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Sunday, December 23, 2007
News Corp sells TV stations for $1.3bn
NEWS Corporation has agreed to sell eight of its Fox television stations in the US to private-equity firm Oak Hill Capital Partners for about $US1.1 billion ($1.28 billion).
The transaction will leave Fox Television Stations with 27 owned-and-operated stations, and allow News Corporation to focus on its larger assets following its $US5.6 billion ($6.54 billion) acquisition of Dow Jones this year.
News Corp, which owns NEWS.com.au, announced in June that it had employed an adviser to help it sell nine television stations. Eight of the nine will be sold to Oak Hill, apart from WHBQ in Memphis.
The media giant's cable television division was a star performer in fiscal 2007, but free-to-air was a drag on the entire television division's earnings which fell to $US962 million ($1.12 billion) from $US1.03 billion ($1.2 billion).
The fall, however, was mainly pinned on losses from MyNetwork TV, the lowest rated of the six major US commercial broadcast networks, and lower results from Asian-based STAR.
The eight Fox Television stations that News Corp sold are in smaller urban centres like Cleveland, Denver, St Louis, Kansas City and Milwaukee. It still owns Fox stations in bigger cities like New York and Los Angeles.
The sale is subject to regulatory approval and is expected to close in the third quarter of calendar 2008.
Oak Hill was founded over 20 years ago by Texas oil barron Robert Bass and manages over $US4.6 billion ($A5.37 billion) of private equity capital. It also owns the firm Local TV, which has nine local US television stations, and cable TV carrier Wometco Cable Corporation, which has over 30,000 subscribers.
source: news.com
The transaction will leave Fox Television Stations with 27 owned-and-operated stations, and allow News Corporation to focus on its larger assets following its $US5.6 billion ($6.54 billion) acquisition of Dow Jones this year.
News Corp, which owns NEWS.com.au, announced in June that it had employed an adviser to help it sell nine television stations. Eight of the nine will be sold to Oak Hill, apart from WHBQ in Memphis.
The media giant's cable television division was a star performer in fiscal 2007, but free-to-air was a drag on the entire television division's earnings which fell to $US962 million ($1.12 billion) from $US1.03 billion ($1.2 billion).
The fall, however, was mainly pinned on losses from MyNetwork TV, the lowest rated of the six major US commercial broadcast networks, and lower results from Asian-based STAR.
The eight Fox Television stations that News Corp sold are in smaller urban centres like Cleveland, Denver, St Louis, Kansas City and Milwaukee. It still owns Fox stations in bigger cities like New York and Los Angeles.
The sale is subject to regulatory approval and is expected to close in the third quarter of calendar 2008.
Oak Hill was founded over 20 years ago by Texas oil barron Robert Bass and manages over $US4.6 billion ($A5.37 billion) of private equity capital. It also owns the firm Local TV, which has nine local US television stations, and cable TV carrier Wometco Cable Corporation, which has over 30,000 subscribers.
source: news.com
Lend Lease to build new Myer
LEND Lease Development has exchanged contracts with Myer Ltd and APPF Commercial for the development and sale of the new Myer Corporate Store Support Office, at Victoria Harbour in Melbourne.
At 800 Collins Street, the building has a forecast value on completion of around $175 million.
The project will be managed by Lend Lease Development. Another Lend Lease subsidiary, Bovis Lend Lease, will design and construct.
On completion, Lend Lease told the market today, “800 Collins Street will be a brand new, A-grade environmentally-rated core asset occupying a prime Collins Street corner site in Victoria Harbour.
”It will provide a modern and high quality work place for Myer employees.''
Lend Lease says the 14-level building will include ground floor retail, ten office floors of nearly 3000 square metres and associated car parks.
It will be the sixth office building developed by Lend Lease development and constructed by Bovis Lend Lease within Victoria Harbour.
APPF Commercial is a wholesale property fund managed by Lend Lease Investment Management.
source: news.com
At 800 Collins Street, the building has a forecast value on completion of around $175 million.
