Casinos grab the cash in PBL asset sales

IF there were any doubts that James Packer's Publishing and Broadcasting Ltd was focusing its resources almost entirely on casino investments ahead of its split later this year, they should be erased after the company yesterday briefed analysts in Sydney on its plans.

IF there were any doubts that James Packer's Publishing and Broadcasting Ltd was focusing its resources almost entirely on casino investments ahead of its split later this year, they should be erased after the company yesterday briefed analysts in Sydney on its plans.

At a presentation where many of the PBL empire's top brass were present -- including its chief executive, John Alexander, executive deputy chairman Chris Anderson, gaming boss Rowen Craigie and new media chief Martin Dalgleish -- the company revealed that almost all of the cash from various asset sales will go into its listed casino company, Crown Ltd, ahead of PBL's split into separately-listed gaming and media companies.

Crown's dominance in Mr Packer's vision may also be measured by the small staffing levels that the media spin-off, Consolidated Media Holdings, will have once the split occurs. Mr Alexander told the briefing that CMH would become a "genuine holding company", with 10 employees and 12 directors.

"It must be the only public company I know of that has more directors than employees," Mr Alexander reportedly joked.

Analysts told The Australian yesterday that Mr Alexander also revealed that CMH would not receive any proceeds from the halving of PBL's stake in PBL Media -- which now owns the Nine Network and Australian Consolidated Press -- from 50 per cent to 25 per cent (which was announced in June).

"CMH is not intended to have a pile of cash," he told them.

They further revealed that CMH would not receive any cash from the proposed sale of PBL's 50 per cent stake in cinema chain Hoyts and its 25 per cent stake in movie studio New Regency.

All the proceeds from these transactions would go to Crown.

Both the Hoyts and New Regency investments are expected to be sold within months, after PBL on Wednesday said it had written down the value of its Hoyts stake by $66 million, to $143 million.

PBL yesterday reaffirmed the book value of its New Regency stake, which stands at about $200 million.

Mr Alexander said that the Hoyts and New Regency investments -- or the cash from their sale -- would stay with Crown.

The split will be executed via a scheme of arrangement which will now be put to meetings of PBL shareholders in November.

News of how gaming dominates PBL's vision follows a statement accompanying the company's annual results, released on Wednesday, in which the company said that "at the closing of the scheme, the majority of PBL's cash reserves, together with the debt raised to fund the cash distribution to shareholders, will reside with the Crown gaming entity".

Mr Alexander also said the company was continuing its "conversation" with the Australian Taxation Office about a $3-a-share, or $2 billion, capital return to PBL shareholders once the split occurs.

The two parties are in dispute over the tax treatment of the return, of which Mr Packer stands to be the major beneficiary.

With Consolidated Media likely to be net-debt and net-cash neutral, it will rely largely on increased distributions from new media investments Foxtel, Premier Media Group and online jobsite Seek.

Mr Packer's company is starting to reap the rewards of years of investment in Foxtel, in particular, and an increase in Foxtel's operating cash flow would support higher distributions to the pay-TV operator's shareholders.

In a related development, it was revealed yesterday that if PBL succeeded in acquiring a 33.1 per cent stake in Germany's leading real estate website, Immobilien Scout, for about $290 million, the investment would also reside with Consolidated Media after the PBL split.

Analysts said the purchase would underline Consolidated Media's continued appetite for "new media" businesses.