James Packer’s Publishing and Broadcasting plans to buy his family’s stake in a group of British casinos as a prelude to a push into the European gaming market.
The deal is expected to take place before the end of the year and follows recent gaming investments in ventures worth up to USD 3 billion in the fast-growing Chinese territory of Macau.
Gaming came within a whisker of overtaking media as the biggest profit engine at PBL in 2005-06, where annual profit jumped 25.6 per cent to USD 610 million.
Despite the concerted push into gaming over the past few years, Mr Packer said the group’s investments were still well balanced between gaming and media. PBL‘s profit was boosted by the strong performance of its local casinos in Melbourne (Crown) and Perth (Burswood).
The ACP magazine group saw a 6.7 per cent revenue lift to USD 878 million, which was matched by a similar EBITDA rise to USD 617 million.
But the result was tempered by a sharp drop in earnings at Channel Nine, under ratings threat from rival Seven for the first time in many years.
Nine’s EBITDA was down 20 per cent from USD 270 million last year to USD 215 million.
Its revenues were down from USD 904 million to USD 870 million.
Analysts said the result was flat in the second half, with modest growth in magazines and an excellent performance from the Burswood casino offsetting the fall in TV earnings. Deutsche bank analysts Andrew Anagnostellis and Tim Plumbe said it was left to the associates to drive the majority of PBL‘s second-half earnings growth.
A USD 15 million earnings turnaround in Foxtel and the earnings contribution of Hoyts were the highlights of a USD 28 million improvement in PBL‘s associates‘ earnings. PBL‘s Ninemsn internet joint venture saw a 36 per cent rise in revenues to USD 87 million, and it posted dividends from online jobs group Seek and the Premier Media Group, which owns Fox Sports.
Mr Packer’s family company CPH owns 50 per cent of a British gaming company with local casino heir Damian Aspinall. It owns three small casinos, including London’s Aspinall Club. The other two are in Swansea and Newcastle.
CPH has also been eyeing the Russian casino market for the past two years, and its UK venture is also the Welsh city of Cardiff’s preferred operator if it wins a super-casino licence from the Government.
PBL chief executive John Alexander said moving the CPH gaming interests to PBL was „imminent“. Mr Alexander said PBL had some „ballpark figures which don’t cause us any loss of sleep“. CPH tipped pound stg. 50 million into the business in 2004.
He said a proposal would be put to the PBL board and the proposal could be put to shareholders by the end of this year. „With Aspinall’s we would be going into European gaming and specifically the UK market, which is liberalising.“
This year PBL will also ramp up its new online gaming venture Betfair, based in Tasmania.
In light of recent cost cutting at Nine the entire group had „a total focus on efficiency“, Mr Packer said.
Nine chief Eddie McGuire said he was confident that the networks ratings would continue to improve over the coming year.