The project will be managed by Lend Lease Development. Another Lend Lease subsidiary, Bovis Lend Lease, will design and construct.
On completion, Lend Lease told the market today, “800 Collins Street will be a brand new, A-grade environmentally-rated core asset occupying a prime Collins Street corner site in Victoria Harbour.
”It will provide a modern and high quality work place for Myer employees.''
Lend Lease says the 14-level building will include ground floor retail, ten office floors of nearly 3000 square metres and associated car parks.
It will be the sixth office building developed by Lend Lease development and constructed by Bovis Lend Lease within Victoria Harbour.
APPF Commercial is a wholesale property fund managed by Lend Lease Investment Management.
source: news.com
Strikes, petrol costs to disrupt holidays
AUSTRALIANS face holiday travel chaos, with refinery problems driving up petrol prices and possible industrial action restricting flights.
Petrol prices around Australia rose up to 5c a litre over the weekend, with "significant'' issues at refineries affecting fuel supply and compounding problems in the eastern states.
At Holbrook, about halfway between Sydney and Melbourne, the Mobil station was unable to sell regular unleaded petrol, forcing motorists to buy premium petrol at $1.49 a litre.
The service station manager said he had not received deliveries because of "problems at the refinery''.
A spokesman for Mobil was unavailable for comment yesterday. But a Caltex spokesman confirmed "significant problems'' with petrol supply in the eastern states because of mechanical problems at refineries.
"There is nothing untoward or suspicious about it, it's just the retail shortness of supply compared with demand,'' he said of the pre-Christmas price rises. "That is the most likely explanation for retail petrol prices being somewhat greater than average.''
According to petrol price-tracking organisation Fueltrac, Brisbane had the cheapest capital city fuel in the country, at 123.3c a litre. Motorists in Sydney were paying an average of 138c, with prices of 136.9c in Melbourne, 131c in Hobart, 135.9c in Adelaide, 138c in Perth and 147c in Darwin.
The Australian Competition and Consumer Commission says petrol prices have recently been well over international benchmarks. It has asked the oil companies and two supermarket chains to explain their price rises.
Air travel disruption
Australians also face potential problems in the air as industrial action could be taken by 1700 Qantas airline engineers from January 9.
The Australian Licensed Aircraft Engineers Association is planning industrial action in response to Qantas's announcement to establish its first airline repair base in Malaysia, igniting fears it will move most of its maintenance work offshore.
After an open ballot returned a vote of overwhelming support for industrial action, the ALAEA is planning to refuse to work overtime, or do any higher duties or secondments from January 9.
ALAEA federal secretary Steve Purvinas said the union would also consider four-hour rolling strikes that would cause the largest disruptions to the nation's air travel since the 1989 pilots' strike.
Representatives from the union will sit down with Qantas on January 4 for a further round of negotiations. The union is asking for a wage rise of 5 per cent a year.
source: news.com
Petrol prices around Australia rose up to 5c a litre over the weekend, with "significant'' issues at refineries affecting fuel supply and compounding problems in the eastern states.
At Holbrook, about halfway between Sydney and Melbourne, the Mobil station was unable to sell regular unleaded petrol, forcing motorists to buy premium petrol at $1.49 a litre.
The service station manager said he had not received deliveries because of "problems at the refinery''.
A spokesman for Mobil was unavailable for comment yesterday. But a Caltex spokesman confirmed "significant problems'' with petrol supply in the eastern states because of mechanical problems at refineries.
"There is nothing untoward or suspicious about it, it's just the retail shortness of supply compared with demand,'' he said of the pre-Christmas price rises. "That is the most likely explanation for retail petrol prices being somewhat greater than average.''
According to petrol price-tracking organisation Fueltrac, Brisbane had the cheapest capital city fuel in the country, at 123.3c a litre. Motorists in Sydney were paying an average of 138c, with prices of 136.9c in Melbourne, 131c in Hobart, 135.9c in Adelaide, 138c in Perth and 147c in Darwin.
