Big Deals: Media Men

Tycoons Rupert Murdoch, James Packer and Kerry Stokes are not the only ones active in the media market. Tony Bell, managing director of Southern Cross Broadcasting has also putting through some timely share transactions.
On October 13, Bell and two of his directors topped up their shareholdings in Southern Cross Broadcasting (SBC) by acquiring shares under the dividend reinvestment program at $12.79 each. Bell acquired 2699 shares for $34,500, Geoffrey Allen acquired 702 shares for $8900 and Marina Darling acquired 294 shares for $3700. Southern Cross Broadcasting issued a statement to the ASX on October 19 to say the company was “in discussions” with other media companies. Closing at $14.50 that day, the investment made by Bell and the directors has improved 13.4% in a single week.

As speculation over possible media acquisitions grew, the only media tycoon who appeared to be sitting out the dance was Rupert Murdoch.

Of course, Murdoch showed his hand after the close of trade on October 19 when his brokers Goldman Sachs JB Were acquired 7.5% stake in John Fairfax Holdings (FXJ) for about $350 million. It has been reported that Goldman Sachs approached several institutions with shareholdings in Fairfax and offered to buy their shares at $5.20 each, a 10% premium on the 69 million shares obtained, which had closed at $4.74 just hours before. Three and half months ago Fairfax was trading at $3.60. News Corporation now owns about 78 million Fairfax shares, or 7.5% of the company.

Also on Fairfax, Merrill Lynch reported to the ASX on October 18 that it had acquired 61.8 million shares or 6.1% of Fairfax for $283 million. It has been reported that the holding is an investment stake for global fund manager, Blackrock Investments and not an acquisition stake, but only time will tell.

The other big acquisition news was that Kerry Stokes had bought a strategic stake in West Australian Newspapers (WAN). It was first reported on October 17 that the Seven Network (of which Stokes owns 41.8%) had acquired 8.4% or 17.5 million shares of the Perth-based publisher and was seeking to increase its holding. On October 18 it was reported that the group had acquired another 6.5% or 13.7 million shares. The shares were bought over the two-day period for $11 each, a 5% premium to the October 17 close of $10.47. Seven Network now owns 31 million shares or 14.9% of West Australian Newspapers.

One trade appears to have been mis-timed in the media frenzy. On October 16 Deutsche Bank reported that it have been actively going short in Austereo (AEO) in the week-long lead-up to the passing of the legislation to ease media ownership restrictions. Deutsche Bank sold just over five million shares for $2.06 each, for a grand total of $10.5 million, and in the process reduced its holding from 7.2% to 6%.

Regular readers of this column will know we are always interested in the dealings of Thorney Investments, a company better known as the investment vehicle of billionaire Richard Pratt. On October 16 the company made a series of acquisitions, totalling $5 million, in micro-cap industrial stocks. Thorney bought $2.8 million worth of telecommunications company Service Stream (STR) and $2.2 million worth of the plastics distributor McPherson’s (MCP).

Directors at luxury goods distributor Oroton will be in good spirits as the company’s share price begins to retrace former highs. After languishing in July 2006, hitting a five-year low of $1.19, the stock has been resurgent with the market particularly impressed by news of a new chief executive and a corporate restructure. The renewed confidence in the stock did not go unnoticed by managing director Ross Lane and three of his directors, who each picked up significant parcels of Oroton shares on the market. Between October 10 and October 14, Ross Lane, Robert Lane and Tom Lane each bought 78,309 shares for $143,000. Another director, James Will Vicars, purchased 66,250 shares for $120,000. With each director paying an average price of $1.82 per share and the value of the stock rapidly approaching $2, it may turn out to be a particularly astute purchase.

Not long after we reported the sizeable purchase of directors in speculative mining company SMC Gold (SMO) we have one more to report. In just over two weeks, the chairman and a company director bought more than $7 million worth of stock in this $91 million gold mining operation. This week another director, Richard Andrew Palmer, bought $2.8 million worth of stock. On July 7 the stock was trading for about 9¢; it closed at 17.5¢ on October 19.

Investors in MFS Limited (MFS) might be curious to know that executive director Rolf Krecklenberg has offloaded 100,000 shares in the company as it nears record high prices. MFS recently made a $700 million offer for travel outfit S8, which itself had acquired Harvey World Travel for $86 million earlier in the year. Krecklenberg now only holds 100,000 shares directly but has another 4.7 million shares indirectly.

In the same vein, investors would be equally interested to know that two directors of fund management company Hunter Hall were selling sizeable holdings in their own company just as the company almost doubled in value. On October 14 last year, the company was trading for $5.92; on October 19 this year, the shares were $10.90. Mark Forstmann cashed out 15,000 shares or 20% of his stake for $152,000 on October 17. Another director, Wayne Hawkins, also sold down 20% of his holding in the company on October 17 and 18 by selling 10,000 shares for $102,000.