ConsMedia Upbeat on Foxtel Bid for Austar

Consolidated Media Holdings (ConsMedia) executive chairman John Alexander says he expects Foxtel's $2.5 billion takeover of regional pay TV provider Austar to go ahead.

Alexander says the tie-up, which requires Australian Competition and Consumer Commission (ACCC) approval, will create one of Australia's biggest media companies.

ConsMedia owns 25 per cent of pay TV provider Foxtel and half of Premier Media Group, which produces the Fox Sports channels.

Its two biggest shareholders are James Packer's Consolidated Press Holdings and Kerry Stokes's Seven Group Holdings.

The ACCC has raised some concerns about the proposed takeover in an initial statement of issues that Alexander said Foxtel management was "working diligently" on.

"I think everybody on this call acknowledges it makes sound commercial sense and it is a logical transaction for Foxtel," Alexander said during a conference call for the ConsMedia's full-year results presentation on Tuesday.

"We expect the transaction will proceed," Alexander said.

"Do I think this is a smart transaction for Foxtel? Absolutely.

"We expect it will be earnings per share accretive from the first full year, post transaction."

ConsMedia said it expected to contribute up to $225 million to the proposed takeover, with the final amount to be confirmed should the transaction receive the regulatory green light.

It said that ANZ and BNP Paribas had committed funds to underwrite the commitment.

Alexander said the union of Foxtel and Austar would provide unique synergies and cost savings but did not offer details.

He said it would also help both businesses continue to compete against free-to-air TV and IPTV (internet protocol TV) for viewers.

ConsMedia reported a 74 per cent fall in full year net profit to $101.74 million, compared with $392.04 million in 2009/10.

The prior year's result was affected by the sale of the company's stake in jobs website Seek.

Operating profit after tax, which the company regarded as the best indicator of financial performance, was $94.8 million, up 5.8 per cent from the prior year.

The company received an increased contribution of $37.6 million from Foxtel in 2010-11, up from $29.9 million in the prior year.

But the contribution from Premier Media Group was $51.5 million, down from $54 million previously.

Alexander said Premier Media Group had a "challenged" year, given slower subscriber growth at Foxtel and Austar as well as higher costs due to sports rights acquisitions.

The company declared a final dividend of six cents per share, unfranked.

ConsMedia closed up nine cents at $2.27.

Alexander said that the speculated price for the next round of National Rugby League (NRL) broadcast rights was "confusing".

"I don't think there is any appetite at Fox Sports to hand vast additional cheques for no extra value," he said.

"Unless Channel Nine has got much, much bigger pockets than we all believe, then I think the prices that have been talked about with NRL remain confusing."

The current broadcast deal with Fox Sports and Channel Nine expires at the end of 2012 and media reports have suggested a new five-year agreement could reap the NRL up to $1.4 billion.

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