Australis Media would be dominated by Mr Rupert Murdoch's News Corp and
Telstra under a long-anticipated $600 million reverse takeover announced
The deal, if it goes ahead, would cut the pay TV players from three to two,
creating a $1.1 billion group with a clear edge over the Kerry Packer-backed
Optus Vision. It would combine Australis's national microwave and satellite
access with Telstra's four-to-one lead in cable.
Australis would issue 642 million new shares and convertible notes to News
and Telstra for their Foxtel cable TV business, giving them 57.5 per cent of
capital; Telstra will have 20 per cent of voting shares, News 5 per cent.
Telstra and News would control the board with six of the 10 directors, but
the existing chairman, Mr Rod Price, would retain his role.
The deal is subject to due diligence by the parties and approval by
unassociated Australis shareholders, the Trade Practices Commission and the
Australian Broadcasting Authority.
It values Foxtel, which launches its cable service next Monday, at $597
million based on the 93 cents at which Australis shares traded before last
Analysts could not say if they would relist at this price, citing
uncertainties about the value of Foxtel and the merged business.
If it goes ahead, Australis will have 1.2 billion shares and convertible
notes on issue, implying a market value of $1.1 billion at 93 cents, putting
Australis among the top 100 companies and requiring institutions to consider
index weighting. With options, including anti-dilutive options issued to News
and Telstra, total capital would be 1.5 billion units.
Mr Price hoped the deal would be completed by Christmas, and said he did not
see much change from a regulatory angle because of Australis and Foxtel's
existing programming deal and cross-shareholdings. ``What you want is common
sense and the best business practice to take place and that's what we are trying
to do . . . What it actually means is Australis is at the forefront of the
development of the pay TV sector of the television business in Australia."
Mr Price said Australis's customer service centre in Adelaide would continue
(Foxtel has one in Melbourne) and job losses would be minimised.
Australis will likely adopt Foxtel's name (instead of Galaxy) and Foxtel's
aggressive pricing of $20 to connect and $40 a month for movies, sport, news and
Grant Samuel will prepare an independent report for shareholders.