So far the media — or rather the non-Murdoch media — haven’t been asking Lachlan Murdoch and his business partner, James Packer, the right questions. News Ltd papers have been their usual fawning selves and have not gone anywhere near the obvious questions raised by the planned joint bid for Packer’s Consolidated Media Holdings.
Lachlan has repeatedly denied the deal has anything to do with News Corp or his father, telling today’s SMH:
I left News Corp two years ago to be my own man, and people have to let me be my own man. I think that’s fair and that’s what I’ve been doing for the last few years. So the conspiracy theorists who would say somehow this is connected to News or the “Murdoch family” – it’s just wrong.
But there are some questions that the ACCC should require answers to before any approval is given and Lachlan can help by being upfront and fully transparent:
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1) How much of the bid vehicle will you own, and how are you financing it?
2) How much debt is being raised for your side of the deal, and how much for Mr Packer’s side, and who is underwriting and guaranteeing that debt?
3) How do Murdoch and Packer plan to borrow $2.8 billion in cash in these unsettled markets?
4) Can he explain how he and Packer plan to service the debt, and what sort of margin they will have to pay over world benchmarks: the so-called Libor or London Interbank Offered Rate?
5) Who will buy the debt once it is raised and refinanced by the banks. If the ANZ is raising it (the ANZ is Packer’s lead banker), will it offload the $2.8 billion by selling it to other investors, such as companies related to the Murdoch and Packer families?
6) In the de-merger document for the split of PBL last year, this comment was made about the financial prospects of Consolidated Media Holdings:
The distributions paid by CMH’s investments to CMH are a key driver of the financial position of CMH. CMH does not control any of its investments and material changes in dividend policy or CMH’s access to distributions will have a significant impact on the financial position and performance of CMH.
Considering the 27% of Seek will be split between Packer (10%) and the rest of shareholders, can Murdoch explain how he and Packer plan to use the distributions from 25% of Foxtel and 50% of Premier Media Group to meet an interest bill that could be as much as $250 to $300 million a year?
Will this deal be done in the expectation that Foxtel and Premier Media Group will eventually end up back in News Corp’s control, which would effectively restore the status quo from before the Super League wars were settled by Lachlan selling those stakes in Foxtel and Fox Sports to PBL for peanuts.
If you were a bank or possible investors in the bond would you lend money to two borrowers who were involved in losing over $1 billion in One.Tel? Even if Packer has turned his father’s fortune into a much bigger pot of loot?
Well, you would if there were guarantees or assurances that Murdoch would be good for his share: either from his family or from Packer.
And by refusing to resign from the News Corp board, Murdoch is opening up an interesting precedent. Ryan Stokes, son of Seven owner, Kerry Stokes, could takeover the Nine or Ten networks, and remain on the board of Seven and its ultimate holding company, ACE.