Moguls Count On Different Set Of Rules To Play The Media Ownership Game
The Age
Monday March 3, 2003
Australia's media landscape will be reshaped if likely changes to cross-media ownership rules can clear the last hurdles. Brian Robins reports.
Ladies and gentlemen, pick your partners for the next dance as a prospective change of cross-media legislation sets the scene for a round of takeover activity.
It's been a long time coming, but the next few months may see the structure of the media industry changed fundamentally. It is almost certain the Government will manage to change media ownership rules, opening the way for many of the existing players to expand by wholesale acquisition.
Izzy Asper at Ten Network is seen as a seller, Village Roadshow is a likely seller of its controlling stake in Austereo, as is Reg Grundy of his block of stock in RG Capital Radio if the price is right.
Southern Cross Broadcasters and Prime TV also are likely to see control change hands, depending on who makes the first move.
``It will be like the banks, one after another," one fund manager said of the prospective change in the media sector.
The Federal Government is negotiating with the four independents in the Senate to win support for its planned changes, although ultimately it may prove to be easier to do a deal with the Democrats.
The Democrats are not especially concerned about further consolidation in the media sector, especially radio, and are willing to look at changes involving regional media, along with opening the door a little wider to foreign companies.
The Ten Network already is controlled offshore, by Canadian investor Izzy Asper, with UK media giant DMG expanding its footprint in commercial radio via its network of Nova FM radio stations.
In print media, the biggest single player is Rupert Murdoch's News Corp, which dominates daily newspapers and has a big presence in suburban weeklies as well.
One flashpoint in any debate over further consolidation of the media sector is in the capital cities, with caution about the prospect of a single company dominating both newspapers and television.
Even so, whether it is the four independents or the Democrats, some consolidation of TV and radio is inevitable, especially in rural markets.
``Radio will be allowed to be bought in the capital cities by newspaper and TV operators. Also, regional newspaper and TV could merge," says analyst Roger Colman of CCZ Equities.
``Before Christmas, I put the chance of the legislation going through at 40 per cent, 60 per cent," said Tim Hughes, managing director of RG Capital Radio. ``But now, I would put it at 70 per cent."
Hughes said that when the Minister for Communications, Senator Alston deferred the legislation and started negotiations with four Senate independents, he upgraded his view of prospects that the legislation will succeed.
``These are '80s rules and it is now 2003," Hughes said.
``All they do is restrict Australian companies." With growth prospects for radio companies like his becoming more restricted, the only way to boost earnings was to continue cutting costs, which was bad tidings for maintaining local news desks, he said. The best match for much of regional radio was regional TV, Hughes said, given the divergent prime-time peaks between morning for radio and evening for TV, allowing plenty of cross-promotional prospects.
Others, such as Rural Press managing director Brian McCarthy, were a little more cautious, putting the prospects of changing the media rules at fifty-fifty.
``If it happens, there would be good opportunities to participate," he said.
In radio, RG Capital, Austereo and DMG are all seen to be likely to change hands.
Austereo's main shareholder, Village Roadshow, is likely to cash out and use the funds elsewhere within its sprawling operations.
© 2003 The Age