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MELBOURNE - Television broadcaster Seven Network says it will form a A$4 billion ($4.6 billion) media joint venture with the US-based private equity firm Kohlberg Kravis Roberts (KKR).
The venture, the Seven Media Group, will include Seven's television, magazines and online businesses.
"The new joint venture will be
Seven and KKR's vehicle to pursue media opportunities in Australia and New Zealand," the companies said in a joint statement.
Seven said the deal underlined its strong and competitive broadcast television and magazine-publishing businesses and rapidly developing Yahoo!7 partnership, which had provided the platform for Seven's development of online and new content delivery platforms.
"Today's agreement delivers to Seven, our people and our shareholders a venture with the strategic and financial flexibility to take advantage of the dynamics of the Australian and New Zealand media landscape," Seven executive chairman Kerry Stokes said.
KKR founding partner George Roberts said Seven had tremendous momentum and was well positioned to benefit from changes in the media environment.
Last month, US-based KKR led a buyout consortium that made an $A18.2 billion takeover offer for Australian retailer Coles Myer, but withdrew the offer after Coles Myer rejected it.
Under the deal with Seven, KKR will invest about A$735 million for a 50 per cent economic stake in the joint venture, which will own Seven's television and magazines businesses and its 50 per cent interest in the Yahoo!7 joint venture.
The Seven Media Group has obtained underwritten financing from Morgan Stanley, Mizuho, Goldman Sachs and Citigroup, of which about A$2.5 billion will be drawn on closing.
Seven will receive cash proceeds of about A$3.2 billion and will retain a 50 per cent stake in the joint venture.
Seven and KKR said the Seven Media Group would not impact upon the employment of Seven's staff.
Seven last month took a 14.9 per cent stake in West Australian Newspapers Holdings.
Seven will retain its subsidiary C7 and the benefit of subscription television rights for the 2007-11 seasons in the Australian Football League and the Olympic Games in Beijing in 2008.
Stokes will be chairman of the Seven Media Group and will remain executive chairman of Seven.
The chief executive of the new venture will be Seven's chief executive of broadcast television, David Leckie.
Seven shares shot up A$1.22 to close at A$11.80.
The Seven deal is similar to one unveiled by James Packer's Publishing and Broadcasting Ltd last month.
The moves come as Australia's media firms position themselves for the introduction of new media ownership laws next year.
- AAP
