Just what game is Macquarie Group playing with its attempts to sell Macquarie Communications Infrastructure Group, the listed satellite fund, to a Canadian co-investor in projects?
The Canadian Pension Plan Investment Board is offering $2.50 a security and some of the fund’s shareholders reckon that’s too light: others suggest the takeover is all but a related party transaction because of the various dealings between the Macquarie Group of companies and the Board over the past four years or so.
But companies sounded out about a possible purchase or deal involving Macquarie Communications Infrastructure (MCG) expressed surprise yesterday at the bid because there was no sign of another deal that Macquarie Group had been hinting at.
They say Macquarie had said in the documents handed around last month that it had a possible buyer for MCG’s major Australian asset, Broadcast Australia. Its key asset is the transmission masts and associated equipment of the ABC and SBS.
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For that reason the groups interested in Broadcast Australia didn’t pursue the deal as they were not interested in the heavily indebted offshore assets of MCG, especially in the depressed UK markets for example.
It’s suggested that pa couple of private equity groups and perhaps the major commercial TV networks might have been interested in Broadcast Australia. The networks jointly own TXA (Transmissions Australia) which owns their masts in the capital cities. Subject to competition problems, a merger between TXA and BA would have allowed the commercial TV companies to cash out their holdings in TXA and gain valuable funds at a time when all are under pressure. CVC, which controls PBL Media is said to have a keen interest as its attempts to sell the Nine properties in Sydney and Melbourne have been stymied by the credit crunch and by the masts being owned separately by TXA.
The ABC and SBS are also concerned at the possible change of control of BA.
On its website Broadcast Australia said it “is responsible for the operation and development of a vital infrastructure network relied upon by a wide range of customers throughout Australia. Extensive analogue and digital broadcasting services are provided to Broadcast Australia’s radio and television customers, and site sharing and infrastructure services to other broadcasters and telecommunications providers.
Our network covers approximately 580 transmission sites strategically located throughout the metropolitan, regional and rural areas of Australia. Through ongoing investment, Broadcast Australia continues to improve the range, reach and quality of the services it provides to its customers, which are in turn relied upon by millions of consumers every day in Australia.
Broadcast Australia provides fully managed transmission services for both analogue and digital television and analogue radio (including AM, FM and HF radio services) to its major customers: the Australian Broadcasting Corporation (ABC) and Special Broadcasting Service (SBS).
Broadcast Australia also provides portal services and site sharing arrangements for commercial and community television and radio broadcasters and co-hosting at Broadcast Australia sites for telecommunications and emergency service providers.
The ABC and SBS are not very happy with BA and its rapacious fee gouging and poor service. Sources say both broadcasters agreements contain what’s known as ‘change of control’ provisions: that means in the event of a change of control the agreements could be undone. But the concept of ‘change of control’ is apparently qualified. It has to be serious, such as a hostile takeover.
Macquarie would argue that the seeing the Canadian bid isn’t hostile, the change of control provisions wouldn’t be triggered. As well the bid could be structured so that control of Broadcast Australia doesn’t change in a corporate sense but remains with MCG.
The ABC and SBS facilities were originally owned by the ABC and SBS, but were privatised by the Howard Government. They were bought by Macquarie Bank and shunted into the Communications Infrastructure trust in a vehicle called Broadcast Australia.
Broadcast Australia has tried very hard to expand into actual broadcasts. It tried to snaffle the so-called A and B digital channels which were a centrepiece of the failed media policy of John Howard and his Communications ministers, ending with the unlamented Senator Coonan.