News Corp. eyes $7 billion deal for PCCW assets
HONG KONG — Rupert Murdoch is mulling joining a consortium that’s bidding $7 billion for the media and telco assets of Hong Kong’s Pacific Century Cyber Works (PCCW).The News Corp. topper said Wednesday that he has held preliminary discussions with Macquarie Bank, the Australian investment bank that last week made the offer for PCCW’s core businesses. The same day, News Corp.-owned daily the Australian reported its parent had taken a 10%-20% stake in Macquarie’s consortium. However, a spokesman at News Corp. subsidiary Star TV in Hong Kong played down the press reports. “Mr. Murdoch said that he had spoken with Macquarie about its bid. But he also said these talks are at a very early stage,” the rep said. “Obviously, given that we supply 16 channels to PCCW (for its NOW Broadband Television division) and that we are extremely positive about the future of Internet Protocol TV, we are going to be interested.” PCCW, one of the largest companies on the Hong Kong stock market, was kicked into play last week when news emerged that it had received an offer from Macquarie. Days later, U.S.-based buyout firm TPG Newbridge, part of the Texas Pacific Group, came up with an all-cash counter-offer. Established by Richard Li Tzar-kai in the 1990s, PCCW shot to prominence in 2000 when it paid $28 billion for Hong Kong’s dominant fixed-line phone operator, Hong Kong Telecom. PCCW today is one of the most converged companies in the world thanks to its dozens of Internet startup acquisitions, a major stake in mobile phone firm Sunday Communications and the rollout of broadband Internet service Netvigator. While analysts believe bids could easily go higher, both consortia have spent the last few days trying to woo PCCW stakeholder China Unicom to the notion of a change of ownership. State-owned Unicom, the No. 2 fixed-line phone company in mainland China, last year bought a 20% stake in PCCW for what it insists were strategic reasons. Although Unicom’s holding is not enough to block a takeover, bidders and Li are all wary of upsetting authorities in Beijing. In response, Macquarie and TPG Newbridge have offered to sell off parts of PCCW should their takeover succeed. But it is not clear whether the businesses would be kept intact and refloated, or whether PCCW’s envied “quadruple play” would be dismembered. News Corp., which has spent billions of dollars in the last year buying Internet companies such as MySpace, sees China as having huge growth potential for new media and for the distribution of repurposed content through mobile and broadband channels. Earlier this month, News Corp. struck a strategic alliance with the world’s largest mobile phone group, China Mobile, when it sold the privatized telco half of Star’s 38% stake in Phoenix Satellite Television, a Hong Kong broadcaster with partial mainland landing rights. Even before the PCCW bids, News Corp. was pursuing a business partnership with NOW Broadband and the PCCW tech subsidiaries, which built it into a role model for the IPTV industry.
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