James Packer’s PBL Media has some explaining to do to analysts about its huge quarter-of-a-billion dollar bid for the NBN TV and other media assets of SP Telemedia. The deal was so surprising that one leading analyst last night wondered just what the attraction was: “Pretty expensive and for what?”

PBL Media has paid an estimated 14 times NBN earnings, a ratio higher than the amount CVC Asia paid to buy half of PBL Media and the price KKR paid to buy half of the Seven Media Group.

As one TV analyst wondered yesterday: “Just imagine how much new programming Nine would have if PBL Media put $25 million a year extra for 10 years into the network’s production budgets or spent it on the conversion to full digital operation.

An executive at another market wondered about the logic of PBL and James Packer selling half the greater earnings potential of the Nine Network stations in Sydney, Melbourne and Brisbane, and then spending over the odds to buy a regional operator like NBN.

So, it’s no wonder the spinners were out whispering about a possible ‘win-win’ situation involving WIN Corporation, the under-bidder for NBN and the top bidder for STW 9 in Perth, and PBL Media in mopping up Perth and NWS 9 in Adelaide, owned by Southern Cross Broadcasting.

That line wasn’t around up until yesterday as the WIN interests of billionaire Bruce Gordon dumped all over attempts by PBL Media to buy Perth, where WIN owns an unrecognised 43.8% stake in the owner of STW, Sunraysia TV.

PBL Media put in a $136 million offer for Perth that WIN topped twice to get a reluctant ‘yes’ from the Sunraysia board, all the while sniping at Nine and PBL Media for trying to extract more money from WIN in a new affiliation agreement due to start 1 July.

I wonder what the Southern Cross board thinks of its two most likely buyers for Adelaide getting together to launch a joint bid for NWS 9? Not too thrilled.

Southern Cross paid $98 million, not $90 million for NWS 9 over a decade ago and Kerry packer at one stage tried to recruit CEO Tony Bell to run the Nine Network because he was unimpressed with the savage cost-cutting Bell imposed on the Adelaide station, leaving it weak and uncompetitive.

PBL Media’s spinners are now talking about cutting up to $25 million a year out of NBN’s costs to make the deal pay. NBN is already a very lean operation. Like WIN, they have been run for profit and with an understanding of TV. To make the NBN deal work Nine will have to turn NBN into a ‘slave’ station of TCN 9 in Sydney, merely relaying the signal and programs originating at Willoughby. Newcastle is a very parochial market so that sort of approach is not going to come without pain and hurt for the viewing audience and PBL Media.

PBL Media will not be able to cut local news out of NBN, although the Gold Coast is an area of big cost-savings and should enable Nine to use its Brisbane station to take over the NBN market and end the dual/shared service in the fastest growing area of Australia.

But there could be a ‘win-win’ situation forced on PBL. Under the limitation that no TV operator can broadcast to more than 75% of the Australian population, PBL Media has a problem. The NBN broadcasting footprint contains more people than in regional Queensland which is a comparable market. That means with Sydney, Melbourne, Brisbane and NBN, PBL Media can buy either Perth or Adelaide, but not both. Adelaide is the most logical to let slip because it is a lower-growth market, but it is far cheaper than Perth, where a bid of over $180 million (or double what Sunraysia paid) will have to be made to win.

That’s why there’s this talk of ‘win-win’ situations. PBL Media pulled the wrong rein by going after NBN in a fit of pique and then paying too much for it. The clever approach would have been to up the bid for Perth (Sunraysia really want to sell to Packer, not to Bruce Gordon) and then bidding and making sure of Adelaide.

Seven and Ten control their stations in the five major metro markets and get all the synergies out of this structure that Nine can’t and won’t. That’s unless it does a deal with WIN on NBN (and maybe the WIN shares in PBL).

The management of PBL Media have badly miscalculated in this expensive foray. It will cost it more to right the blunder, but it can be done.