UPDATE: News Bids for Consolidated Media to Lift Pay-TV Presence

-- News Corp. makes A$1.94 billion bid for Consolidated Media

-- Bid is A$3.45/share, less than previous non-binding offer

-- Shareholder James Packer says bid price fair

(Recasts first paragraph, adds ownership structure and deal background from third, shareholder comment in sixth.)

 
   By Gavin Lower 
 

MELBOURNE--News Corp. (NWS) bid 1.94 billion Australian dollar (US$2 billion) for Australian media-investment company Consolidated Media Holdings Ltd. (CMJ.AU) as it seeks to boost its presence in Australia's pay-television market.

In a statement Friday, Consolidated Media said that News Corp., owner of this newswire, had made a A$3.45-a-share bid for the company, less than its previous non-binding proposal of A$3.50-a-share in June and only slightly above the A$3.42 level the shares were trading at before the bid was announced.

News Corp. and Consolidated Media each own 25% of Australia's largest pay-TV company Foxtel and 50% of sports-channel Fox Sports. Australian telecommunications company Telstra Corp. (TLS.AU) owns the rest of Foxtel.

Consolidated Media said shareholders would additionally receive a final dividend of 6 Australian cents a share--which means they'd get the equivalent of A$3.51 for each share under News Corp.'s bid.

Consolidated Media said most of its directors recommended that shareholders accept the bid, and that Australian casino billionaire James Packer, whose Consolidated Press Holdings owns 50% of the company, intended to vote in favor of the deal.

"In my view, this is a great outcome for CMH shareholders and for News and it reflects a fair price," Mr. Packer said in the company's statement.

The deal may face opposition from Consolidated Media's other major shareholder--Seven Group Holdings Ltd. (SVW.AU), which owns 25% of the company and has asked Australia's competition regulator to consider whether it could buy the shares in Consolidated Media it doesn't already own.

Consolidated Media directors associated with Seven Group declined to make a recommendation on News Corp.'s bid, Consolidated Media said. A spokesman for Seven Group didn't immediately reply to a request for comment.

Seven Group also owns 33% of media company Seven West Media Ltd. (SWM.AU), and its request to the Australian Competition & Consumer Commission has been widely seen by analysts as a tactic either to extract a sweetened bid from News Corp. or deliver a deal on sports-broadcasting rights.

The ACCC has already said it has no objections to News Corp.'s bid and is yet to decide on Seven Group's proposal.

Write to Gavin Lower at [e-mail]

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