BREAKFAST DEALS: Murdoch scores

News Corp extends its sporting reach in the US, while there's a question mark over Nathan Tinkler's stake in Whitehaven.

Rupert Murdoch is getting into broadcasting baseball and basketball games to America’s north-east corridor – the sports TV rights focus goes beyond Australia’s borders. Meanwhile, questions remain about just how serious Nathan Tinkler’s Mulsanne Resources problems are for his broader empire. Elsewhere, Sir Ron Brierley is having a crack at what’s left of Murchison Metals, Ruralco isn’t giving anything away in regards to former merger target Elders and Shanghai Zhongfu has been officially announced as the Western Australia’s Ord River developer.

News Corp, YES Network

Rupert Murdoch’s News Corp could one day end up owning 80 per cent of a cable network that exclusively broadcasts New York Yankees and Brooklyn Nets games live to New York, New Jersey, Connecticut and Pennsylvania.

Early this morning, News Corp announced that it has come to an agreement with the existing owners of Yankees Entertainment and Sports Network, dominated by Yankee Global Enterprises and Goldman Sachs, to acquire a 49 per cent stake YES Network.

The total value of the deal was not disclosed, but some estimate that YES Network could be worth a total of $US3 billion.

News, the parent company of this website, indicated in a statement to the NYSE that the investment is expected to close by end of calendar 2012. However, YES Network also announced a media rights agreement that will keep Yankees baseball games with them until 2042. This needs to be approved by Major League Baseball.

"We've long been a believer in the unique appeal of sports entertainment,” said Rupert’s son James, News deputy chief operating officer. "Partnering upstream with rights holders is even more important today in the dynamic media marketplace in which we compete.”

It’s interesting for Australians to note that the importance of sports broadcasting rights is not something unique to our market, though we might be known as a bunch of sporting tragics.

Back at home, Seven Network has its hand on the football in conjunction with Foxtel, which is half-owned by Murdoch’s Australian arm News Limited. Nine Entertainment has the rugby and the cricket, although the latter is up for negotiations.

While the Australian television market is unquestionably in a terrible funk, it’s no secret that Seven and Nine are in a much better position than Ten Network.

While Ten might be regretting some misguided and expensive programming decisions as it sacks a posse of talented and likable journalists, its lack of a sports broadcasting deal deprives it of a reliable source of ratings.

Nathan Tinkler, Mulsanne Resources

The question on everyone’s lips is whether the liquidation of Mulsanne Resources is a sign that the broader empire of young tycoon Nathan Tinkler, specifically his stake in Whitehaven Coal, is in serious trouble.

Few are willing to write off the ambitious dealmaker, but no one can say that the failure of his private company, Mulsanne, to make good on its $28.4 million deal with Blackwood Corporation is anything other than worrying.

The scenario that’s been obvious for such a long time is that Tinkler could be forced into a margin call if his cash-flow problem and falling value of the principle source of his wealth, Whitehaven Coal, reach a tipping point of sorts.

The problem is no one really knows where such a tipping point would be. We’ve received hints at what Tinkler’s personal debts are, which have been subsequently denied by a spokesperson.

For more on the implications of the Mulsanne liquidation, check out this morning’s edition of The Distillery.

Mercantile Investment Company, Murchison Metals

The definitively 'unretired' corporate raider Sir Ron Brierley has levelled his sights at Murchison Metals with his new vehicle Mercantile Investment Company.

Mercantile, which owns 11.7 per cent of Murchison, is calling for the removal of removing chairman Ken Scott-Mackenzie and managing director Greg Martin.

In their place, Mercantile is proposing that its own executive director Gabriel Radzyminski be elevated to the board, along with an independent in Paul Jensen.

You might remember Murchison is the company that couldn’t get the Oakajee Port & Rail project in Western Australia up and running. It was forced to sell its half of the project to partner Mitsubishi for $325 million.

At the moment, the company has returned 46.5 cents a share to shareholders, with another 3.5-4 cents to be passed back in February, when conditions on the Mitsubishi deal expire. At this point, Murchison will be wound up.

Mercantile’s objection is that, on its calculations, Murchison is spending around $500,000 a month in the meantime. Murchison counters that this is misleading, as the company meets non-repeatable legal bills and tax obligations.

Whatever the case, Mercantile hasn’t revealed what it wants to see happen to the remaining funds.

Ruralco, Elders

Ruralco chairman Richard England is playing his cards close to his chest when it comes to potential acquisition of the Elders rural services business.

In a full-year results presentation yesterday, Ruralco said it expects to benefit from the Elders sale whether it plays a direct role or not.

"If Ruralco did participate, we would be disciplined and would not pursue any acquisition unless it was value-accretive for Ruralco shareholders,” England said in a statement accompanying the company’s preliminary final report.

"Regardless of the outcome, Ruralco was well-positioned to benefit either from a synergistic acquisition of (Elders) rural services or continuing to win market share if sold to another entity.”

Back in early October, The Australian Financial Review broke the story of merger discussions that Ruralco tried to start with Elders.

At the time, the AFR believed that Ruralco would raise between $100 million and $140 million to cut the debt in the merger entity and settle hybrids.

With this in mind, it’ll be interesting to see what Elders gets for its assets.

Ord River, Zhongfu

While we’re talking agribusiness, little-known Chinese company Shanghai Zhongfu has been confirmed as the winner of a deal to lease and develop 13,400 hectares of land in the northern parts of Western Australia.

Premier Colin Barnett and Regional Development and Lands Minister Brendon Grylls confirmed the decision yesterday. The premier denied that the decision had been made before Monday’s cabinet meeting, after The Australian reported it was in the bag a week ago.

The Ord-East Kimberley Expansion project will see pastoral land turned into irrigated farmland and Western Australia will finally get a $250 million sugar mill expansion around Kununurra.

Reassuringly, there hasn’t been the same reaction from protectionists to this investment as there have been to similar moves by Chinese companies on Australian agricultural assets.

Could this be that we’re maturing when it comes to Chinese M&A activity? Or is it that both state and federal governments, governed by each political party, have thrown money at this project and are just happy to see it getting off the ground?

Wrapping up

The three brothers controlling skate clothing company Globe International have issued a pretty clear rebuke to a takeover offer by corporate raider Mariner Corporation.

Founder Matt Hill and his brothers Peter and Stephen said they would not accept the $19.7 million all-scrip offer. Given that they speak for 67.8 per cent of the register, that’s a pretty definitive response.

Meanwhile, a key Qantas Airways investor has thrown its support behind chief executive Alan Joyce and his turnaround strategy.

According to The Australian, BT Investment Management portfolio manager Sondal Bensan hasn’t been contacted by the quartet of Australian businessmen reportedly speaking to Qantas shareholders about a rival proposal. By the sounds of it, BT would need some persuading.

"I am definitely supportive of the Emirates deal and what it brings to Qantas,” said Bensan. "It has been a long road, but from this point the strategy is where it needs to be.”

Finally, Lend Lease has picked up a $208 million design and construction contract to redevelop the Lakeside Joondalup Shopping City in Perth.

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