BREAKFAST DEALS: Murdoch's radio mix

Lachlan Murdoch has moved to strengthen his position in the Australian radio market by picking up the remaining 50 per cent of Nova operator DMG Radio that he doesn't own. While his chairmanship at Ten Network is a story of recovery, a tie-up between the two companies could easily make sense one day. Meanwhile, Qantas Airways is believed to be close to an Emirates code-sharing deal, as Etihad takes 10 per cent of rival Virgin Australia. Elsewhere, Gunns Limited is still suspended from trading, with no end to its financing woes in sight.

Lachlan Murdoch, DMG Radio, Ten Network

Lachlan Murdoch has purchased the remaining 50 per cent of DMG Radio Australia that he doesn't already own through his investment company Illyria.

The Australian understands that Murdoch paid about $100 million for the extra 50 per cent from Daily Mail and General Trust, the UK newspaper publisher. It's believed he paid $110 million for the first 50 per cent.

DMG is in charge of the Nova radio network, as well as the recently launched Smooth FM.

As pointed out in The Australian Financial Review this morning, the news immediately draws attention to Murdoch's chairmanship at Ten Network and the logic of a merger between the two at a time when media is converging.

The newspaper rightly emphasises that any such possibility would be a fair way down the track. Ten needs to secure its ratings and revenues before it thinks about a company-changing deal.

But the pieces are in place should the opportunity for a deal present itself.

Qantas Airways, Emirates, Virgin Australia, Etihad

Qantas Airways chief executive Alan Joyce is apparently close to securing a code-sharing agreement with Middle Eastern carrier Emirates.

Fairfax believes that Emirates will take over the operation of the majority of flights from Perth to Europe, amongst others.

The report raises questions about whether Qantas can continue its revenue sharing arrangement with British Airways over the long term.

A source close to the deal summed the situation up nicely in the Fairfax report.

"Unless they are going to be paid for the passengers [who transfer to Emirates flights], and that is unlikely, it is not a huge benefit. It is just a huge downgrading of the Qantas presence and handing it over to Emirates.”

It's a fair concern. But there have been a few barbed comments levelled at Qantas management since the code-sharing plan emerged that are a little unfair.

The argument is that code-sharing does not benefit the airline nearly as much as joint venture airlines, much like the premium carrier Qantas sought to establish in Asia.

The reality is that Europe is not Asia and Qantas has to work with different players, many of which are struggling in the same areas as it. The Fairfax report also indicates that Qantas sought a deeper relationship with Emirates, but the carrier wasn't interested.

Qantas has just received a timely reminder of just how quickly it needs to paddle if it's to stay in front of domestic rival Virgin Australia.

Like Qantas, Virgin is forming closer ties with a Middle Eastern carrier, Etihad Airways. On Sunday, Etihad announced that it has bumped up its stake in Virgin to 10 per cent.

The carrier, based in the United Arab Emirates, has made it clear that it doesn't want Virgin outright, but the tightening alliance between the two only makes Qantas' job harder.

Hastings Diversified Utilities Fund, APA Group

It was curious to watch sought-after takeover target Hastings Diversified Utilities Fund report a financial loss for the six months to June 30 on Friday.

HDF, which is currently recommending a $1.4 billion offer from APA Group, was dragged down to a $134.6 million loss thanks to performance fees that had to be paid to Hastings Funds Management, along with debt refinancing expenses.

The gas pipeline company expects demand for gas to ebb in the short-term, but is bullish over the long-term.

The all-cash offer from rival bidder Pipeline Partners Australia expired at the end of the last week. There's still no further word on reports that the Canadian pension fund Caisse de dpt et placement du Quebc is hoping to find support for a higher bid for HDF.

Gunns Limited

It's hard to believe that Gunns Limited has been suspended from trading for almost six months now. It's much easier to believe that the shares might never change hands again.

The Tasmanian timber company suffered as disastrous write down to its $2 billion Bell Bay pulp mill project, a project that the company has conceded might never go ahead.

The write down was to the tune of $796 million, which is terribly intimidating when Gunns's market cap is $135.7 million. The concerns that have been raised about the woodchipper's survival are proving more and more apt.

Korda Mentha was called upon by lenders in late July to check whether Gunns was solvent, with $560 million in debt hanging over its head.

Thankfully, Korda Mentha has not been appointed as received and Gunns is not in administration. However, all the talk about securing a financier to make its pulp mill vision possible are fading as strategies to keep the company alive at all take precedence.

National Australia Bank, Commonwealth Bank of Australia

We might have to call time on the Australian bank bond purple patch, with National Australia Bank reportedly failing to raise much interest in the UK for a rather small issue.

According to Fairfax, NAB barely fulfilled a 250 million ($A383 million) 14-year covered bond issue.

The covered bond comes not too far behind a similar offer from Commonwealth Bank of Australia, which secured 750 million.

The banks have been opting for the funding method in order to keep pace with the mortgage book requirements.

The tepid demand for NAB could be a sign that the market doesn't have the stomach for further Australian bank issues…or a bad day at the office for NAB.

Perhaps NAB could take the lead of Commonwealth Bank once again with a hybrid issue.

After delays courtesy of the Australia Prudential Regulation Authority, CBA is expected to reveal its hybrid issue sometime this week. One report says the bank could move as early as today, while another says more meetings are scheduled into the week.

The launch is to refinance the $1.5 billion PERLS IV hybrid.

Wrapping up

Fairfax Media shares hit a new low on Friday, increasing the takeover focus on the company and raising questions about the intentions of mining magnate and major shareholder, Gina Rinehart.

The company's stock sunk to 41.5 cents a pop, dragging its market capitalisation beneath $1 billion.

The headline trade of the session was a parcel of 7.9 million shares at 41 cents for a grand total of $3.2 million.

Rinehart has previously threatened to sell out of Fairfax has unsuccessfully attempted to offload a third of her 15 per cent stake.

There's no indication this time that it's Rinehart behind the trade, we'll have to wait and see.

Meanwhile over at GrainCorp, chief executive Alison Watkins has put a ruler through the idea of more acquisitions after the purchase of Gardner Smith and Goodman Fielder's Integro oil and fats business.

Some investors were surprised at the price GrainCorp paid for Gardner Smith, but have largely given Watkins a pass on the basis that Integro for a steal.

Ruling out further acquisitions should help settle some of those nerves.