Thursday, January 25, 2007
Speculation is building that Rupert Murdoch’s son Lachlan will bid for the channel ten television network.
The network has been officially up for sale since December when the dominant shareholder CanWest and the Ten Group itself announced that they would consider bids for the entire company. The sale price is expected to exceed $4 billion.
Last week the Ten Group issued an information memorandum to likely bidders including the Macquarie Media Group, News Corporation, WIN Television and, it is believed, Lachlan Murdoch’s private Australian company Illyria Pty Ltd...
The 35-year old set up Illyria in 2005 after resigning from his US post as News Corporation's deputy chief operating officer and returning to Australia with his wife Sarah O'Hare.
He remains on the board of News Corporation.
The name Illyria is said to come from a pre-Christian tribal grouping that controlled an area around modern-day Albania. It was also the name used for the setting of Shakespeare's Twelfth Night.
Its only known investments to date have been small, among them a significant stake in the Australian on-line DVD rental company Quickflix.
A bid for the Ten Network would require additional funding, perhaps from a private equity partner or a loan from News Corporation itself.
While at News Corporation Lachlan Murdoch had responsibility for all 35 of its US television stations as well as its Australian newspaper operations.
Media analyst Peter Cox of Cox Communications said last night that Lachlan Murdoch had the necessary skills to run the ten network. “He is looking to do something in Australia, he has been very well trained over the years and he wouldn’t necessarily have immediate conflicts, although I don’t know how things would go on the legal side,” he said.
Funding from News Corporation to allow Lachlan Murdoch to complete the deal might enable a rapprochement between Rupert Murdoch and his son who fell out in 2005 over what Lachlan Murdoch saw as interference in his role as deputy chief operating officer.
Another of Rupert Murdoch’s sons James set up and ran an independent hip hop record label Rawkus Records in the 1990’s before it was brought by News Corporation and he returned to the company fold. He is now in charge of News Corporation’s British Sky Broadcasting satellite network.
News Corporation has assisted other purchasers to buy media assets in the past. In the late 1980s it provided loans to allow the management of its Brisbane and Adelaide newspapers to take them off its hands in order to enable it to buy the Herald and Weekly Times newspaper group. At one stage Rupert Murdoch discussed providing funding to allow his Australian chief Ken Cowley to buy his Australian newspapers from him.
Roger Colman of CCZ Statton Equities said he believed that Lachlan Murdoch had little to offer Ten.
“Well he might get a consortium together but I do not think he is going to run channel ten any better than it is. It is one of the best televisions stations in the world on its earnings margins. There is not much more to get out of it.”
The ten network is the last of the free-to-air commercial networks available for sale. Both Channel Seven and the PBL, the company that runs Channel Nine were refinanced by the sales of shares to private equity buyers late last year after the government’s new media laws passed the Senate.
After they are proclaimed later this year it will be legal for News Corporation to buy the ten network in its own right. The laws will allow foreign corporations to buy Australian television stations and will allow newspaper owners to won television stations in the same cities.
Both Fairfax Media and the Ten affiliate Southern Cross have said that they will not be bidding for Network Ten. WIN Television, which already owns 13 per cent of Ten, is known to be interested and might sell its channel nine rebroadcasters in order to fund the purchase.
Ten and CanWest are expected to decide which bid to accept by the end of February.
Assessing the likely outcome Peter Cox said that if News Corporation itself wanted Ten it would have the capacity to outbid any other contender. But he said infrastructure investors such as the Macquarie Bank, Babcock & Brown and Allco might be prepared to pay even more than News Corporation as they were running short of assets to invest in Australia.
Asked about Lachlan Murdoch’s chances through Illyria Pty Ltd he said: “It is a definite possibility. I wouldn’t rule him out. He has a lot to offer and he doesn’t have grand international ambitions in the way that James Packer does. If he did have, he would not have come back to sit on a beach in Australia.”
He added jokingly “Another plus is that Lachlan Murdoch has a breakfast presenter ready to go.”
Murdoch’s wife, Sarah Murdoch is currently hosting the Today Show on channel nine.