Independent News Ltd (INL) will pay out $340 million to shareholders in April or May next year.
The company said today that the decision follows its unsuccessful takeover bid for Sky TV, which closed last Friday.
INL owns 78.3 per cent of its target - not enough to trigger a 90 percent
compulsory takeover.
The bid drew acceptances for 47 million shares, INL said.
But the only major taker appeared to be Telecom, which sold its 12 per cent stake in Sky for $3.35 a share, plus a swap of three INL shares for every 10 Sky shares held.
INL executive chairman Ken Cowley said that the capital return was subject to shareholder and high court approval.
"This represents a capital repayment of approximately 78 cents per share," he said.
Sky shareholders obviously felt their shares were worth more, Macquarie Equities investment adviser Arthur Lim said.
"Sky TV shareholders are taking the view that...after many, many years of cash-burn, it has built up economies of scale, presence in the marketplace, a digital pay-TV monopoly in New Zealand and it's now very well positioned to leverage off that position."
He expected INL to remain a separate entity on the market and to make another tilt at Sky when it was free to.
"From INL's perspective it makes a lot more desirable to have 100 percent so that INL can freely access the cashflow of Sky TV."
The other option, liquidation, would not suit INL's owners, Newscorp, who found the Sky stake attractive, Mr Lim said.
However, remaining an investment vehicle also did not make a lot of sense because INL had no other major investments and it was simply duplicating costs.
INL, the New Zealand arm of Rupert Murdoch's media empire, retained its stake in Sky when it sold its stable of some 80 newspaper and magazine titles to Australia's John Fairfax Holdings Ltd for $1.2 billion in June. Macquarie currently values Sky TV shares at $5.01.
INL shares closed down 2c to $4.88, after losing 10 cents on Friday. But Sky TV shed 10 cents to $5.00 after losing 11 cents after the takeover bid fell apart, compared with its year high of $5.28.
- NZPA
