Things are not going the way the heavies at PBL Media thought they would go — at least in the Australian media — after PBL Media was created by the sale of 50% to private equity group, CVC.
Sure, the $4 billion war chest is being used up carefully and strategically on expanding the gaming interests (even with cost overruns in Macau). But on the Australian media side, a certain impudence is being shown by people who should know their place and costs are rising faster than thought.
Bruce Gordon’s regional TV Empire, WIN Corporation, is challenging the Packer interests in Perth and Newcastle, forcing Packer to consider doubling the cost of consolidating the Nine Network. Gordon has overbid PBL Media twice in the battle for Sunraysia TV and its STW 9 station in Perth: WIN is offering a net $163 million, PBL around $136 million. Sunraysia’s meeting to consider the PBL offer has been postponed to a date to be fixed from next Tuesday because of the second offer from WIN.
WIN is also talking to its fellow NSW regional Nine affiliate, NBN, which is owned by SP Telemedia, part of the Washington H. Soul Pattinson empire of the Sydney-based Milner family. Those discussions started three or four weeks ago and saw Andrew Gordon, son of Bruce, resign from the SP Telemedia board. WIN owns 12.7% of SP Telemedia. SP Telemedia paid $145 million for NBN in 2004 when it bought it from its parent, Soul Pattinson.
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Now PBL Media has approached SP Telemedia seeking to deal. Gordon is thought to be talking around $165 million to $175 million, Packer, a reported $200 million, according to The Australian today.
Others are steaming to Newcastle sniffing for a bone: the ubiquitous Macquarie Bank plus an unnamed third party private equity deal. Could that be Catalyst, the mob which bought the Global TV business?
For Soul Pattinson, it has the delight of selling the same asset, NBN, twice. It is the major shareholder in SP Telemedia with 44%. It already has $145 million and will get its hands on a big part of whatever inflated price is paid for the network when it is sold.
Even if it is sold to PBL Media, Bruce Gordon and Win should get a nice payback from 12.7% of $200 million. It originally cost $90 million when bought from the then owners, the Lamb family, which also owned 2UE for a while.
But for PBL Media, it was a deal that wasn’t on the front-burner: buying Perth and fixing it up was the major deal and a cheap one until Bruce Gordon decided that years of owning almost 44% of Sunraysia and being ignored and insulted by Eva Presser were over.
WIN also has a nasty affiliation argument with PBL and Nine to sort; so, too, does NBN and STW 9 in Perth.
And, finally, people who think that by buying NBN , PBL will make more money by abandoning that affiliation agreement (30% or so of revenue) are ignoring one point: that money is received by the Nine Network.
If you stop NBN paying it, you stop Nine from receiving it: it’s a zero-sum game.
The scope for cost cuts would be limited, though. NBN has to broadcast local news services in its areas of the north and west of NSW. That’s in addition to the networked Nine News from Sydney. NBN News out-rates Nine in Newcastle, so cutting that news service to save money would be silly. But then it is PBL Media — stranger things have happened.