BREAKFAST DEALS: Network favourites

A Southern Cross deal appears to be on the backburner as Nine cosies up to WIN, while Steadfast Group moves towards an IPO.

Nine Entertainment’s David Gyngell and WIN Corporation billionaire Bruce Gordon are reportedly talking about station deals for Adelaide and Perth, which could put the former’s talks with Southern Cross Media to bed. Frank O’Halloran is heading back to the ASX with Steadfast Group on course for an IPO, regardless of the market volatility. Elsewhere, Kerry Stokes and Carlyle Group have a Malaysian suitor on the line for Coates Hire, while fellow billionaire James Packer continues to taunt Echo Entertainment.

Nine Entertainment, WIN Corporation, News Corporation

Nine Entertainment could be on the path to killing merger discussions with regional broadcaster Southern Cross Media by engaging in talks with WIN Corporation over television stations in Adelaide and Perth.

According to The Australian, sources indicate Nine's David Gyngell and WIN billionaire Bruce Gordon have been “thrashing a deal out for the past week” for the latter’s stations in Adelaide and Perth.

This news says a lot about the extent to which Gyngell is prepared to wait for the 75 per cent 'reach rule’ for media companies to be removed in the immediate future – very little.

Speculation about television station mergers went into overdrive earlier this year when Communications Minister Stephen Conroy tried to ram a set of media reforms through the federal ALP caucus that included an abolishment of the rule that prevents media companies ‘reaching’ more than 75 per cent of the population.

This rule has been obviously useless since the internet became used nation-wide for media consumption. It’s just a matter of time before one of the major parties decides to ditch it.

But discussions between Nine and Southern Cross Media were derailed when the passage of the legislation was delayed indefinitely.

With the Free TV Australia lobby group in disarray after Nine’s negotiations with Southern Cross led to open fighting among the major networks about the reforms, Nine was left with few choices but to try to mend its relationship with regional affiliate WIN.

Adelaide and Perth would place Nine in excess of the existing reach rule provisions. The Australian reports that Nine would most likely take Adelaide and, if the rule is abolished, take Perth as well on something like the same terms.

If all that were to happen, it could push WIN towards a merger with Ten Network, which Gordon owns a 15 per cent stake in.

But that’s a long way down the track. Gyngell and Gordon would have to do a deal, which is then followed by Conroy, or his presumptive replacement Malcolm Turnbull, giving legislative room to such a merger.

While we’re talking media, the News Corporation board gave the go-ahead to a $US500 million stock repurchase for the publishing division when the company splits in two towards the end of next month.

News Corp is the parent company of this website.

Steadfast Group

It appears Federal Reserve chairman Ben Bernanke can’t scare new Steadfast Group chairman Frank O’Halloran.

With global sharemarkets in a state of flux over the to-ing and fro-ing of the US central bank and its exit strategy from a third round of money printing, investment bankers are worried that the recently shaken optimism for an Australian IPO market revival will be thoroughly snuffed out.

But O’Halloran, the legendary former QBE Insurance chief and peerless dealmaker, is having none of it.

According to Fairfax Media, documents filed to the Australian Securities and Investments Commission show the company still plans to list on the Australian Securities Exchange in mid-August.

When last we checked, this one was shaping up as a $350 million IPO.

Since accepting the chair at insurance broker Steadfast, O’Halloran and managing director Robert Kelly have driven a restructure as a prelude to a sharemarket float.

Back in October last year Kelly was quoted as saying the company was keen to do a deal in the financial planning space.

“There is big potential for us to do something long-term in that area,” said Kelly at the time.

While we’re talking IPOs, The Australian Financial Review reports that private equity heavyweight Kohlberg Kravis Roberts has puts its highly anticipated float of BIS Industries to the side for the moment, thanks to the doom and gloom that’s gripped the mining services industry in recent months.

Kerry Stokes, Carlyle Group, Coates Hire, UMW Holdings

Billionaire Kerry Stokes and US private equity giant Carlyle Group have reportedly managed to attract yet another big fish to have a look at their heavy equipment hire company Coates Hire.

The pair have put Coates under review, which is being led by Goldman Sachs, with the hope that it will result in a bid or an IPO.

The Australian Financial Review reports that Malaysia’s UMW Holdings is one of a handful of bidders that have been attracted by the auction, which includes Australia’s own Wesfarmers and US hedge fund Apollo Global Management.

Stokes and Carlyle own about 46 per cent apiece.

Wrapping up

Echo Entertainment suffered a predictable but still painful share rout on Friday of the order of 11.9 per cent as shareholders cut the stock on the back of James Packer’s decision to sell Crown’s 10 per cent stake.

As revealed in an interview with The Australian Financial Review, this columnist is delighted to see that Packer hasn't stopped trashing Echo over its plans to expand The Star hotel in Sydney.

“They were relying on me to pay for their plan,” Packer said. “Let’s see how they go paying for it themselves.”

The same newspaper reports that Origin Energy boss Grant King has indicated that his company is in discussions with Arrow Energy over a possible expansion of the $24.7 billion Australia Pacific LNG project.

One of the big Queensland LNG players probably needs to seek the comfort of a merger, something that has been thought for a long time by industry watchers.

Origin is shaping up as a home for Arrow.

Meanwhile, the corporate watchdog is having a look at the efforts of investment bank Macquarie Group to win control of a $500 million portfolio of managed investment schemes held by the collapsed timber company Gunns Limited.

Liquidator PPB Advisory sought the help of the Australian Securities and Investments Commission because, well, Macquarie’s trying to kick them out.

And finally, Virgin Australia and major shareholder Air New Zealand have run into more opposition to their request to have their trans-Tasman alliance approved unconditionally.

New Zealand Airports Association has written to the Australian Competition and Consumer Commission voicing its objections to such a request by an alliance that controls 51 per cent of all capacity on trans-Tasman activity.