BREAKFAST DEALS: Nine lives

Nine and Fox Sports emerged as winners in the NRL deal, as Nine's desperation trumped all others.

In the background of the ARL’s billion-dollar deal with Nine Entertainment-Fox Sports and the progressing talks between News Limited and Consolidated Media Holdings, there sits billionaire Kerry Stokes. Meanwhile, DuluxGroup continues to watch the paint fail to dry on its Alesco Corporation bid, ClearView Wealth Management apparently has two more parties sniffing around and Thakral Holdings might have an improved offer to examine.

Australian Rugby League Commission, Nine Entertainment, Fox Sports

Nine Entertainment simply had to win the Australian Rugby League Commission television rights deal with joint bidder Fox Sports.

The implications of the $1.025 billion, five-year deal stretch far and wide.

Crucially, the ARLC will receive $90 million upfront of the $925 million cash component of the deal, with another $100 million to come in advertising. Additionally, Fairfax understands that the deal is front-loaded.

As Business Spectator’s Stephen Bartholomeusz suggests, this could be a slight nod to the precipitous situation that Nine is in.

The network’s owner, CVC Asia Pacific, is staring at $2.8 billion worth of debt that matures in February, to go with an additional $1 billion in mezzanine debt with Goldman Sachs.

It’s been suggested that Nine is in danger of breaching its debt covenants in September. It’s possible that the owners of the majority owners of Nine’s debt, a pair of US hedge funds, would let Nine continue as normal.

Whatever the case, Nine had to secure the rights to maintain its ratings. If in the unlikely situation that disaster strikes and the deal falls over on account of movements from the US hedge funds, the ARLC would be able to renegotiate the deal with Seven Network and Ten Network.

Speaking of which, Ten is the biggest loser out of this deal. The third-placed network needs ratings badly and was even rumoured to have secured the deal in the lead up to what turned out to be an announcement re-anointing Nine.

Kerry Stokes’ Seven Network, by contrast, didn’t the need the deal as badly and will take heart from the fact that it appears to have helped push Nine to paying its absolute maximum given the state of the advertising market.

Stokes could have a further hand to play in this saga , which will be discussed in a moment.

Firstly, Fairfax reports this morning that Seven and Ten are plotting to poach some or all of Nine’s cricket coverage.

According to the report, "Channel Seven sources” say the network has met with Cricket Australia at least a dozen times, while Ten is also interested in securing a major sport.

Secondly, we need to focus some attention on the biggest winner from yesterday’s announcement – rugby.

The ARL has been under assault by the Australian Football League in recent years. Chief executive Andrew Demetriou has led franchise expansions into traditional ARL markets with the Gold Coast Suns and Greater Western Sydney, headlined by the audacious poaching of two rugby stars Karmichael Hunt and Israel Falou.

The power imbalance has been about money. The AFL had it, while the ARL was recovering from a number of internal issues; salivating for the next TV rights deal.

Now the league is already talking about cash injections for clubs and a higher salary cap, which will help insulate player from any further attempts by the AFL to lure them away from the game.

While Demetriou has outmanoeuvred the rival league, the ARL now has some cash to fight back. With State of Origin commanding a greater audience outside the traditional rugby states, the game appears to be entering a much more encouraging period.

David Gallop can now leave the job with his head held high, as he takes the wheel at the top of Australian Soccer (sorry, football).

Consolidated Media Holdings, News Limited

Now, back to Kerry Stokes. The other big story to come out of the Australian media market yesterday concerned Consolidated Media Holdings, which owns a 25 per cent stake in Foxtel and a 50 per cent stake in Fox Sports.

The media company, controlled by billionaire James Packer, announced that it expects pre-conditions for the $2 billion bid from News Limited will be satisfied within six weeks.

Stokes controls about 24 per cent of CMH and has always been the wildcard in this play.

News Limited, owner of Business Spectator, announced in June a proposal to acquire CMH for $3.50 a share, subject to a number of conditions.

Telstra Corporation was blocked out of the equation because the competition watchdog didn’t like the idea of the telco controlling 75 per cent of the country’s pay TV market.

CMH now says that those conditions could be met by the beginning of October, perhaps earlier. This is in line with previous guidance that a deal wouldn’t be completed until the final quarter of calendar 2012.

But with Fox Sports forking out for its share of the NRL deal, will News still be enthusiastic about a $3.50 offer price? Additionally, how will Stokes play it?

Sources told The Australian, also owned by News, that Stokes is expected to be "supportive” of a News offer. Yes, but under what conditions and at what price?

DuluxGroup, Alesco Corporation

Paints company DuluxGroup has suffered the indignity of having to extend its $210 million takeover offer for Alesco Corporation for the fourth time.

Dulux declined the opportunity to get the garage door maker’s shareholders into the fold be declaring the offer unconditional. At present, the offer is conditional on 90 per cent acceptances.

Dulux has over 46 per cent saying yes, but that’s made up of its own 19.96 per cent stake, 23 per cent in an acceptance facility and a mere 3.7 per cent that have officially said yes.

The problem for the bidder is that they’ve declared the offer "best and final”. Meanwhile, talks must apparently be continuing about whether Dulux would be happy with an increased dividend to shareholders that would deliver some precious franking credits.

The problem for Dulux and Alesco is that the Takeovers Panel and Australian Securities and Investments Commission don’t like phrases like "best and final”.

ClearView Wealth Management, Crescent Capital Partners

Now that gas pipeline company APA Group looks to have defeated Pipeline Partners Australia in the brutal subterranean brawl over Hastings Diversified Utilities Fund we need another takeover battle.

We just might have one. The Australian Financial Review understands that The Carlyle Group is thinking about a run at ClearView Wealth Management, which has just rebuffed a $214 million offer from Crescent Capital Partners.

The newspaper further understands that Carlyle has been engaged in "high level due diligence” and local player Archer Capital has also been in the data room.

ClearView has only just released its target’s statement featuring independent expert KPMG. The report dismissed the 50 cents a share offer as lowball and opportunistic.

Wrapping up

Keep an eye on Australian listed property investor Thakral Holdings, as it’s likely to have to make a statement in relation to a report from The Australian.

A person familiar with its Brookfield Asset Management talks said the suitor has upped its bid for Thakral to 80 cents a share from 70 cents a share.

Glencore International chief executive Ivan Glasenberg, an Australian citizen, has given a stark warning to his agitator Qatar Holdings, a 12 per cent shareholder in its target Xstrata.

Speaking at the company’s results yesterday, Glasenberg says the multibillion-dollar deal is not a "must-do deal” Glencore, making it abundantly clear that he’s unlikely to improve the terms for the upcoming vote.

And finally, packaging giant Amcor looks like it will book a few more takeovers in coming months as boss Ken MacKenzie continues to drive the company’s growth path.

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