Tussle over Ten as Stokes takes a bite

Billionaire Kerry Stokes reported to have picked up 5% of TV broadcaster, Ten

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published March 1, 2013 11:09 am AEDT

Free-to-air TV broadcaster TEN Network Holdings (ASX: TEN) now has another billionaire on its register, with news that Kerry Stokes's Seven Group (ASX: SVW) is reported to have picked up 5% of the company in December 2012.

The company now counts James Packer, Lachlan Murdoch, Gina Rinehart, Bruce Gordon and Mr Stokes as significant investors in the business.

The Australian Financial Review (AFR) reports that Mr Stokes, through his group of Seven affiliated companies, which include Seven Group and Seven West Media (ASX: SWM), is believed to have a $40 million holding in Ten. Mr Stokes has a 68% shareholding in Seven Group, which in turn owns 11% of Prime Media (ASX: PRT), 35% of Seven West Media and an $803 million listed investments portfolio. It's unclear which assets this portfolio holds.

The news comes as the federal government considers plans to relax media ownership rules. Current reach rules prevent metropolitan TV networks, including Nine, Seven and Ten from merging with their respective regional TV affiliates, as part of a prohibition on a TV licence holder from reaching more than 75% of the total population.

Communications Minister Stephen Conroy has pledged to scrap the reach rule and is expected to go to cabinet within two weeks. Should the changes get the green light, we could see an almighty upheaval in Australia's TV sector, and possibly a five-way tussle over Ten.

Speculation has emerged that, if the media laws were relaxed, Ten could merge with its regional affiliate, Southern Cross Media (ASX: SXL), while Seven West Media may consider a tie-up with its own affiliate, Prime Media.

Foolish takeaway

Fee-to-air TV networks face several headwinds including falling ad revenues and structural threats to their business, as consumers become overwhelmed with entertainment choices. Consolidation may be one way for the sector to fight back.

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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.

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