The Australian Competition and Consumer Commission says petrol prices have recently been well over international benchmarks. It has asked the oil companies and two supermarket chains to explain their price rises.
Air travel disruption
Australians also face potential problems in the air as industrial action could be taken by 1700 Qantas airline engineers from January 9.
The Australian Licensed Aircraft Engineers Association is planning industrial action in response to Qantas's announcement to establish its first airline repair base in Malaysia, igniting fears it will move most of its maintenance work offshore.
After an open ballot returned a vote of overwhelming support for industrial action, the ALAEA is planning to refuse to work overtime, or do any higher duties or secondments from January 9.
ALAEA federal secretary Steve Purvinas said the union would also consider four-hour rolling strikes that would cause the largest disruptions to the nation's air travel since the 1989 pilots' strike.
Representatives from the union will sit down with Qantas on January 4 for a further round of negotiations. The union is asking for a wage rise of 5 per cent a year.
source: news.com
Deadline ups heat on BHP Billiton's Rio Tinto bid
THE battle of brinkmanship between BHP Billiton and its buyout target Rio Tinto will escalate after British authorities issued the first firm deadline in the protracted takeover affair.
The Takeover Panel in London ordered on Friday night that BHP must declare its intentions in the possible takeover by Wednesday, February 6.
The $US150 billion ($174 billion) bid to merge the two global mining giants has hit a persistent hurdle in that Rio refuses to negotiate.
BHP, the larger of the two companies, has informally offered a 3-for-1 share deal but analysts believe it will take an offer of at least 3.5 shares to interest Rio's board.
The deadline has been agreed to by both BHP and Rio, and analysts believe the firm date could be the start of a formal campaign to secure a deal.
Rio labelled the Takeover Panel decision a "put up or shut up deadline" for BHP and said that by then there would have been three months of "uncertainty".
Rio Tinto holds firm
Rio chairman Paul Skinner said the company retained the view that the $US150 billion offer still undervalued Rio's current valuation and future prospects.
"The boards are unanimous in the view that BHP Billiton's rejected proposal was wholly inadequate and Rio Tinto's very strong existing portfolio will create significant future value for shareholders," Mr Skinner said. "We have been very clear as to where we stand and we feel that it is time for BHP to do likewise."
The chase from BHP to take out Rio is likely to speed up after the Christmas break.
BHP chief executive Marius Kloppers is away at the moment, after extensive campaigning in London and South Africa to drum up support for the bid.
After the Takeover Panel ruling, BHP said it was still keen to negotiate with Rio executives. "BHP is still considering its options in light of the deadline set by the panel but no decision has been taken on this matter," the company said.
Sweeter offer likely
Grant Craighead, a senior resource analyst at Stock Resources, said the market and investors believed an increased formal offer was likely to be made.
A number of traders believed Rio's share price could lose all ofthe 30 per cent gain that had been made since BHP appeared interested.
A fall of that size in Rio's share price, analysts said, would be enough to drag the entire Australian market back.
"From BHP's point of view, they just want to get Rio to the negotiating table. Because they are larger they will end up dominating the discussions.
"Rio wants a premium. But it comes down to ego when you get two big companies. It really does become a clash of egos." Mr Craighead said he thought the current offer was fairly priced for Rio but believed a higher bid of up to 3.5 shares would be needed.
"Before BHP came to the market they would have sounded out the opportunities and looked at the risks and thought that it had a chance," he said.
"The market is expecting a formal bid. But the challenge is going to be major shareholders being involved in both groups.
"They are going to have shareholders with a foot in both camps - some will be leaning whichever way suits them best."
Analysts have been slightly critical of BHP's recent presentations for "glossing over" its corporate failures.
source: news.com
The Takeover Panel in London ordered on Friday night that BHP must declare its intentions in the possible takeover by Wednesday, February 6.
The $US150 billion ($174 billion) bid to merge the two global mining giants has hit a persistent hurdle in that Rio refuses to negotiate.
