A high stakes game involving the Nine Network and its Perth affiliate, STW 9; with an apparent threat being made to turn off programming by Nine if the owner of the Perth station didn't pay millions of dollars owing under an affiliation agreement.
The dispute came a week before Sunraysia TV shareholders meet in Melbourne this Friday and are expected to approve the sale of STW 9 to WIN Group, the regional TV operator, in for $163 million. Nine's owner, PBL Media is the underbidder for Perth.
Itwas also revealed on the day James Packer sold down his stake in PBL Media to 25 per cent for more than half a billion dollars, and sold Ticketek and the Acer Arena rights in Sydney (a big performance space on the old Olympic site at Homebush in Sydney) for more than $200 million.
The sale means Packer will only have a small indirect stake in Nine and ACP Magazines when he splits PBL into two companies, Crown (the gambling arm) and Consolidated Media.
That hasn't stopped PBL Media, now controlled by CVC Asia, the European-US owned private equity group, from running a hard line with straying members of the Nine Network
In a statement to the ASX late Friday, Sunraysia TV, owners of the operating subsidiary, Swan TV, revealed what it called 'a dispute' between Nine Network and Swan over outstanding affiliation fees of $14.7 million.
Swan had paid a substantial part of that sum on Friday, some 'under protest' "to assist in the continuing provision of programming and services by Nine. Swan TV said it will promptly address all outstanding matters."
That's a nice way of Sunraysia saying it bent to Nine's threat and paid the money.
Sunraysia's statement started: "A dispute has developed between Swan TV (the operating subsidiary of Sunraysia TV) and Nine Network Australia (a subsidiary of PBL Media) in respect of various amount now totalling approximately $14.7 million."
Sunrays said Nine network was claiming the money "for programming and services provided by them" to Swan.
Sunraysia said San had put aside the money in its accounts and retained the cash to pay for them while discussions continue to resolve "adequate verification of all the amounts involved".
Sunraysia said the dispute centres on the Nine Network's belief that "all the monies are due immediately".
Sunraysia says it wants the amounts of be 'substantiated' by Nine, but Swan has made arrangement to pay $10.6 million approximately "of which $2.4 million was paid under protest".
PBL Media may have lost the battle for the Nine Network affiliate in Perth, STW 9, but it is intent on winning the longer term war over the millions of dollars in unpaid affiliation fees.
Sunraysia and Nine have been arguing for a year or more over the new affiliation agreement for Perth, which has remained unsettled well past a new one was due to be in place.
Sunraysia has been withholding payment, especially for costs associated with AFL broadcasts in Perth. It considers the costs, levied by Nine under the affiliation agreement, to have been too high.
Sunraysia has lost money for the past year in Perth and singled out the costs of the AFL coverage last year as a major factor in those losses.
WIN too has an unsettled affiliation agreement with PBL Media and can be expected to be monstered by PBL Media to finalise a new deal.
WIN is objecting to the higher returns PBL Media and its new owners are demanding: around 44 per cent of its revenue.
Will PBL Media and its new controllers, the CVC Asia buyout group, threaten to turn off the Nine signal to WIN if it cant reach settlement on the affiliation agreement"?
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Meanwhile, in the wake of the sell down of PBL Media, James Packer's new media company, Cons Media, has a problem.
It has lots of investments in things like PBL Media, has no cash or earnings flow, except on an equity accounted basis, but has the chance to buy something, if there's the determination to do so.
Will Packer challenge his Foxtel partner, Telstra, and perhaps News Ltd, and launch a bid for the regional pay TV operator, Austar?
That course is open to him after the collapse of talks with Foxtel, which were finally confirmed on Friday by Austar, 24 hours after the company refused to comment on the talks and their status at Austar's annual meeting.
Telstra scuppered the takeover talks when it baulked at paying any more than $1.70 a share for Austar, when the major shareholder, US media mogul, John Malone, wanted around $2 a share.
News Ltd and PBL were interested, and remain interested in doing a deal closer to the $2 a share Malone has demanded, but Telstra and its American management has asserted its 50 per cent stake and refused to contribute to any takeover.
Austar said Friday that:
"AUSTAR notes this morning's article in the Financial Review and confirms that discussions with FOXTEL regarding a potential transaction have terminated.
"Other third party discussions continue but remain preliminary and incomplete."
Those discussions were officially ended after the AGM on Thursday but for all intents and purposes they were dead before the AGM: the Austar share price had fallen back to $1.68 from the high two months ago of $1.78 when the talks were starting.
The shares fell to a recent low of around $1.59 a month ago when the first opposition from Telstra was leaked into the market, but recovered after a senior executive from John Malone's Liberty company arrived in a Australia to try and finalise a deal.
AUN finished off a cent at $1.67 yesterday while PBL fell 49c to $20.86 in the wake of Friday's announcement of the sell down in PBL Media and the failure of the Austar/Foxtel deal (at the moment).
