Stokes wins Seats in ConsMedia Board

Submitted by Jim Thesiger on 11 September, 2009 - 05:45

James Packer, who controls more than 40 percent of Consolidated Media Holdings (CMJ) shares have agreed to provide two seats to Kerry Stokes in the Consolidated Media Board in return of a standstill agreement according to which Mr. Stokes will not purchase more shares without the agreement with Mr. Packer for 12 months. The two representatives of Mr. Stokes, who were given entry in the board are Peter Gammell and Mr. Stoke’s son Ryan. The surprise announcement that came last night from James Packer is considered as a truce between Mr. Packer and Mr. Stokes after Mr. Stokes launched a stunning share attack over Consolidated Media in last July by boosting his stake in the company to 19.9 percent from 4.8 percent.

Consolidated Media owns 50 percent of Premier Media and 25 percent of Foxtel. Mr. Stokes, who controls the West Australian Newspaper and Seven Network has long desired to gain control over Foxtel as he considers it as a vital platform. His legal fight against AFL and other sporting codes alleging conspiracy with Foxtel, Telstra and others was seen as a strategic move to create pressure over Foxtel to gain access to the platform. However, Foxtel refused to accept the terms offered by Mr. Stokes despite their willingness to give him an entry.

Fox Sports was valued at $1.8 billion while Foxtel at $3.5 billion by Goldman Sachs. It is to be mentioned that Telstra owns 50% of the pay TV where Mr. Packer and News Corporation owns 25% each. News Corporation had an agreement with Mr. Packer for selling 25 percent stake which is a part of Super League Settlement in 1997. Both sides reserves pre-emptive rights over their positions. However, the takeover of Consolidated Media is not going to activate the rights. Mr. Packer’s stake in the Consolidated Media is expected to increase to 44 percent while Mr. Stoke’s at around 23 percent after the company moves forward with a 10 percent share buyback. Mr. Packer dumped 20 percent stake in Challenger and his Seek stake as well which is seen as an attempt to raise cash to either remove the Crown minorities or to protect his position over Consolidated Media.