Packer plans a TV finale?

The Power Index

Type in the search term "Packer sell Foxtel" today and you'll get 73,100 stories on Google to fit the bill.

We still haven't yet got round to reading them all, but the first four pages of the list link back to a piece last night by News Limited business columnist Terry McCrann, claiming that the media and gambling tycoon has decided to sell out of the media and spend his money on buying more casinos.

Poor Kerry would be turning in his grave. Again.

Specifically, Packer is planning to raise $1 billion in free cash from the sale of his 25 per cent share of Foxtel to fund a bid for Echo Entertainment, says McCrann, who claims Packer has appointed his old mate Matthew Grounds at investment bank UBS to handle the auction. If the bid were successful, Packer would win control of four more Australian casinos: The Star in Sydney, Jupiters on the Gold Coast and in Townsville, and the Treasury in Brisbane.

But sadly, we have to admit this is Macca's "exclusive" not ours.

When The Power Index tried to confirm the story this morning we were met with a broadside of 'no comments'. We rang Matthew Grounds at UBS ("We have no comment"), Adam Suckling at News Limited, ("We never comment") and tried rather feebly to talk to James Packer at Consolidated Media Holdings ("We'll get someone to ring you back").

We also tried Kerry Stokes at Channel Seven, who would surely be a buyer, Richard Freudenstein at Foxtel, who should know if one of his shareholders is selling, and the good folks at ACMA and Senator Conroy's office in Canberra, who might know whether the pay TV sale would get past the regulators. We even put in a call to McCrann, ("He is not in the office today").

But by the time we went to press we'd got ... zilch.

So how likely is it to happen? Four years ago, Packer tried to buy Consolidated Media Holdings (which owns the Foxtel and Fox Sports stakes) at $4.75 a share in a 50-50 joint venture with Lachlan Murdoch. He dodged a bullet when Murdoch's bankers refused to put up the money. He's now trying to sell his shares at $3.60, according to McCrann, but that's a lot higher than the $2.40 they were four months ago.

It seems that the Foxtel agreement requires Packer to offer his shares first to News Limited and Telstra, but the devil will be in the detail of this, and Kerry Stokes (who owns around 20 per cent of CMH) will doubtless be trying to get into the game.

Five years ago James Packer was waxing lyrical at a Sydney function about the future of Foxtel, describing it as the most valuable and profitable media group in the country. Perhaps he is now seeing it more in the same light as free-to-air TV, which is beset by ever-increasing competition from programs delivered over the internet.

But he must also be taking a view about the future of gaming in this country, where high-roller revenues have held up well despite massive new casinos being built in Macau and Singapore.

Either way, The Power Index would remind potential purchasers that it has rarely been a smart move to buy when the Packers are selling – especially in TV. The last lot to make that mistake were the mob from the private equity outfit CVC, who paid James $5.5 billion for Channel Nine in late 2006 and lost their shirts on the deal.

This story first appeared on The Power Index on May 3. Republished with permission.