BREAKFAST DEALS: Free TV fisticuffs

The ructions within the free-to-air television broadcaster lobby over Nine’s talks with Southern Cross Media have blown up, with the chairman of Free TV Australia resigning. Carsales.com is heading to Brazil after failing to win TradingPost from Telstra. Meanwhile, Atlas Iron’s independent rail dreams appear to be fading in favour of a Fortescue access deal, and Brambles is being encouraged to demerge its document management business after an unsuccessful sale attempt last year.

Nine Entertainment, Southern Cross Media

The chairman of the free-to-air television broadcaster lobby group, Nine Entertainment’s Jeffrey Browne, has resigned following reported claims from rival networks that he’s serving the interests of his chief employer rather than the whole group.

According to media reports, Browne tendered his resignation letter to the board of Free TV Australia yesterday, where he claimed the news would be seen as a victory to the “faceless critics”.

The Australian newspaper reports that there’s been a consensus within Free TV Australia for a while that the next chairman needs to be independent.

Fighting within the lobby group broke out into the public arena two months ago when it became apparent that Nine Entertainment was talking to Southern Cross Media about a possible merger should Canberra abolish the 75 per cent reach rule.

The reach rule’s fate now appears destined to be decided after the election. But the continued push by Nine chief executive David Gyngell for a solution has underlined the seriousness of the discussions between Nine and Southern Cross.

Free TV Australia appeared to be united in the push for the reach rule to be axed, when it appeared that the metropolitan broadcasters were likely to hook up with their respective regional affiliates if they choose to move – Nine with WIN Television, Seven Network with Prime Media Group and Network Ten with Southern Cross. This support has since been wound back.

The story can be boiled down to this. The other networks would have to be incredibly naïve to believe that not one of the Free TV Australia members was considering a merger that mightn’t be in their interest.

Taking the issue at face value, if Browne managed to lead Free TV Australia to supporting the abolishment of the reach rule when it wasn’t in the interests of the other networks, the other networks should indeed be calling for his removal.

But they all have members on the Free TV Australia board. If their own board members aren't allowed to represent their own network’s interests either, then they also should be removed.

Carsales.com, Webmotors SA

Carsales.com might have failed in its attempt to secure Trading Post from Telstra, but it might find itself dealing with similar Australian car ad trends in Australia in Brazil.

The Australian-listed company announced yesterday that it has signed a binding terms sheet and entered into exclusive negotiations to purchase a 30 per cent stake in Brazil’s Webmotors SA for about $R180 ($89 million).

Spanish finance giant Santander will retain a 70 per cent stake in the advertiser. Carsales.com will fund the deal with existing cash reserves and bank debt.

This is the second overseas venture by the Australian online advertiser this year. Just last month the Aussie car flogger picked up a 19.9 per cent stake in iCar Asia for $13.4 million. The company’s share price is up 63.5 per cent over the last 12 months.

Carsales.com said both sides are confident that negotiations, which are expected to be concluded “in the coming months”, will be successful.

Over in Brazil, the locally made Hyundai HB20, which only launched in the last year, is up to fourth spot on the country’s total sales list behind a Volkswagen and two models of Fiat.

The Hyundai i30 is the South Korean car taking Australia by storm at the moment, only eclipsed by a Mazda and two models of Toyota.

The difference is that Hyundais in Brazil that sell well are locally made. Not so in Australia.

Atlas Iron, Aurizon

Mid-tier iron ore player Atlas Iron has raised significant questions about how committed it is, or really can be, to the idea of a Pilbara rail line for independents with haulage giant Aurizon.

Following the company’s quarterly activities report, managing director Ken Brinsden said the iron ore player was continuing discussions with Fortescue Metals Group over access arrangements for its own infrastructure.

The complicating factor would be the reality that Fortescue is looking to sell a minority stake in that port and rail infrastructure and the incoming investor will no doubt want to maximise the earnings on Atlas Iron’s tonnage.

Earlier this month Brisden said the first stage of a feasibility study into the proposed independent rail line had been completed.

“As a result of this first phase of study, Atlas has learnt much about the economics of a new independent rail solution, and for that matter the part independent infrastructure options have to play in the broader Pilbara landscape,” said Brinsden.

“The results of the joint study support our view that an infrastructure solution for junior miners in the Pilbara is viable and could be realised, to the benefit of all of our stakeholders, including the local Port Hedland community and the State of Western Australia”.

The company announced the study had been extended until July 1.

By that time, the companies will have been looking at this idea for 14 months. And, tellingly, it’s around July 1 that Fortescue expects its infrastructure stake deal to be done.

Wrapping up

Demergers are gaining attention from analysts as a way for companies to realise value for shareholders.

Morgan Stanley has suggested that Brambles should consider demerging its document management business Recall, which it attempted to sell last year but couldn’t find a compelling buyer.

Elsewhere, Murray Goulburn Co-Op chief executive Gary Helou has emphatically denied that the group is accepting a lower-than-commercial rate of return on its $120 million investment to build two milk processing plants in New South Wales and Victoria.

The chief makes his case in this morning’s edition of The Australian, following claims from major fresh milk processor Parmalat in yesterday’s edition of The Australian Financial Review.

And finally, Tabcorp Holdings will fork over $20 million to the Queensland government to extend its Keno licence to 2047 from its current term ending in 2022.