No boost the Nine Entertainment Co (NEC) share price yesterday from the news that regional TV group, WIN and its billionaire boss, Bruce Gordon, had raided the Nine share register and picked up enough shares to become the TV group’s biggest shareholder.
WIN, through Gordon’s private investment vehicle, Birketu, will purchase approximately 13% of Nine from US hedge fund Apollo (which has a 22% of Nine) to add to the small stake in Nine already held.
The deal is expected to complete on November 9 and will leave Apollo with 9%. It will take WIN and Birketu’s holding in Nine to 14.95%.
Nine fell 1.85% to $1.58 at the close yesterday as the deal left investors (especially hedge funds) unmoved.
NEC 1Y – Bruce Gordon builds Nine stake
This means that WIN is now a major shareholder in two of the three free to air TV networks in the country – Nine and Ten where it also owns 14.9%.
The cost of the Nine stake, close to $200 million (he has lost more than that on his stake in the Ten network).
The competition regulator, the ACCC is due to hand down its decision on Thursday on the move by Foxtel to buy a 14.9% stake in Ten and merge the TV ad sales operation with Ten’s TV ads sales department (that has already happened) and to sell a small stake in the Presto video streaming business now co-owned with rival Seven.
Ten is due to release its 2014-15 financial results at a news conference and briefing in Sydney next Monday morning.
WIN has been the long time regional TV affiliate for Nine. Nine and WIN are currently renegotiating their affiliate agreement, which expires in December, with Nine reportedly pushing for higher fees.
In a statement yesterday WIN said: “WIN Corporation announced today that its related entity, Birketu Pty Ltd (“Birketu”), a private investment company owned by the Gordon family, has entered into an agreement to increase its shareholding in WIN’s affiliation partner Nine Entertainment Co. Holdings Limited (“Nine”) with the result that on completion of theagreement WIN and Birketu will in aggregate own approximately 14.95% of Nine. WIN has been a long time investor in Free to Air Television in Australia with investments in a number of Television broadcasters.”
"WIN and the Gordon family have had a close association with Nine dating back to the early days of television in Australia when Bruce Gordon was a director on Sir Frank Packer’s Channel Nine board. WIN has been an affiliate of Nine in regional Australia for the last 26 years. WIN and Birketu were advised by KPMG Corporate Finance.”
The immediate reaction was that this was Mr Gordon seeking a bit of insurance in case the ACCC approves the Foxtel swoop on Ten (which will reduce Gordon’s leverage at Ten, although he is one of three billionaires (with Lachlan Murdoch and James Packer) who have guaranteed the $200 million line of credit provided to Ten by the Commonwealth Bank in late 2013).
It was also seen as Gordon positioning himself ahead of any changes in media laws by the Turnbull government.
