KEY POINTS:
When CanWest MediaWorks ups its profit outlook - as it almost certainly will - Ironbridge's job in taking over the company will get just that little bit harder.
Ironbridge Capital already looks as if it faces a battle to win the whole company, with Brook Asset Management having
upped its stake to 8.3 per cent this week.
But the good news likely to come will prompt some shareholders to think twice before selling into Ironbridge's offer.
CanWest said at its half-year earnings last month that its operating profit - earnings before interest, tax, depreciation and amortisation - for the full year would be $65.7 million.
It's already earned $36.3 million of that in its first half, which means that just to meet but not surpass last year's earnings, it would need to have its worst second half since 2004, and that's hardly likely given the way the economy has grown since then.
Even if CanWest just matches what it earned in the second half of last year, its earnings will be around $70 million - some 7 per cent higher than it forecast last month.
Add to that the fact that CanWest is pushing through a 7 per cent rise in TV ad charges from the middle of the year and the outlook for the broadcaster looks pretty good, at least in the short term.
Australian private equity firm Ironbridge already has 70 per cent of CanWest, having paid $386 million for the stake owned by CanWest Canadian parent CanWest Global Communications. And its $2.43 a share offer for the remaining shares doesn't look too bad when compared with Australian media acquisitions over the past year.
But with Brook holding 8.3 per cent of the stock, only a handful of other shareholders would need to hold out to stop Ironbridge reaching the 90 per cent it needs to take full control.
While Brook's Simon Botherway hasn't revealed why it's been increasing its stake, it's unlikely to be doing so just to sell into the offer at the current price. But Botherway has said that Brook hasn't yet decided whether it will accept the offer.
It's also unlikely that Botherway would want to remain a minority shareholder - institutional investors aren't comfortable with the amount of debt private equity firms pile on to their investments.
Which probably means that Brook will hang in there, hoping Ironbridge comes back later and makes a higher bid to mop up the minorities.
This may not be such a bad approach.
Riding on the coat tails of private equity has the potential to deliver rich rewards if things work out, but there are some risks to CanWest's TV business.
TVWorks, which operates TV3 and C4, has made impressive ratings gains against the once-impregnable TVNZ. But TVNZ will eventually get its act together and the gains may not come so easily in future.
And then there's Sky TV. So far the broadcaster - whose largest shareholder is Rupert Murdoch's News Corp - hasn't made much of a push into free-to-air TV.
Ironbridge facing new hurdles in CanWest takeover
But the option remains open. Sky could beef up free-to-air Prime.
Alternatively, with Sky decoders in 43 per cent of New Zealand households - and mostly the wealthy households that advertisers target - the pay TV operator could roll out its own free channel in addition to Prime over the decoders.
If it did this it would be a tough competitor, with the financial backing and programming tie-ups of Murdoch's News Corp.
It's doubtful that Ironbridge would have deep enough pockets to match Sky and TVNZ in a bidding war for international programming and all of a sudden things might not look so rosy for CanWest.
My own airline
After breakfast this morning I'm going to start my own budget airline.
It's the latest craze.
Every week there's another announcement from someone or other that they're about to start their own budget or regional airline.
This week we've seen reports that Nelson tribe Ngati Koata and the founder of failed regional airline Origin Pacific, Robert Inglis, are working together to launch another regional airline.
That followed reports last week that Florida-based aviation investor Patrick Weil had $27 million backing to start up a low-cost carrier here in New Zealand. Weil plans to buy Qantas' New Zealand operations for his airline, but told reporters he hadn't actually spoken to the Aussie carrier about his plans.
So really, he's not much further ahead of where I'll be when I get my airline under way after my Weet-Bix. And in one respect I'm in front - unlike Weil I'm not an undischarged bankrupt.
The chances of a budget airline succeeding in New Zealand are pretty much nil. Look at the difficulties various domestic competitors to Air New Zealand have had as one half of a duopoly.
While there might be some space for a regional carrier on some routes, the idea that a genuine third competitor could make a profit - particularly now that Air New Zealand is operating as a low-cost domestic carrier - is ridiculous.
But so too is Air New Zealand's suggestion that it might start its own budget domestic airline. The idea was floated in a passing reference in an internal company memo which mysteriously made its way to the media soon after Weil announced his plans.
Why would Air New Zealand start a budget airline? What would it gain? It is already essentially a low-cost carrier.
So no one's going to start a third airline in New Zealand, whatever they might tell eager journalists.
After lunch, I'm going to start a phone company, and provide super high-speed broadband.
The milk-fed housing slowdown
Every time someone gains something in the economy, someone else loses.
This idea was neatly illustrated by the suggestion from ANZ economists this week that high international milk prices will probably exacerbate the housing slowdown.
World dairy prices are at a record high, up nearly 60 per cent from a year ago. This of course is great news for farmers, the rise being strong enough to more than offset the surge in the New Zealand dollar and boost their incomes.
And the resulting increased payout from Fonterra will boost the economy by $1.2 billion to August next year, ANZ says.
So far, so good. But, as always, there's a cost.
The extra income will add more pressure to inflation, which is already running too strongly.
"Additional impetus via surging commodity prices and the terms of trade will ultimately necessitate the housing market and other sectors having to bear a greater proportion of the economic adjustment to curb inflationary pressure," ANZ said.
The bank's chief economist, Cameron Bagrie, is expecting house price growth to finally flatten off this year as the interest rate increases over the past few years finally start to bite.
So, happy farmers, but not so happy householders.
* Christopher Niesche is business editor of the Herald
