KEY POINTS:
Shares in Australian media companies rose sharply yesterday before the introduction of new media ownership laws which are expected to trigger a fresh wave of takeovers among radio, television and newspaper businesses.
The Australian Government said late on Thursday the laws would come into force on April 4,
ending uncertainty about the timing of the changes which were endorsed by Parliament last year.
The laws relax 20-year-old foreign ownership limits on Australia's A$12 billion ($13.8 billion) media sector, and allow cross-ownership of newspaper, radio and television interests in the same city.
"Next Wednesday marks a landmark event in Australian media history. The short notice given as to the effective date was unexpected, and could lead to a flurry of activity in the coming few days," Goldman Sachs JBWere analysts said in a client note.
Shares in likely takeover targets newspaper publishers John Fairfax Holdings, West Australian Newspapers and radio broadcaster Austereo Group rose.
Fairfax jumped 24c to A$4.98, West Australian Newspapers put on 98c to A$15.63 and Austereo was 5.5c higher at A$2.05.
Radio station operator Southern Cross Broadcasting climbed 67c to A$16.60.
The laws clear the way for powerful media tycoons like News Corp chief Rupert Murdoch and James Packer, who controls conglomerate Publishing and Broadcasting, to do more big deals, although analysts say they are no longer as hungry for local media assets as they once were.
Macquarie Equities said Fairfax and Austereo were the two most likely targets. Fairfax's open share register and display advertising revenues made it a strong target, while Austereo was a natural fit for a TV group.
Foreign predators, particularly private equity, were also circling.
"Because a new foreign player does not reduce the number of media in any given market, virtually any media company could be a target," Macquarie Equities said in a client note.
Packer's PBL and Kerry Stokes' Seven Network have already tipped their media assets, including Australia's top two television networks, into multibillion-dollar joint ventures with private equity firms last year.
"Seven will continue to monitor and pursue investment opportunities, as it does on an ongoing basis," Seven Media said yesterday.
The James Packer-led PBL surged 82c to A$19.85 and Seven added21c to reach A$11.42.
Some investment bankers believe a majority of the big deals have already been done, and players like Packer would focus on expanding into gaming while Stokes could look abroad where valuations were cheaper.
A majority stake in Ten Network Holdings, Australia's third-largest TV broadcaster, is up for sale.
The new laws guarantee at least five separate media groups must remain in the main cities, and at least four media groups in a regional market.
Foreign investments above 5 per cent will still need to be approved by Australia's Treasurer and the Foreign Investment Review Board, although the laws scrap limits which had prevented a foreign investor from owning more than 15 per cent of a television station or 25 per cent of a newspaper.
- REUTERS
