Stokes and Packer, head-to-head
Australian pay-TV platform Foxtel is shaping up as the latest prize in the country’s long-running Packer v Stokes soap opera. Kerry Stokes’ Seven Network on Friday confirmed it had lifted its stake in the James Packer-controlled Consolidated Media Holdings, which owns stakes in Foxtel and other Australian pay-TV businesses, to 18%.
Two series of share acquisitions were staged last week, with A$180 million paid on Wednesday to lift Seven’s stake from juts under 5% to over 15%. A further trade later in the week saw Seven pay out another A$40 million, ending the week with an 18% stake in the media holding company.
But Packer himself, through his privately-held Consolidated Press Holdings, then purchased shares worth A$25 million, raising his stake from 38.3% to 39.3%. That buy was clearly intended to send a message to Stokes over who was in charge.
Seven is reportedly mulling a full hostile takeover for ConsMedia, which owns 25% of Foxtel (News Corp owns 25% and Telstra the remaining 50%) and 50% of Premier Media Group, which operates the Fox Sports network of channels, among others. After selling its stake in Seven Media Group, which actually operates Australian network Seven, Seven Network still has some A$1.4 billion of cash left.
But whether a full takeover will happen is unclear. Most observers see Stokes’ move as insurance for Seven, which is positioning its fingers in as many media pies as possible. The ConsMedia stake gives Seven a seat at the Foxtel table. Telstra could be forced to sell its stake in Foxtel in the future, and Stokes has been keen for years to get into pay-TV. Seven’s C7 pay-TV sports channel failed back at the beginning of the decade but recent litigation showed that the sector is still attractive to Seven.
Stokes will also now have a say should Packer decide to divest all of his family’s remaining media assets (the former “Crown Jewel”, free-to-air Nine Network, was sold off to private equity back in 2007).
And of course Stokes’ acquisition will have another side effect – annoying both Packer and Rupert Murdoch.