Moves by the Seven Network Ltd to secure a strategic stake in West Australian Newspapers Holdings Ltd has prompted speculation as to whether the network is seeking a bargaining position in the current media shake-up, or if it marks the start of a calculat
Moves by the Seven Network Ltd to secure a strategic stake in West Australian Newspapers Holdings Ltd has prompted speculation as to whether the network is seeking a bargaining position in the current media shake-up, or if it marks the start of a calculated move to launch a takeover bid.
Last week, Seven acquired 17.49 million WAN shares, equivalent to a 8.4 per cent stake before ramping up its stake to 14.9 per cent, the maximum allowed under the current cross-media legislation, for $343 million.
To one senior analyst, Seven’s purchase was more of a blocking stake rather than an attempt to merge with WAN, which owns The West Australian, regional newspapers and radio stations.
Bell Potter Securities head of wealth management Heather Zampatti told WA Business News the purchase was a means of securing a slice of the print media pie in WA.
“What we are seeing is some very early manoeuvring to get a seat at the table,” she said.
“Print media and television are the two most dominant forces in media, and WAN is a strategic opportunity for Seven to get into print.”
Ms Zampatti said it was too early to suggest whether Seven would move to offer a takeover bid for WAN.
However, the easing of cross-media ownership laws next year could provide the impetus for a Seven takeover bid of WAN, even though Seven executives, reportedly including chairman and 43 per cent shareholder Kerry Stokes, claim no plans of this ilk were currently in the pipeline.
CommSec senior analyst Craig Shepherd said the corporate regulator, Australia Competition and Consumer Commission, would likely put up a strong resistance to Seven if there are plans to buy up more of WAN.
“We would suggest that [Seven] will struggle to own 40, 50 or 100 per cent of WAN,” said Mr Shepherd.
“The fact is it is going to have a very large chunk of the news content market in Perth.
“It is a one newspaper city and Seven has got a really great position in news and current affairs in Perth, and that combination is a pretty powerful one.”
Seven’s acquisition came after legislative changes to the Trade Practices Act were passed by the senate, which ultimately made it easier for companies to merge.
The passing of the legislation witnessed heightened merger activity in the media industry.
PBL unveiled a deal to spin-off half its media assets to focus on the international gaming sector, while newspaper publisher John Fairfax Holdings Ltd confirmed Rupert Murdoch’s News Corp bought 7.5 per cent of its shares.
For Seven’s Mr Stokes, The West Australian isn’t the first paper to cross his path, after having already acquired the late Kerry Packer’s The Canberra Times in 1989 through his private company Australian Capital Equity, before selling it off for a $45 million profit to Rural Press in 1998.
Mr Stokes, who headed the WA contingent in the Forbes’ Australia and New Zealand’s 40 richest list earlier this year with a net worth of $1.1 billion, also owns Caterpillar earth moving machinery dealer WesTrac, which generates a greater portion of his income than his stake in Seven.
