The failure of the Ten TV network sale to private equity buyers means our great media boom is fading with James Packer and Kerry Stokes emerging as the winners for doing deals that really didn't need the changes in media laws introduced by the Howard Government.
Ten is going to remain in the hands of its 56 per cent shareholders, the Canwest Global media group, controlled by the Asper family of Canada.
The sale failed because Canwest wanted at least $3.10 a share and the four or so prospective buyers wouldn't meet their demand and offered at most, $2.90 a share for Ten.
The offer had to be made not only to Canwest, but to the minority holders in Ten, which include Bruce Gordon's WIN Group with around 13 per cent.
Canwest will restructure its holding in Ten to move to full economic and legal control. That's a deal which could only have been done under the new media laws.
But the Packer and Stokes deals were done (in the first instance for Packer) under the old laws.
That saw PBL sell half of PBL Media to the CVC buyout group (owned in Europe, Asia and the US). That transaction did not need new laws but the second part, the sale of another 25 per cent two weeks ago, needed the law changes allowing foreigners to control Australian media outlets.
Kerry Stokes' sale of half of the Seven Media Group to KKR but that is as far as he has gone.
Another possible acquisitor, the Macquarie Media Group, has picked up a 14.9 per cent stake in Southern Cross Broadcasting but has spent money buying newspapers in the US, on top of its Australian regional radio station network.
A widely tipped move to control Southern Cross hasn't happened as yet
But despite trying for the best part of nine months, Canwest couldn't get a sale away to investors which included the private buyout arm of Merrill Lynch, Hellman and Friedman of San Francisco where for PBL boss, Brian Powers works. Also negotiating were the New York-based buyout groups, Carlyle and Blackstone.
In all cases the $3.10 or more a share Canwest wanted from the sale, was too much and the buyers eventually passed.
Canwest told the ASX yesterday retaining control of Ten was in the best interests of its (Canwest's)shareholders.
CanWest will now opt to take control of the TV group by converting its 56.4 per cent economic interest into voting shares, something that has been expected for some weeks after talk about the sale died away.
CanWest chief executive Leonard Asper said the company had decided to hold onto its investment: "We have spent the last several months considering our strategic options regarding our investments in the South Pacific,'' Mr Asper said in a statement.
"In the case of our New Zealand operations, we determined to divest our investment position. In Australia, however, we have determined that retaining our investment in Ten to be in the best interests of our shareholders.
Canwest is selling its NZ TV business, Canwest MediaWorks to Ironbridge Capital of Australia. The deal still needs official approval and acceptance by all shareholders.
"We believe that the company's operations have growth potential still to be realised and that our shareholders would be best served by participating in that potential.''
The company also flagged a capital return for shareholders.
CanWest bought its interest in Ten 15 years ago, when foreign ownership restrictions were in place. It held its stake via a 14.4 per cent interest in voting shares and the rest in convertible notes.
Ten shares fell 13c Monday to $2.97 before trading was halted. When the halt was lifted yesterday they eased a further 3c to $2.94 as investors digested the news and the suggestion of capital returns to Ten shareholders in the future.
