Broadcasting in Australia
The news on Nine
A network's IPO shows investors are nervous about broadcasters' prospects
DAVID GYNGELL'S first child was born the night after he helped to arrange a recapitalisation of Nine Entertainment.
David Gyngell的第一个孩子正好出生在他协助安排的Nine Entertainment资本重整的隔天晚上。
The deal saved Australia's second most popular free-to-air television network from administration.
A year on, Nine's chief executive is about to see his corporate baby toddle onto the stock exchange.
Nine is due to re-list on December 6th with an expected market capitalisation of about A$2 billion.
Nine's controlling shareholders, Oaktree Capital Management and Apollo Global Management, two American hedge funds, will reduce their combined stakes from 53% to 36%.
They are taking advantage of a rising equity market, of Nine's rising ratings and of its growing share of the metropolitan free-to-air advertising market.
The share issue, however, is not being underwritten by its joint lead managers—two global banks, UBS and Morgan Stanley, and two local ones, Commonwealth and Macquarie.
This suggests that some investors may be wary about backing a free-to-air broadcaster when digital advertising is growing apace and the government is rolling out a national broadband network.
The free float will be limited to one-third of the new shares.
Nine has endured as much drama as an episode of Hostages.
Late last year the broadcaster was facing bankruptcy until a proposal by Oaktree and Apollo to convert its more than A$3 billion of debt into equity was finally accepted by other lenders.
The hedge funds then took control of Nine from CVC, a private-equity group which had bought the company for A$5.6 billion in stages between 2006 and 2008, at the height of the bull market.
CVC had in turn purchased Nine from James Packer, whose father, Kerry, controlled the network until his death in 2005.
James Packer wanted to redeploy the family's wealth from media into casinos.
Earlier this year Nine bought stations in Adelaide and Perth from WIN, another broadcaster.
With these and its existing operations in Brisbane, Melbourne and Sydney, Nine has a national metropolitan network for the first time.
Nine's share of the metropolitan broadcast-advertising market has risen to within three percentage points of that of Seven Network, the leader, if Nine's newly acquired stations are included.
Third-placed Ten, chaired by Lachlan Murdoch, has been struggling. By investing in Adelaide and Perth, Nine hopes to push up its ratings and advertising revenues by even more.
However, Nine remains exposed to the ad cycle.
Four-fifths of the group's revenue comes from television.
Digital media and events businesses bring in the rest.
Moreover, online advertising is expected to overtake free-to-air TV as the leading ad category in Australia this year.
For Mr Gyngell, Nine is a family affair.
His wife is a presenter and his late father, Bruce, was an executive there under Kerry Packer.
Mr Gyngell may have ensured its survival for another generation.
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