James Packer (pictured left) has moved to sell his stake in Foxtel so he can pursue a full merger of his Crown casino group with Echo Entertainment, the owner of Sydney’s The Star casino, to create a $10 billion global gaming giant.
The News Limited press is reporting that the potential $1 billion pay-TV sale would add to the $4.5 billion Mr Packer earned in 2006 by selling his controlling stake in the Nine Network. The sale would mean the Packer family will have no media interests, other than a small stake in Channel Ten.
A sale of the 25 per cent stake in Foxtel held by Mr Packer’s Consolidated Media Holdings would send shockwaves through media, political and business circles. Rupert Murdoch’s News Corporation is the most likely buyer. It is believed News will get first right to buy.
But West Australian billionaire Kerry Stokes’ Seven Network, which controls both Seven and the West Australian newspaper, also wants to buy. Telstra, which already owns 50 per cent of Foxtel, last week also indicated it was interested.
News and Mr Packer’s Consolidated Media Holdings share the other 50 per cent of Foxtel. News and CMH each own half of Fox Sports, which supplies important programming to Foxtel.
A suggestion of interest from Telstra chief executive David Thodey sparked a response from the ACCC, which said it would have concerns at the telco spreading its dominance. The ACCC has just approved the merger of Foxtel and Austar to create a monopoly pay-TV service across Australia.
Mr Packer selling to Mr Murdoch would make Foxtel a simpler partnership between Telstra and News Corporation. News effectively controls Foxtel as it has the right to appoint the chief executive. Because News is a "foreign company" such a deal would require the approval of the Treasurer Wayne Swan. That was also the case with the Foxtel-Austar merger, and Mr Swan waved it through without any issues.
It comes at a controversial time with the hacking scandal in Britain and a parliamentary committee finding that Mr Murdoch was not a fit person to lead a major corporation. The finding was highly political, as it was made 6-5 on party grounds.
In contrast, if Mr Packer sold to Mr Stokes and Seven, that would change media in Australia dramatically. It would bring the dominant free-to-air network into partnership with the dominant telco Telstra and, reluctantly, the biggest media group overall in News Corporation. Even selling to Telstra alone would build its dominance ahead of the arrival of the NBN.
The other side of Mr Packer’s intended deal is perhaps more controversial. It would give him an all-but total Australian casino monopoly. Mr Packer wants to merge Crown – which owns not only the Melbourne casino but Burswood in Perth – with the Echo group, which owns The Star casino, as well as the Gold Coast’s Jupiters and Brisbane’s Treasury casinos.
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