WIN, the media arm of billionaire Bruce Gordon, is due to launch action this week which could frustrate the $136 million agreed deal for PBL Media to buy STW (Channel Nine in Perth) from Sunraysia TV.
Sunraysia and PBL Media reached an agreement about a month ago, despite suggestions that WIN had been in discussions with Sunraysia and talk of a higher bid.
Now, according to weekend reports, that higher price is claimed to be an offer of $13.85 per Sunraysia share, compared to the $12.60 from PBL Media – The SMH reports:
James Packer’s $136 million mop-up bid for Channel Nine in Perth has disintegrated into a messy courtroom battle with long-time Packer family associate Bruce Gordon.
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Mr Gordon, who was close to Clyde and Kerry Packer, is a former director of the Nine Network and owns a significant stake in Publishing & Broadcasting Ltd, is taking on the younger media mogul. Mr Gordon’s company, WIN Corp, owns a stake of about 45% in Sunraysia, which owns and operates Channel Nine in Perth. WIN, the biggest regional affiliate of the Nine Network, has been trying to buy Sunraysia for years, but its attempts have been thwarted by major shareholder Eva Presser, who would not even give Mr Gordon a seat on the board.
Industry sources said yesterday that WIN had an offer of $13.85 on the table before PBL Media came along with its deal, which effectively values Sunraysia at under $12 a share. Investec chairman David Gonski advised Sunraysia on the deal. Now WIN is taking Sunraysia to court.
On the face of it this represents a split between the two long time associates. WIN is Nine’s biggest and most important affiliate; it dominates regional TV broadcasting along with Nine’s other affiliate, NBN.
WIN’s argument isn’t with PBL or the Packer camp; it’s with Sunraysia and its CEO and biggest shareholder, Eva Presser.
But WIN is arguing with PBL Media over a new affiliation agreement with Nine. Southern Cross Broadcasting has already struck an agreement with PBL for its Adelaide Nine network affiliate. That is thought to be a share of Adelaide’s revenues of around 30%.
Nine however wants a higher deal with WIN: 50% of revenue or up to 20% or so of Nine’s costs. That would put the payment around $160 million based on Nine’s costs of around $800 million in a full year.
WIN doesn’t want to pay that much and has refused to talk any further. WIN currently pays around 30% of its revenues to Nine in affiliation payments.
Sunraysia has also been in dispute with Nine and PBL on a new agreement and had not negotiated for some months before the $136 million offer was made by PBL Media.
Neither WIN nor Packer wants the WIN affiliation agreement to fall over. WIN would have nothing else to broadcast and millions of Australians would be without popular programming; PBL and Nine could not broadcast direct because that would breach the 75% maximum cap on broadcasters (that’s the maximum level of the Australian population any one broadcaster can cover) and Nine would be without upwards of $100 million in affiliation payments from WIN.
The court action against Sunraysia appears to be an attempt to pressure the PBL deal either to lessen the pressure on the new affiliation agreement, or, in the event of securing a favourable judgment, to acquire something to trade with the Packer camp.