News Corp's Rupert Murdoch has a rethink on splitting the company's publishing and entertainment businesses, while Seven West Media is punished for switching CEOs.

News Corporation has confirmed it’s thinking about an entertainment/publishing split, but a report indicates that the Australian operations are likely to be left alone. Elsewhere, GPT Group has given Myer its first site in the Northern Territory, while Seven Group Holdings has a little less room to raise capital after Don Voelte’s appointment. Also, Fortescue Metals Group founder Andrew Forrest has been named as the big fish snapping up stock, what’s the iron ore king up to?

News Corporation

Rupert Murdoch’s News Corporation confirmed overnight that it is thinking about a restructure that would "separate its business into two distinct publicly traded companies”. The one sentence statement had nothing else to offer.

If News decides to go in this direction, its film and television studio assets would be separated into one division, while its famous mastheads like The Wall Street Journal, The Times of London and The Australian would form another.

It’s being suggested in The Australian this morning that the Australian arm of News Corp, News Limited, would be excluded from any split. Presumably, that would mean that News Limited would fall in the publications arm, but it would hold on to its existing, and possibly growing, pay TV portfolio.

The idea has been kicked around the senior offices of News Corp for years, but the word has always been that Murdoch hasn’t liked the idea. Media reports indicate that the mogul has changed his mind.

What could have brought about this change? In The Australian, Karara Capital Investment manager Rohan Walsh suggests that it’s the influence of chief operating officer Chase Carey, who's impressed many in the role.

One thing’s for sure. Whatever happens, the structure of any split would maintain the control that the Murdoch family wields over the company.

GPT Group, Myer

Property trust GPT Group has given department store Myer a ticket to the Northern Territory and offloaded a stake in the site, along with another asset, to its unlisted wholesale fund.

Myer is now set to move in to the Casuarina Square Shopping Centre in Darwin after nine months of negotiations. A year ago, GPT said it would spend $250 million refreshing the centre, but added that figure would be updated when development approvals were requested.

It’ll be the first full-line department store in Darwin and will come as a relief to the state government, which has been lobbying for some big retailers.

GPT has sold a 50 per cent stake in the Casuarina site for $229.7 million, along with a 50 per cent stake in the Westfield Shopping Centre at Woden in the ACT for $321.5 million. The stakes will go to the unlisted GPT Wholesale Shopping Centre Fund.

The company said it might use the proceeds, a combined $551.2 million, to make asset purchases in the industrial property space.

Seven Group Holdings, Seven West Media, Consolidated Media Holdings

Seven Group Holdings chief executive Peter Gammell, the right-hand man of billionaire Kerry Stokes, says the company is "continuing to explore all options” in relation to a bid for Consolidated Media Holdings.

But an equity raising might be a little more difficult to execute. The naming of Don Voelte as successor to chief executive David Leckie gave short sellers, with an eye on a capital raising, the perfect opportunity to hit Seven West Media, hard.

Seven West shares plunged 14 per cent in yesterday’s trade as a combination of shorters and Voelte sceptics jumped off the media company.

If advertising markets don’t rebound in good time, Seven’s debt burden leaves it vulnerable, particularly if it’s serious about putting up a counter-bid to News Limited’s $2 billion CMH offer.

Fellow television player Ten Network was recently forced to tap the market for equity, with billionaire shareholders Gina Rinehart, James Packer, Lachlan Murdoch and Bruce Gordon all jumping in.

Rinehart’s stake has held firm above 10 per cent after the raising, with the billionaire picking up 39.2 million shares for $19.99 million.

The new shares are held indirectly through a company called Hanrine Investments, which is a subsidiary to Rinehart’s Hancock Prospecting.

The news comes as Fairfax Media chief executive Greg Hywood weighs in with his first comments on Rinehart’s pursuit of boardroom representation at his company without signing the charter of editorial independence.

Hywood says the policy is the "bedrock” of the company and while Rinehart mightn’t end up signing it, she’d better bow to it in the interests of the company.

Fortescue Metals Group, Andrew Forrest

Fortescue Metals Group founder and chairman Andrew Forrest has been confirmed as the substantial shareholder that’s been wading into the market for more stock.

Documents lodged to the ASX indicate that Forrest acquired 12.8 million shares for $62 million, inching his stake up to 32 per cent from 31 per cent.

The question is, what is Forrest’s motivation?

It could be to lend some support to the stock. Fortescue shares are off 18 per cent in the last three months as iron ore prices come off the boil and higher-cost producers face a tougher time than the big players.

Echo Entertainment, Genting

The NSW gaming regulator has confirmed that Malaysian gaming billionaire KT Lim wants more than 10 per cent of Echo Entertainment.

The NSW South Wales Independent Liquor and Gaming Authority says Genting, Lim’s company, wants to raise its stake beyond its current level. Fellow gaming billionaire James Packer is seeking the same thing.

It’s likely that both companies will seek 20 per cent of Echo apiece.

Genting also needs the approval of Queensland regulators, as does Crown. But the prospect of both players owning a fifth of Echo each presents a huge opportunity for upheaval at the company. That is, if Packer and Lim work together.

Wrap up

Paper company PaperlinX has dashed many hopes of a private equity takeover after the board approved the sale of its US business to Central National-Gotesman Inc.

PaperlinX said in a statement to the market that as a result of the CNG deal, the company is "no longer in discussions with any third parties”.

Meanwhile, battling listed property developer Becton Property Group has started selling properties in an attempt to refinance the loans attached to a retirement village joint venture with Oman Investment Fund from China.

Becton said it has sold its site in Malvern East, located in Melbourne’s eastern suburbs, to Knowles Group for book value. It didn’t give a specific figure.

Meanwhile, Lend Lease has won a $315 million contract to upgrade the M5 South West Motorway in Sydney for Interlink Roads.

However, the company’s attention is firmly fixed on looking for financing and leasing deals for its $6 billion Barangaroo South project at Darling Harbour.

Finally, there’s an emerging consensus that Billabong founder and largest shareholder, Gordon Merchant, will prefer an offer for the company that allows him to transfer his shares into the ownership structure of the suitor, rather than selling out for cash.

The news will be some consolation for shareholders that have been burned by Merchant’s rejection of an offer of $3.30 a share from TPG Capital earlier this year, who won’t see anything like that this time.

However, if private equity comes knocking again Merchant is going to have a hard time getting them to let him come on board.


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