James Packer has welcomed the competition watchdog's decision to approve News Limited's $2 billion bid to buy Consolidated Media Holdings, as a wait-and-see game unfolds on whether Kerry Stokes will oppose the bid.
The expected decision buoyed Mr Packer. He wants to sell his ConsMedia controlling share to concentrate on his gaming assets.
"I welcome the Australian Competition & Consumer Commission's decision and reiterate that this is a good deal for News at a fair price," Mr Packer told The Australian.
Mr Packer's ConsMedia has a 50 per cent shareholding in Fox Sports Australia and 25 per cent of the shares in pay-TV operator Foxtel.
The regulator's green light clears the way for News (publisher of The Australian) to own 50 per cent of Foxtel and 100 per cent of Fox Sports. The media company already owns 25 per cent of Foxtel and controls the cable company's management.
A senior source at the watchdog said the potential move of News, which also needs News Corporation board approval and a tick from the Foreign Investment Review Board, had very little impact on any market in Australia, but Mr Stokes's interest in ConsMedia was more complicated.
"Given that News Corporation has no interests in other free-to-air or subscription-television entities in Australia, the ACCC considered that the proposed acquisition was unlikely to materially change News Corporation's incentives in relation to the supply of content in Australia," ACCC chairman Rod Sims said.
The News bid needs the approval of Mr Stokes, who owns a 25 per cent stake in ConsMedia, and he has already sought ACCC clearance to bid for the shares in ConsMedia that he does not already own.
The potential tilt would give Mr Stokes a foothold in the pay-TV sector in addition to his existing ownership of free-to-air television network Seven, raising acquisition of content matters and a potential reduction of competition.
Mr Sims has made clear that Mr Stokes faces a tougher test than News because of these factors, and the ACCC posted a note on its website last month saying it had "requested further information from Seven".
It is understood the ACCC has had further discussions with Seven about supplying additional information following its request on July 27, and the watchdog is in the process of obtaining this information. There is no timetable, and the delay could run into months, but it is understood the process is likely to take weeks.
It is also understood that there was no discussion of the ConsMedia transaction by Seven West directors and executives in meetings ahead of the group's $440 million capital raising.
To finance a counter-bid, Seven could sell up to $500m in investments, including its shares in Telstra and a $250m stake in Agricultural Bank of China.
There has been speculation that brokers tested demand for the Telstra stock at $3.75 a share. Despite being deputy chairman of ConsMedia, Mr Packer is expected to be active in negotiations with Mr Stokes to achieve a win for all parties.
One fund manager said Seven Group was expected to retain its shareholding in Telstra until after the next dividend because of the franking credits.
A News Limited spokesman welcomed the competition watchdog's view but added that the bid was still subject to approval by a number of parties.
"News welcomes the ACCC decision today regarding the proposal . . . to acquire Consolidated Media," he said.
"This satisfies one of a number of conditions to News's proposal. News continues to progress the proposal, which remains subject to FIRB approval, the completion of due diligence and News Corp board approval."
Telstra owns the remaining 50 per cent of Foxtel and has the right to select the chairman of the subscription-TV company.
A Telstra spokeswoman said the telco would add "nothing further than we have said in the past".
It welcomed the bid when it was announced in June.
The telco was once in the running to acquire ConsMedia, but withdrew before the News bid amid concerns that the ACCC would block any move to increase the telco's hold over exclusive sporting content.
Telstra and media companies were concerned that the News takeover could result in a partial or full sale of Fox Sports Australia to either Foxtel or Telstra. But that is an unlikely scenario as News Corporation does not use that strategy in other markets.
However, the watchdog looked at the News proposal in isolation, and not potential subsequent transactions, reasoning it would look at future deals at the time.
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