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Comment: Tony Brown, editor, ASIAcom on James Packer and PBL Media

Researching this piece brought one of those "has it really been that long?" moments that leave you scratching your head in wonder at how fast the years go by.

The current turmoil at the Nine Network set me off trying to remember how long ago it was that Publishing and Broadcasting (PBL) had bought the Crown Casino complex in Melbourne. That was the deal that signaled PBL’s entry into the gaming sector and began the shift away from its core media operations, culminating in the recent sale of most of its media assets, most notably flagship terrestrial broadcaster Nine.

Well, after trawling the archives I was thoroughly aghast to discover that it was way back in 1999 that the late Kerry Packer rescued the ailing Crown. I remember comparing the annual revenues of Nine and Crown at the time and being amazed that the revenues from a struggling Crown comfortably dwarfed those of the nation’s leading broadcaster. At the time I couldn’t see why the Packers wanted the hassle of owning a national broadcaster when the rewards were so much greater in the gaming sector with much less political grief.

Well, the speed that James Packer sold off 75% of PBL Media, the holding company for Nine and publisher the Australian Consolidated Press, almost as soon as the government relaxed the media ownership laws seemed to confirm that he was thinking on similar lines.

Packer junior’s intentions to sell off Nine had long been rumored but the sale still brought comparisons from many in the industry with his father’s deal to sell Nine to tycoon Alan Bond for A$1.05 billion in 1987, buying it back for just A$250 million plus debts in 1990.

"An Alan Bond only happens to you once," Packer famously commented, several years after he had regained control of his prized asset in the cut-price deal.

Market watchers’ imaginations have run wild speculating on whether the latest sale of Nine was a cunning plan by Packer junior to take advantage of the private equity fuelled boom to get a good price for with a long-term plan to buy the broadcaster back once the market falls, just as his father did seventeen years ago.

Well, that scenario might make for a fairytale ending but the reality is much harsher now and I don’t hold out much hope for a Packer-Nine reunion.

The fact is that when Kerry Packer so spectacularly bought back the Nine Network on the cheap he was buying back a premium media asset that had a shining future ahead in a market where pay TV and the internet were not yet on the horizon and the three commercial networks had blue skies and calm oceans ahead.

Nine remains a major player in the terrestrial market and a big money maker, but it is now in a genuine dogfight with the Seven Network for ratings leadership and is watching its core viewer base get older and smaller.

Along with its fellow terrestrial broadcasters in Australia and around the world, Nine has found few answers to the fragmenting market, if indeed there are any answers to be had, as young viewers reject traditional TV viewing in favor of the internet and pay TV.

Nine is one of the few places where advertisers can reach a mass of viewers but that mass is getting smaller and less lucrative as advertisers look to reach younger audiences on the web and elsewhere.

It is also quite possible that a new Labor-led federal government could issue a fourth commercial terrestrial license, which would force the three existing players to slice the ad pie thinner and further dilute Nine’s value.

As a result, the question has to be asked, why would Packer want to reclaim an asset that looks like its salad days are disappearing behind it?

Sure, there may be some political kudos to owning a terrestrial TV network, which might be why Packer held on to a 25% stake in PBL Media, but the tsunami of internet-delivered content is making the terrestrial players a shadow of their former dominant selves.

It might be romantic to think that Packer junior is holding one of his father’s tricks up his sleeve to pull off one last deal but the likelihood is that he saw which way the wind was blowing and sold a declining asset to an overly keen buyer, CVC Asia Pacific, at a price he simply could not refuse, A$5.15 billion.