ConsMedia Seeks cash - but why?

Rose Major

Consolidated Media Holdings, the James Packer-controlled investment firm, has turned itself into a pure pay-TV play, selling its 27% stake in jobs and education online service Seek for A$440.6 million.

While some explained the sale as another move in James Packer’s attempts to keep Kerry Stokes away from ConsMedia (Stokes-controlled Seven Network recently amassed a 19.9% stake in the firm) others pointed out that the deal represented very good value for ConsMedia shareholders. Total ConsMedia investment in Seek was about A$70 million since buying its initial 25% stake in 2003.

Whether the cash will fund a buyback of ConsMedia to deter any move by Stokes to further consolidate his position in ConsMedia remains to be seen. But ConsMedia is certainly amassing cash to spend. In a deal the previous day, the firm sold its Sydney HQ for A$50 million.

Meanwhile, Seven Network reported profits down 91% to A$12 million from A$142 million in the year to the end of June compared with the previous year, as the company wrote down the value of some of its investments, including Seven Media Group to zero.

Seven Network’s investments include 47% of Seven Media Group, which operates the Seven Network TV channel and owns Pacific Magazines, 23.2% of regional newspaper publisher West Australian Newspapers Holdings, and 100% of wireless broadband firm Unwired Group.