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The Sydney Morning Herald

WINNERS AND LOSERS IN HWT TAKEOVER

Author: By ANABEL DEAN, ALAN DEANS and LEA WRIGHT
Date: 11/02/1987
Words: 676
          Publication: Sydney Morning Herald
Section: Business
Page: 29
The Commonwealth Trading Bank, law firms Dawson Waldron and Clayton Utz and auditor Pannell Kerr Forster should be big winners from Mr Rupert Murdoch's takeover of the Herald and Weekly Times Ltd and Queensland Press Ltd.

These four major professional advisers to News Ltd seem to be in the box seat as Mr Murdoch rationalises his $3.3 billion media purchases.

The major losers are likely to be the National Bank of Australia, the banker to both HWT and QPL, and the auditor of both groups, KMG Hungerfords.

HongkongBank of Australia Ltd, joint banker to HWT, may also end up worse off.

NAB could lose up to $3 million in annual income according to banking industry sources, while the combined auditing fees are worth $1.3 million to KMG Hungerfords.

The legal fees up for grabs would total about $4 million annually, including defamation and corporate advice.

It is almost certain that NAB will be terminated.

While still in his 20s, Mr Murdoch launched an audacious and unsuccessful takeover bid for Advertiser Newspapers Ltd, rival publisher to his Adelaide News.

Mr Murdoch's company had shareholders' funds of less than $1.8 million and the bid was priced at $14 million, so he needed a friendly banker.

NAB's predecessor was the News banker, but it backed out because it also acted for Advertiser.

The bid went ahead, however, when Mr Murdoch was able to convince the Commonwealth Trading Bank to fund him.

His respect for that bank has continued to this day.

There are a swag of other solicitors and advertising agencies which could be on the butt end of the takeover tussle.

On the HWT side, there are solicitors Corrs Pavey Whiting and Byrne, and advertising agencies including George Patterson, Tarrant Haysom and Manzie, John Clemenger and Eddelbuttel Osborne.

With QPL, there are three Brisbane legal firms, Feez Ruthning and Co, Thynne and Macartney and Williams and Williams that could lose to News Ltd's bigger Sydney lawyers.

Advertising agencies would take $10 million-odd from HWT and QPL, given average expenditure of between $1 million and $2 million annually for major television stations, $1 million to $1.5 million for metropolitan newspapers and up to $300,000 for radio stations.

MojoMDA and McCann Erickson do substantial business with News, but in the short term there may be few changes.

News' marketing manager Mr Colin Grayson said: "We need a different creative input for each of our products which is hard to achieve in one agency even with different creative teams."

John Clemenger chairman Mr Geoff Wild believes the status quo will be maintained at least until networking comes into full swing.

"Most relationships have been in place for years. Economies of scale(rationalistaion of agency services) are years ahead and the market will have to overcome parochialism."

It may be some consolation to NAB that Westfield Capital Corporation Ltd and Northern Star Holdings Ltd are the buyers of News' two Channel 10 television stations.

The bank acts for WCC and could earn fees from the $100 million-plus borrowings the company is raising to help boost its stake in NSH to 50 per cent.

However, WCC also has the Commonwealth Trading Bank as a principal banker, while NSH does its business solely with Westpac Banking Corporation.

Other groups that could gain from Mr Murdoch's $842 million electronic media assets sale are WCC's auditors Greenwood Challoner and Co and its legal firm Freehill Hollingdale and Page.

NSH currently has the Lismore firm of Thomas, Noble and Russell as auditor and J.C. McIntosh Barr and Gordon as solicitor.

 
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