BHP, the larger of the two companies, has informally offered a 3-for-1 share deal but analysts believe it will take an offer of at least 3.5 shares to interest Rio's board.
The deadline has been agreed to by both BHP and Rio, and analysts believe the firm date could be the start of a formal campaign to secure a deal.
Rio labelled the Takeover Panel decision a "put up or shut up deadline" for BHP and said that by then there would have been three months of "uncertainty".
Rio Tinto holds firm
Rio chairman Paul Skinner said the company retained the view that the $US150 billion offer still undervalued Rio's current valuation and future prospects.
"The boards are unanimous in the view that BHP Billiton's rejected proposal was wholly inadequate and Rio Tinto's very strong existing portfolio will create significant future value for shareholders," Mr Skinner said. "We have been very clear as to where we stand and we feel that it is time for BHP to do likewise."
The chase from BHP to take out Rio is likely to speed up after the Christmas break.
BHP chief executive Marius Kloppers is away at the moment, after extensive campaigning in London and South Africa to drum up support for the bid.
After the Takeover Panel ruling, BHP said it was still keen to negotiate with Rio executives. "BHP is still considering its options in light of the deadline set by the panel but no decision has been taken on this matter," the company said.
Sweeter offer likely
Grant Craighead, a senior resource analyst at Stock Resources, said the market and investors believed an increased formal offer was likely to be made.
A number of traders believed Rio's share price could lose all ofthe 30 per cent gain that had been made since BHP appeared interested.
A fall of that size in Rio's share price, analysts said, would be enough to drag the entire Australian market back.
"From BHP's point of view, they just want to get Rio to the negotiating table. Because they are larger they will end up dominating the discussions.
"Rio wants a premium. But it comes down to ego when you get two big companies. It really does become a clash of egos." Mr Craighead said he thought the current offer was fairly priced for Rio but believed a higher bid of up to 3.5 shares would be needed.
"Before BHP came to the market they would have sounded out the opportunities and looked at the risks and thought that it had a chance," he said.
"The market is expecting a formal bid. But the challenge is going to be major shareholders being involved in both groups.
"They are going to have shareholders with a foot in both camps - some will be leaning whichever way suits them best."
Analysts have been slightly critical of BHP's recent presentations for "glossing over" its corporate failures.
source: news.com
Australian dollar tipped to rise over 90 US
THE Australian dollar is tipped to rise above 90 US cents early in 2008 as the central bank raises interest rates and demand for the country's key resources stays strong, experts say.
However, it's likely to be a different story in the second half, when risks to global economic growth are expected to take their toll.
Foreign exchange strategists believe the domestic unit could fall as low as 80 US cents, as fears of a US recession gather pace and the rate of growth in the commodities-hungry economy of China eases.
The Australian dollar looks set to finish 2007 around the 86 US cents mark, after rising from 79 US cents since January.
The median economist and strategist forecasts collected by AAP indicates the Australian dollar is likely to be trading around 93 US cents in June and 89 US cents by the end of the year.
In early trade today, the currency was trading around 86.85 US cents.
Good year
The year about to end has been particularly favourable for the currency, despite a couple of volatile periods when global credit market concerns weighed on sentiment.
The Australian dollar stepped above 80 US cents in March and then climbed to 94 US cents in November, reaching levels not seen since March 1984 when the currency was around 94.75 cents.
Along the way, it slipped to 76.76 US cents in August as global credit market panic sparked a sell-off in high interest rate currencies like the Australian and New Zealand dollars.
Interest-rate support
ANZ senior currency strategist Tony Morriss said the prospect of two more Australian interest rates rises in February and May next year, coupled with expectations of a cut in US interest rate cut, would propel the Australian dollar to 96 US cents by June 2008.
The would be its highest level since it was floated in December 1983.
The domestic currency has not closed above 96.53 US cents since March 16, 1984, Reserve Bank of Australia (RBA) data shows.
