ConsMedia shares hit post-split low

Consolidated Media Holdings shares hit their lowest level since James Packer split the company from his gaming assets late last year.

SHARES in Consolidated Media Holdings closed yesterday at their lowest level since James Packer split the company from his gaming assets late last year, amid a special placement of 7.4million shares in the company during afternoon trade.

The placement, more than 1 per cent of the company, helped to push the share price down 24c to $2.26. This price level capitalises the company at under $1.6billion.

This means that just six months after Lachlan Murdoch shelved his $3.3 billion bid to take over ConsMedia, it is valued by the market at less than half that.

The ConsMedia price dive has come amid speculation about the status of its 25 per cent stake in debt-riddled PBL Media, already valued at zero by many analysts.

ConsMedia's August profit result revealed PBL Media continued to labour under a $4.2 billion debt mountain built up by private equity firm CVC, as it accumulated a 75 per cent stake over the past two years.

PBL Media's operating profit for the year was $463 million, but the cost of servicing the $4.2 billion virtually negated any contribution to ConsMedia profit.

This has led to speculation on whether PBL Media may require an equity injection from its shareholders and, if so, if ConsMedia would itself make a contribution.

Last year's "scheme booklet", detailing the split of the former Publishing and Broadcasting Limited empire into separate media and gaming companies, said ConsMedia was not "required to provide further funding to PBL Media". But the booklet also spelt out that ConsMedia "has the right to provide further equity funding (to PBL Media) on a pro rata basis with (CVC)".

With continuing market concern that PBL Media's debt covenants may be broken at some point because of the high gearing, there is speculation that if this occurs, ConsMedia may still pump money into the vehicle.

ABN AMRO media analyst Fraser McLeish said of yesterday's large share price falls in ConsMedia: "The market is either worried more money is going to have to go from ConsMedia into PBL Media, or there's been a large forced seller that's had to exit at low prices."

ConsMedia also has stakes in pay-TV operator Foxtel (25 per cent); Premier Media Group, owner of Fox Sports channels (50 per cent), and online job classifieds leader Seek (27 per cent).

Many analyst valuations now put PBL Media's worth at zero, but still value ConsMedia at $2.3-$2.4 billion because of its other stakes, particularly the pay-TV holdings. Mr McLeish values ConsMedia's PBL Media stake at zero, but puts its Foxtel holding at $964 million, its Premier Media stake at $900 million and its Seek stake at $400 million. "Its market value is well below analyst valuations: even if you put PBL at zero," he said.