More to come in PBL restructure

THIS month's split of PBL into two businesses may not end the restructuring of the Packer media interests, with expectations of more activity in the private equity joint venture with CVC Capital Partners.

THIS month's split of PBL into two businesses may not end the restructuring of the Packer media interests, with expectations of more activity in the private equity joint venture with CVC Capital Partners.

Consolidated Media Holdings, the listed media vehicle to be created out of the Publishing and Broadcasting split, aims to present itself as a new-media company.

Informed sources say PBL has been weighing media options, including a possible further sell-down of its stake in PBL Media, its 50:50 joint venture with CVC.

Consolidated Media could sell down its stake in the PBL Media joint venture from 50 per cent to 30 per cent, allowing CVC to take the lead in PBL's acquisition strategy. The sell-down of a 20 per cent stake, the figure most widely speculated, would release about $380 million into Consolidated Media coffers, based on analysts' estimates of the value of PBL Media (which comprises the Nine Network, ACP Magazines, and stakes in Ninemsn, carsales. com.au and Sky News).

That would leave CMH's interest in PBL Media at 30 per cent of the equity (about $560 million).

The possible restructure would come as PBL is clearly looking to move away from its reliance on old-media assets and move towards new-media.

At the time of the split, PBL sources stressed that CMH - with assets including 25 per cent of Foxtel, 50 per cent of Fox Sports and 27 per cent of online recruitment firm Seek - would be heavily weighted in favour of new-media assets. A further selldown of the stake in PBL Media, currently dominated by old-media assets, would free up cash for the new Consolidated Media vehicle to concentrate on what it sees as increasingly important new-media assets. Already, its new-media investments comprise about 70 per cent of the total value of PBL's media plays.

The selldown is also seen as logical at a time when CVC is widely perceived to seek a leading role in PBL Media's acquisition strategy. One source suggests there has been some disagreement between CVC and PBL over which assets to buy, and allowing CVC to raise its stake in PBL Media would give the private equity firm a bigger say a little more than six months after its involvement with PBL was announced. "It gives CVC the opportunity to keep expanding," the source says.

Consolidated Media's financial exposure to any purchases made through PBL Media would be minimal, given that PBL Media has a capital structure of about 70 per cent debt and 30 per cent equity. In the event of a selldown to a 30 per cent stake in PBL Media, Consolidated Media would only have to contribute $90 million in equity towards every $1 billion purchase PBL Media would make.

The speculation about the selldown comes as documentation for the scheme of arrangement (through which the split of PBL into a gaming company, Crown, and Consolidated Media, will be executed and put to shareholders in August) are being finalised.

It also follows comments by Nine Network outgoing chief executive Eddie McGuire during his resignation announcement last week, that he was out of step with an increasingly financial focus at PBL Media.

He hinted at more changes: "There'll be some more changes coming. In the next few months more things will become apparent, and will make this decision even more sensible."