”Domestic demand remains strong (and) commodity prices will hold up and support our terms of trade,'' Mr Morriss said.
”We expect underlying US dollar weakness to be maintained. I would prefer to couch it in terms saying market expectations would be for a further widening of the interest rate differential.''
The US Federal Reserve cut interest rates in December by a quarter of a percentage point to 4.25 per cent.
Conversely, the RBA left interest rates on hold in December, at 6.75 per cent.
But most economists agree Australia's cash rate could go up once or twice in 2008.
National Australia Bank currency strategist John Kyriakopoulos also sees the Australian dollar hitting 96 US cents by mid-2008.
He then expects the currency to recedes to 90 cents by the end of the year, as a further rate cut in the US begins to stimulate a flagging American economy.
”You may see a slowdown in China and the US dollar doing better at the end of next year, once the worst for the US economy is behind it,'' he said.
Mr Kyriakopoulos said the expected Australian interest rates rises would curtail inflationary pressures and alleviated the need for any more monetary policy tightenings.
OzForex manager of corporate business Jim Vrondas said the Australian dollar would fall to 83.50 US cents by June next year, and to 80 cents by year end as a slowdown in world economic growth impacts.
”A global slowdown in economic growth is likely to impact on the resources sector mid to late next year,'' he said.
source: news.com
However, it's likely to be a different story in the second half, when risks to global economic growth are expected to take their toll.
Foreign exchange strategists believe the domestic unit could fall as low as 80 US cents, as fears of a US recession gather pace and the rate of growth in the commodities-hungry economy of China eases.
The Australian dollar looks set to finish 2007 around the 86 US cents mark, after rising from 79 US cents since January.
The median economist and strategist forecasts collected by AAP indicates the Australian dollar is likely to be trading around 93 US cents in June and 89 US cents by the end of the year.
In early trade today, the currency was trading around 86.85 US cents.
Good year
The year about to end has been particularly favourable for the currency, despite a couple of volatile periods when global credit market concerns weighed on sentiment.
The Australian dollar stepped above 80 US cents in March and then climbed to 94 US cents in November, reaching levels not seen since March 1984 when the currency was around 94.75 cents.
Along the way, it slipped to 76.76 US cents in August as global credit market panic sparked a sell-off in high interest rate currencies like the Australian and New Zealand dollars.
Interest-rate support
ANZ senior currency strategist Tony Morriss said the prospect of two more Australian interest rates rises in February and May next year, coupled with expectations of a cut in US interest rate cut, would propel the Australian dollar to 96 US cents by June 2008.
The would be its highest level since it was floated in December 1983.
The domestic currency has not closed above 96.53 US cents since March 16, 1984, Reserve Bank of Australia (RBA) data shows.
”Domestic demand remains strong (and) commodity prices will hold up and support our terms of trade,'' Mr Morriss said.
”We expect underlying US dollar weakness to be maintained. I would prefer to couch it in terms saying market expectations would be for a further widening of the interest rate differential.''
The US Federal Reserve cut interest rates in December by a quarter of a percentage point to 4.25 per cent.
Conversely, the RBA left interest rates on hold in December, at 6.75 per cent.
But most economists agree Australia's cash rate could go up once or twice in 2008.
National Australia Bank currency strategist John Kyriakopoulos also sees the Australian dollar hitting 96 US cents by mid-2008.
He then expects the currency to recedes to 90 cents by the end of the year, as a further rate cut in the US begins to stimulate a flagging American economy.
”You may see a slowdown in China and the US dollar doing better at the end of next year, once the worst for the US economy is behind it,'' he said.
Mr Kyriakopoulos said the expected Australian interest rates rises would curtail inflationary pressures and alleviated the need for any more monetary policy tightenings.
OzForex manager of corporate business Jim Vrondas said the Australian dollar would fall to 83.50 US cents by June next year, and to 80 cents by year end as a slowdown in world economic growth impacts.
”A global slowdown in economic growth is likely to impact on the resources sector mid to late next year,'' he said.
source: news.com
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