Nine Network sale tests Australian laws

New media ownership rules sees first case

SYDNEY — For the first time since it launched in 1956, the Nine Network has passed into foreign hands and faces an uncertain future. In a deal worth $A515 million ($430 million), James Packer sold an additional 25% of PBL Media to Blighty’s CVC Capital, his private equity partner in what had been a 50-50 joint venture.

Deal put CVC in the driver’s seat for the first time and makes Nine a test case for Oz’s new media ownership laws, which allowed foreign ownership of Aussie media assets for the first time.

Analysts believe there are a number of changes in store for Australia’s oldest free-to-air network, chief among them being a further tightening of costs.

Nine axed more than 100 jobs in news and current area last year and in May saw its topper lose his job. After just over a year in the job, the one-time “Who Wants to Be a Millionaire” host Eddie McGuire stepped down as Nine’s topper. McGuire will not be replaced, leading to speculation that it will be easier for its new owner to intervene.

PBL Media boss Ian Law has also said the network will narrow its focus to target the 25-54 demo. The web was won the ratings for the better part of two decades but a resurgent Seven Network could steal the crown this year and that makes the timing of the changes important.

The first focus of this change appears to be the web’s morning skein “Today,” which is being consistently beaten by Seven’s “Sunrise.” Within days of CVC taking the reins, “Today” shed veteran talk radio host Alan Jones, whose aud is older skewing. With a focus on younger viewers his is likely to be just the first of a number of on-air contracts up for review.

Nine is also expected to make a more aggressive move into digital technology, replacing older equipment, which will help counter criticism that the web is the dinosaur of the free-to-air terrestrial webs, resting on the laurels of its ratings dominance.

The web is funding the upgrades with a fire sale of assets including moving from its Melbourne base in Richmond for the first time since it went on air in 1956; Nine’s Sydney base in Willoughby is also likely to be sold.

Another significant change in the air involves the introduction of digital channels, multi-channeling, as it’s called here.

According to new Aussie media rules, beginning 2009, all five free-to-air channels will be able to broadcast three extra digital channels, which will go up against to paybox Foxtel.

Nine has long resisted this change as it has a 25% stake in Foxtel and did not want to compete with it.

But CVC’s focus on digital means that this is likely to change and that Nine will need to look at not just how this is delivered but what content it will need.

On completion of the purchase, CVC’s Adrian MacKenzie said, “There are a number of exciting initiatives to add value to the business.”

For the employees at Nine the changes are just beginning.

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