WIN owner Bruce Gordon has made his choice: It’s Nine in the bush and Ten in the city. Recent corporate moves, culminating in yesterday’s deal to cement a 10% stake in the Ten Network, have established his preference.
His private company yesterday spent several million dollars securing an options arrangement over 40 million Ten shares at $3 each, taking his stake to just above 10%, enough to stymie any corporate activity that needed full control of the network. That deal will remain in place for a year, so clearly Mr Gordon expects something to happen at Ten in that time, and the overseas holder of the shares doesn’t.
Could it be a capital repayment, which is rumoured to be revealed this week, or a takeover, with News Corp the most logical buyer? Gordon and Murdoch have had dealings in the past over WIN’s master station in Wollongong.
The recent changes to the media laws saw Canwest’s holding in Ten move to its true 56% level, thereby diluting Gordon’s holding from more than 14% to around 6.3%. According to a notice to Ten earlier in the month, Gordon’s company, Birketu, picked up more shares in lifting its holding to 6.5%.
Yesterday’s transaction is designed to take it to around 10.7%. It was another major corporate play for Gordon who this year has picked up the Nine stations in Perth for $162 million and Adelaide for around $105 million.
To pay for Perth, Mr Gordon’s companies raised $40 million earlier this year by selling 2 million PBL shares. It’s the first time Mr Gordon has lightened his media holdings and indicates the strain his big spending this year has placed on the company.
The recent PBL annual report shows the WIN holding at 5.240 million shares, down from the 7.261 million the year before. That’s less than one per cent of PBL. The fact that he sold the PBL shares raises the question of what he will do with the Crown and Cons Media Holding shares he will receive in the PBL split.
WIN will also get $15.6 million in cash in the split, which will come in handy to help pay for the cost of the new Ten stake. By selling down his PBL stake Mr Gordon has forgone more than $6 million from the cash distribution, a sign of how much he needed the cash from the share sale.
At current PBL prices he will have around $104 million worth of Crown and CMH shares. CMH has more interest because of his media interests, so logically Mr Gordon would be a seller of Crown shares once the split happens and the new companies are bedded down.
Ten reports its 2007 profit on Thursday afternoon in Sydney.