Fairfax rocked by share sell-off

LESS than a week out from the release of Fairfax Media's full-year result, an unnamed institution has sold a 1.65 per cent stake in the company at a discount to the company's prevailing market price.

LESS than a week out from the release of Fairfax Media's full-year result, an unnamed institution has sold a 1.65 per cent stake in the company at a discount to the company's prevailing market price.

The surprise sale of the Fairfax stock will see the mystery seller -- which informed sources described last night only as a "long-only" institution -- forgo the company's final dividend, due to be announced at the company's annual profit briefing next Thursday.

The Australian understands the broking arm of investment bank UBS took on a line of 25 million shares before the opening of trade yesterday, and later placed the stock with several institutions by mid-morning.

The shares were placed at $2.70, a 7c discount to Fairfax's prevailing share price at the time of the trades.

The stock closed yesterday 10c below its previous close at $2.75, with the placement, not surprisingly, pushing volumes of trade in Fairfax shares to their highest level this year.

Market watchers last night questioned the reasons for the sale. One broking firm media analyst said: "Why, with a 10c (Fairfax) dividend likely to be on the table next week and with the stock trading at a low point, are they selling now?"

The sale of the stock by the unidentified seller has come at a time Fairfax shares are trading just above a six-year low of $2.64, recorded in October 2002.

The fall in the share price in recent months has come amid hedge fund speculation on Fairfax stock, and a tougher advertising market for media stocks on the back of the global credit crunch.

There have also been revelations in recent weeks that Fairfax is examining the sale of a key part of the former Southern Cross Broadcasting empire it acquired less than a year ago.

The company has admitted it is considering a trade sale or strategic partnership for Southern Star, the production house it bought along with Southern Cross's former radio assets last November.

This followed questions raised in this paper last month about Fairfax's decision to purchase Southern Star in the wake of the Ten network's axing of reality show Big Brother: the production house's third programming casualty since the newspaper group took it over.

Big Brother -- like the other shows axed, the Nine network-screened comedy series Monster House and quiz show 1 vs 100 -- was made by Endemol Southern Star, the production house's joint venture with global producer Endemol. Fairfax is believed to have paid just over $150 million for Southern Star last year.