Seven douses talk of deal with Fairfax

Kerry Stokes’s Seven West Media has downplayed a report claiming the media company could join forces with Fairfax.

Kerry Stokes’s Seven West Media has downplayed a report claiming the media company could join forces with Fairfax Media following talks about potential corporate deals.

Amid the passage of the Turnbull government’s media reforms, Seven, operator of Australia’s No 1 commercial television network, is said to be in Fairfax’s crosshairs, according to a report yesterday in The Australian Financial Review, a Fairfax title.

Fairfax turned its attention to Seven in anticipation of changes to the ownership laws, and failed talks between Fairfax and Nine Entertainment, the article reported. Seven insiders said no deals were imminent, and suggested Fairfax was attempting to position Seven as a “stalking horse” to flush out Nine and other dance partners.

“We are not looking at anything from them at the moment. It is obvious they did it because Nine has gone quiet on them,” a Seven source said.

“It is so funny. What is the basis? Nine has said they were not interested. Clearly (talks) cooled. So they are trying to invent a stalking horse.”

A spokeswoman for Fairfax declined to comment last night. Shares in Seven moved lower in trade yesterday, down 0.69 per cent, while Fairfax inched up 0.53 per cent as the wider sharemarket closed 0.45 per cent higher. Some industry observers believe ASX-listed HT&E (Here, There & Everywhere) is a more logical partner for Seven. HT&E, previously known as APN News & Media, owns outdoor advertising and digital media businesses, as well as Australian Radio Network, operator of the commercial FM radio networks KISS and Pure Gold.

Investors were reminded in the recent profit season of the need for media companies to find new sources of revenue to offset an advertising market that had stopped growing and offer a credible force behind the Facebook and Google duopoly.

While media executives will consider transactions to attain earnings growth, they caution even beaten-down media stocks might not yet be cheap enough to lead to big deals.

Discussions between Fairfax and Nine centred on several transactions including the future of streaming service Stan, a joint venture between the companies.

There are rumours that the viability of Stan’s crucial programming deal with CBS Corporation’s Showtime was in doubt in the wake of CBS’s proposed takeover of Ten.

Premium US cable channel Showtime supplies Stan with exclusive dramas. However, Stan executives have dismissed these suggestions, pointing out it has long-term deals in place.

Fairfax’s long-time suitor, TPG Capital, walked from its potential $2.8 billion bid earlier this year, concerned about the valuation of star asset Domain, which executives are planning to spin out in a float on the ASX.