Murdoch offloads stake in Prime Media

LACHLAN MURDOCH has sold down his stake in the regional television and commercial radio group Prime Media, exiting a company that was his first major entry into the Australian media as a private investor. His private investment vehicle Illyria sold for 68? a share, netting him $22 million, sources close to the business confirmed.

By InvestSMART · 30 Mar 2012

By InvestSMART ·
30 Mar 2012

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The sale was at a small discount of 2.9 per cent to Prime's last traded price of 70?. Illyria held an 8.87 per cent stake in the company.

Mr Murdoch bought into Prime in April 2009 and has since built up his media investments to include 8.9 per cent of Ten Network, of which he is non-executive chairman, and half a share in the radio company DMG, which operates radio stations Nova 969 in Sydney and Nova 100 in Melbourne, among others. The other half of DMG is owned by the British media group Daily Mail and General Trust.

Mr Murdoch's exit from Prime came as a surprise to the company, which had yet to make a statement to the stock exchange last night. Its chief financial officer, Lesley Kennedy, said: "We have not heard anything. It is news to us."

The company's major shareholder is the private hospital magnate Paul Ramsay as well as Kerry Stokes's Seven Group Holdings. Prime operates as the Seven affiliate in northern and southern NSW, Victoria, the Gold Coast area in Queensland and all of regional Western Australia. It also operates radio stations in regional Queensland.

Prime is one of the few media stocks that has not been hit as hard by the downturn in advertising. In the half year, its revenue rose by 4.9 per cent to $138 million with post-tax profits rising by a similar amount to $16.1 million.

There has been persistent speculation that Seven would buy Prime if rules that prevent no one company from reaching 75 per cent of the population are scrapped later this year by the Communications Minister, Stephen Conroy, as part of his convergence review.

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Frequently Asked Questions about this Article…

What happened when Lachlan Murdoch sold his stake in Prime Media?

Lachlan Murdoch’s private investment vehicle, Illyria, sold its stake in Prime Media. The sale reportedly fetched about 68 a share (a small 2.9% discount to Prime’s last traded price of roughly 70) and netted Murdoch about $22 million, according to sources cited in the article.

How large was Illyria’s holding in Prime Media before the sale?

Illyria owned an 8.87% stake in Prime Media prior to the sale, which is the percentage reported in the article.

Did Prime Media comment on Lachlan Murdoch’s exit?

According to the article, Prime Media was surprised by the sale and had not issued a statement to the stock exchange. The company’s chief financial officer, Lesley Kennedy, said, “We have not heard anything. It is news to us.”

Does Lachlan Murdoch still hold other media investments?

Yes. The article notes Murdoch has built other media stakes since buying into Prime in April 2009, including an 8.9% holding in Ten Network (where he is non-executive chairman) and a half share in radio company DMG, which owns Nova stations.

How has Prime Media been performing financially amid the advertising downturn?

Prime has been relatively resilient: in the half-year reported in the article, revenue rose about 4.9% to $138 million and post-tax profits increased to approximately $16.1 million, making it one of the media stocks less affected by the advertising downturn.

Who are the major shareholders and what markets does Prime Media operate in?

Major shareholders include private hospital magnate Paul Ramsay and Kerry Stokes’s Seven Group Holdings. Prime operates as the Seven affiliate across northern and southern NSW, Victoria, the Gold Coast area in Queensland, regional Western Australia, and also runs radio stations in regional Queensland.

Could Seven Group buy Prime Media in future and what regulatory changes might affect that?

There has been persistent speculation that Seven might buy Prime if media ownership rules that prevent one company reaching coverage of 75% of the population are scrapped. The article says any such change could come as part of Communications Minister Stephen Conroy’s convergence review.

What should everyday investors take away from Murdoch’s sale of Prime Media stock?

From the article: Murdoch’s sale was unexpected by Prime and the company hadn’t commented at the time. Investors should watch for any company announcements, monitor Prime’s continuing financial results (revenues and profits cited in the half-year), and keep an eye on regulatory developments from the convergence review that could change takeover dynamics.