Like father, like son: Packer thought to be taking ConsMedia private

James Packer. Photo / Supplied

SYDNEY - The share buyback at Consolidated Media Holdings, controlled by billionaire James Packer, is a likely first step in taking the publicly listed company private, analysts say.

ConsMedia said on Friday it would seek shareholder approval to use A$225 million ($290 million) to buy back 11.88 per cent of the company's 620.71 million shares on issue.

The company, which has been mulling over options for its large cash balance for months, had A$251.5 million in the bank at April 16.

If given the green light by shareholders, the proposal could allow ConsMedia's two largest shareholders - Packer's Consolidated Press Holdings and Kerry Stokes' Seven Network - to increase their grip on the company. Packer holds 45.3 per cent of ConsMedia and Kerry Stokes has a 22.1 per cent stake.

Assuming neither took part in the buyback, Packer would emerge with majority control of ConsMedia, while Seven would increase its stake to about 25 per cent.

Independent analyst Peter Cox from Cox Media said privatising ConsMedia would definitely be on Packer's agenda.

But Cox said there was likely to be less of a sense of urgency for Stokes to take ConsMedia private.

"The bottom line is it allows the controlling shareholders to squeeze out the smaller shareholders and increase their holding," Cox said.

"Obviously Packer and Murdoch believe that the buyback is in the interests of the company and therefore in their interests.

"They want to increase their own shareholding and they think that in the long run they will end up better off for it."

ConsMedia owns half of Premier Media Group, which produces the Fox Sports channels, and a quarter of Australia's biggest pay TV provider, Foxtel.

The company described the buyback as "an appropriate use of cash in the absence of an appropriate investment or acquisition opportunity".

"It also reduces the uncertainty for all shareholders in relation to the use of the surplus cash," ConsMedia said in last week's notice of meeting.

But the company also acknowledged there were downsides to the buyback, such as being unable to frank any dividends to be paid during the year ending June 30 next year and potential exclusion from S&P/ASX indices.

Wealth Within chief analyst Dale Gillham said it would be no surprise if ConsMedia became a private company.

Gillham said James Packer's father Kerry was no fan of running a listed company.

"Kerry always preferred to be a private company because obviously then you are not responsible to the Australian stock exchange and you don't have to have all your financials out there," Gillham said.

"It wouldn't surprise me if James is of the same ilk."

An independent expert's report prepared by Deloitte Corporate Finance valued the ConsMedia shares at between A$3.33 and A$3.73. ConsMedia closed Friday's trading day at A$3.10.

Shareholders will vote on the buyback on May 28.

- AAP