Packer Turns Back On PBL Media, by Tina Wang - Forbes - 27th October 2008

PBL Media looks like Australian billionaire James Packer's unwanted child.

His Consolidated Media has refused to further prop up the heavily indebted PBL, spun off from the media and casino empire Packer inherited from his father. The Australian tycoon, who ranks No. 3 on Forbes' list of Australia's richest people, also resigned abruptly from PBL Media's board.

For Packer, who has been eager to pursue casino ventures around the world, it seems to be a final turning away from the media empire established by his family 70 years ago.

Consolidated Media said in a statement Monday to the Australia Securities Exchange that it "does not intend to contribute any further funding to PBL Media," and that Packer and Consolidated Media executive John Alexander had resigned from PBL Media's board.

Consolidated Media reportedly rejected a request by private-equity partner CVC, which owns 75% of PBL Media, to inject 75 million Australian dollars ($46.7 million) into the company, which is struggling to pay down debt amid an advertising slump and a rise in borrowing costs due to the global credit crunch.

PBL Media owns the Nine Network, Australia's second-ranked TV broadcaster, and ACP Magazines, the country's biggest magazine group.

With a recapitilization of PBL Media necessary, Consolidated Media's 25% stake stands to be severely diluted. CVC may plow 300 million Australian dollars ($185.9 million) into PBL Media, which would lower Consolidated Media's stake to 10%, according to a report in the Australian Financial Review.

PBL Media had a heavy debt burden from its birth, as Packer vigorously shook cash out of media assets to plow into gambling ventures worldwide. Packer inherited a media and gambling empire after his father Kerry's 2005 death. His company, PBL, sold off 4.6 billion Australian dollars ($4.5 billion) worth of media assets in 2006 to PBL Media, a 50-50 joint venture with CVC that was completely financed by debt assigned to itself, rather than taken on by PBL or CVC. PBL then sold off another 25% stake to CVC for 525 million Australian dollars ($515 million) in 2007. PBL's 25% stake was then transferred to Consolidated Media, after Packer split PBL into separate media and casino businesses, Consolidated Media and Crown (See " Billionaire Packer Carves Up His Media Empire").

PBL Media holds debt of 4.2 billion Australian dollars ($2.6 billion), on which it has to pay 450 million Australian dollars ($278.9 million) a year in interest.

After PBL's media-gambling split, Packer bought three U.S. casinos for $1.75 billion in 2007 (See " Crown Bets $1.8B On Las Vegas's Cannery Casino"), and opened a casino in Macau, which has overtaken Las Vegas as the world's biggest gambling center by turnover (See " Packer May Have Shaky First Hand In Macau").

Consolidated Media will hold its annual meeting in Melbourne on Tuesday. In midafternoon trading Monday in Sydney, the company's shares were up 12 Australian cents, or 5.6%, to 2.14 Australian dollars ($1.33).

(Credit: Forbes)

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