Michael Pascoe writes:

Fairfax seems to be getting its own hopes up this morning with a rather
tenuous excuse for speculating about control of Channel Ten being for sale.
It’s a rather desperate exercise:

The ownership structure of Ten Network has been thrown
back into the limelight after controlling shareholder CanWest announced plans
to sell out of an Irish television station, prompting speculation it would
divest other offshore assets.

Most of the speculation prompting seems
to be Fairfax’s own – the company did have some merger discussions with Ten in the past.

A CanWest spokesman told journalists in Ireland that the media group was selling its 45 per cent stake
in TV3 because its priority was to reduce debt and sell non-strategic assets.

TV3 certainly is a non-strategic asset – in
fact, it’s a dog. After launching in 1998, it finally made a small profit last
year and its profits look like remaining small. An idea of its weak outlook is
in the Smage story which suggests top price for Canwest’s stake might be $162 million.

By contrast, Channel Ten made a bottom line
net profit last year of $100 million with its television business enjoying a
EBITDA margin of 37.7 per cent – the highest in the Australian industry.
Canwest itself only managed a bottom-line profit of C$20 million in 2005 – a
figure hit by one-offs that took it down from C$194 million in 2004.

Thus Canwest’s 56.4 per cent financial
interest in Ten is a very core strategic holding – something a rational person
might think would only be sold if the Canadians were offered significantly more
than it’s worth.

The “concentrating on the core knitting”
theory also gets a lashing from Canwest overnight, making a rather unlikely
first investment in the US magazine market.

The venerable political weekly The New Republic
now counts Canwest as one of the four members of the private partnership that
owns it. Given the sort of money political weeklies
don’t make, I suspect Canwest will need Ten’s profit stream for a long time