Media Manoeuvres Set Tone As Moguls Wait For The Nod
The Age
Saturday October 15, 2005
UNCERTAINTY over the timing and detail of the Government's media ownership reform has placed many media stocks in a holding pattern and thwarted their ability to make bold transactions.
But Kerry Packer's Publishing and Broadcasting Ltd has emerged as a nimble operator as many of its media rivals take a more rigid approach to investing until restrictions on foreign and cross-media ownership are lifted. "They are still waiting for the legislation to change, so as a result there haven't been many major changes in the sector," said Greg Fraser, media analyst at Shaw Stockbroking. No longer haunted by the spectre of One.Tel, PBL demonstrated its corporate panache last week by outmanoeuvring John Fairfax Holdings to take a 41 per cent stake in the online automotive classifieds business carsales.com.au. The transaction catapults PBL, which also has interests in employment site seek.com.au, to the top position in two of the three classified Fairfax "rivers of gold" revenue streams that are moving from print to the internet. However, Mr Fraser said this had not been fully reflected in PBL's share-price performance over the past year, on which it improved $1.99 to yesterday's close of $16.26. Floundering ratings at the Nine Network on top of management changes and unrest, combined with a lack of financial transparency among its business divisions, have tarnished its performance. Andrew King, portfolio manager at Investors Mutual, believes PBL's 50 per cent stake in sports channel Fox Sports and 25 per cent holding in monopoly pay TV operator Foxtel are also among its more astute investments. "PBL in recent years has been a lot more shrewd in their investments," he said. "It seems to be able to do deals without giving away the bank and taken strategic positions in companies that could potentially prove to be worthwhile, but they've not yet been fully appreciated by the market." Media analyst Ivor Ries, of EL & C Baillieu, said family-run companies such as Rupert Murdoch's News Corp and PBL were not burdened by protracted decision-making processes. "Ultimately only one person is making a decision, so the family-owned ones have always been quick to act," he said.Murdoch plans to boost News Corp's internet sales to as much as $US1 billion ($A1.3 billion) over the next five years have led to him snapping up assets in an aggressive acquisition spree. He recently finalised the $854.03 million purchase of video games site IGN Entertainment Inc, bought Intermix Media, owner of entertainment portal MySpace.com, and is plotting a takeover bid for property website realestate.com.au Despite his efforts to broaden the company's revenue streams, News Corp's share price has dropped $1.60 over the past 12 months to yesterday's close of $20.72. "There's a whole raft of media companies around the world which are not family-run, and they tend to be slower to act because you have to run proposals past the board," Mr Ries said. John Fairfax Holdings rates somewhere lower on the corporate agility scale after being trumped by PBL over carsales.com.au and seek.com.au. "I don't think it's done a good job with the risk to classifieds from new media competitors such as seek and carsales.com, so its agility is probably down the lower end," Mr King said. Having bought online dating service rsvp.com for $38.9 million, Fairfax is pursuing internet companies to protect revenue.
© 2005 The Age