Seven Group flags standoff with News over CMH

By Duncan Craig | 28 August 2012
Seven Network chairman, Kerry Stokes.

Seven Group Holdings has refused to rule out a competitive tussle with News Limited to acquire Consolidated Media Holdings, revealing it is still waiting on the regulatory green light before it makes a potential move.

Seven said it is still waiting for approval from the Australian Competition and Consumer Commission.

“We want to know if we can buy it,” said Seven Group Holdings CEO Peter Gemmell at the company's annual earnings conference today. He added that Seven's decision would come down to the price and availability of the CMH business, as well as regulatory approval.

Seven also said it is still waiting on News Limited to provide it with a formal proposal to buy out its 24% stake in CMH.

“It's hard to make a decision without a proposal,” Gemmell said. “In the fullness of time, I am sure News Limited will come forward with a proposal (and then a decision would be made).”

News Limited is yet to form a binding agreement with CMH. News Limited CEO Kim Williams has said that it will close the CMH deal before the end of the year.

The comments by Seven today indicate that it will not make it easy for News to swoop in and buy CMH, which owns 25% of Foxtel, and half of Fox Sports. Seven Group's Kerry Stokes is understood to be keen for a higher price than the $400 million that his interest would get from the News offer.

Gemmell would not directly respond to questions about whether Seven has the financial ability to buy all of CMH. The News Limited bid is priced at $2 billion.

Seven Group also joined the list of other media companies that have recently dramatically reduced the value of its assets. The company revealed a $483.5 million equity accounting write-down of its investment in Seven West Media.

Seven Group also announced today that Ryan Stokes has been appointed chief operating officer.

“Ryan’s appointment formalises the key role he has been undertaking for Seven Group Holdings as our industrial services businesses have expanded over the past twelve months,” Gemmell said.

“He is making a significant contribution to our Group and I am looking forward to him joining our key executive team and his continuing involvement in our business operations across the WesTrac Group and our investments in media.”

Seven Group announced its annual earnings today, revealing that its earnings before interest and tax from its media investments was $116.1 million. Eighty percent of its profit now comes from its industrial and mining-related businesses.

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