CanWest told to pare Ten stake

SYDNEY — As Australia’s major media moguls waited for the government to hand down its long-awaited changes to media ownership laws, Izzy Asper’s CanWest Global Communications was ordered Friday by the federal government to divest itself of almost one-fourth of its shareholding in Network Ten.

Federal treasurer Peter Costello’s edict for CanWest to divest came after a probe of CanWest’s holdings at Ten by the Foreign Investment Review Board (FIRB), which was prompted by an early April finding by the Australian Broadcasting Authority (ABA) that the Canadian group illegally controls Network Ten.

The ABA said interests associated with CanWest were in a position to control 52% of Ten’s voting stock, in breach of federal laws limiting foreigners to 15% voting stock in networks and prohibiting foreigners exercising management control over TV webs.

The ABA’s four-month probe was prompted by a complex series of share transactions between November and January, in which interests associated with CanWest acquired 37% of minority stakes in Ten, boosting its economic interest in the web to about 76% from 57%. CanWest’s voting interest in Ten rose to 52% from 15%. Late Thursday, CanWest filed a Federal Court appeal against the ABA findings.

The treasurer’s order requires CanWest to revert to the 57% economic holding and 15% voting stock share it held before the late 1996 stock acquisitions.

“CanWest does not agree with the FIRB’s findings, and the treasurer’s orders, with respect to the share divestiture,” Asper said in a statement, adding that the local companies associated with CanWest that had been ordered to sell, “dispute the findings and may appeal the orders.”

The CanWest-Ten ownership spat comes amid an increasingly tense atmosphere between the media moguls and the conservative government, which is expected to hand down its changes to media ownership laws at any moment. In recent weeks, Asper, Kerry Packer and Kerry Stokes have personally lobbied Prime Minister John Howard (while Rupert Murdoch did so by phone) to change the laws to the benefit of each of their empires.

At the center of the most intense lobbying efforts is the Fairfax newspaper empire, which Packer has lusted after for years. But cross media ownership laws (which the government has said it regards as being outmoded) prohibit TV barons such as Packer (who controls the Nine web) from controlling newspapers, while newspaper titan Murdoch is barred from controlling TV webs. (Murdoch holds 15% of the Stokes-controlled Seven Network, which is a co-owner of Hollywood studio MGM with Kirk Kerkorian).

On Friday, local media reports suggested the prime minister had considered relaxing cross-ownership laws to allow Packer to take over Fairfax. To overcome Murdoch’s objections, Howard is said to have offered to relax foreign ownership restrictions to allow Murdoch (who is a U.S. citizen) to move on Seven. The deal was rejected by all but Packer. Needless to say, Stokes angrily took to the airwaves denouncing the government, while Murdoch’s broadsheet, the Australian, ran an editorial strongly criticizing the government’s handling of the media ownership issue.

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