Stokes unlikely to buy ConsMedia: analysts

25 Jun 2012, 5:25 pm   -   Source: AAP

Analysts believe Kerry Stokes' flirtation with bidding for ConsMedia is unlikely to succeed, but could bring his diverse interests to a head.

Billionaire Kerry Stokes' positioning for a possible bid for Consolidated Media Holdings (ConsMedia) is most likely serious but unlikely to succeed, analysts say.

The Seven Group chairman signalled his intention to thwart Rupert Murdoch's $2 billion offer for ConsMedia when his company lodged a request with the competition regulator late on Friday for an informal review.

Seven already holds 24 per cent in the pay-TV takeover target, while James Packer owns just over 50 per cent and is friendly to offers from Murdoch's News Ltd.

Questions surround Mr Stokes' motivations and whether he actually wants full control of ConsMedia or is pressing News Ltd for a higher price.

Analysts also say the issue might bring Mr Stokes' conflicting media and mining services investments to a head.

Seven already carries as much as $1.8 billion of debt - a high level, even before he gets into a bidding war with Mr Murdoch, Fat Prophets media analyst Greg Fraser said.

"I don't discount the desire of Seven Group to own that asset, or continue to own their part of it, but question their wherewithal to be able to do that," Mr Fraser said.

Mr Stokes bought his way into pay TV through the ConsMedia stake after losing a $200 million legal battle against other media players in 2007 for control in the industry.

That case ended badly with him having to pay costs and might well be driving a possible bid for the rest of ConsMedia, Mr Fraser said.

ConsMedia's pay TV investments, including 25 per cent of Foxtel and 50 per cent of Fox Sports, are not as affected by the weak advertising market hitting other media because they rely on subscriptions.

Seven could sell some of its investments to finance the bid, including its diverse range of construction and mining equipment businesses and its shares in Telstra.

It has a $US200 million-plus stake in the Agricultural Bank of China, although some analysts suggest its heavy equipment business Westrac might be locked into that stake to garner Chinese business.

Morningstar equities analyst Ross MacMillan said he believed Mr Stokes should consider selling out of ConsMedia.

"Is his key focus going to be funding these businesses that have exposure to the mining service industry, which is really booming and potentially has a lot of growth for quite a while?" he told AAP.

"Or is it media because he's got a foot in both camps at the moment.

"He will probably ultimately decide it's in the best interests of Seven Group Holdings to sell the stake and lower debt."

The Australian Competition and Consumer Commission said on Friday that Seven was "actively considering" increasing its stake in ConsMedia and it had asked the regulator to "review a proposal for an acquisition of all of the shares in CMH (ConsMedia) that it does not already own".

Seven's shares were 40 cents, or 4.94 per cent weaker, at $7.70.

ConsMedia's shares had gained three cents to $3.40 amid falls of about 0.5 per cent across the market.

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