner said at the company’s financial results announcement in February that Seven is seeing strong demand for its content internationally.

“Our programs and formats are now sold into over 160 countries. We have also been expanding our production capabilities with new overseas ventures. In October we announced our JV with Beyond, which is focused on developing content for the U.S. market and we are working on more initiatives that increase our content offering, this time in Europe, so watch this space,” Worner said.

Production is a small but growing part of Seven West Media. Revenues from international sales of Seven programming showed growth of 15 percent in the half year to December 31. Overall program sales, affiliate fees and other sundry revenue was $75 million or 0.8 percent of total revenues.

Worner said having its own in house production business is a key area for the company as the network’s strategy is to rely less on third party programming. And as online media continues to grow, Seven has the ability to make more money from its own product.

Brad Lyons, Seven’s Director of Production, added: “Seven is recognized as a leader in the development and production of Australian television. We are driving our own future with the programs and content we create and leverage, and we are making deliberate and considered moves into new opportunities not only for our own primary market in Australia but increasingly in international markets.

“7Wonder forms a key element in our plans”.

Seven announced last month that Endemol had acquired format rights to make a New Zealand version of My Kitchen Rules.

And its latest foray into international production follows the formation last year of 7Beyond, a joint venture with Beyond International, which focuses on the creation and development of new shows and formats for the U.S. television market.