The Age from Melbourne, Victoria, Australia • Page 90

BUSINESS 3 THE AGE SATURDAY 22 AUGUST 1 998 State aliiiiiniimiiim stake fetches $500m the 10 per cent holder Eastern Aluminium, as a back-door option for interested parties to take a stake in the world-class project. Mr Stockdale said the Victorian Government had moved to sell because "it did not believe it was appropriate for Victorian taxpayers to continue to be exposed to the commercial risk associated with the world aluminium The Victorian Government has had a long involvement in the Portland Aluminium smelter. A disastrous electricity arrangement in which the Government subsidised the cost of power to the smelter deal was wound back earlier this year. The smelter produced 202,650 tonnes of aluminium in and under new electricity arrangements has an estimated capacity of 345,000 tonnes a year. not to bid.

The 45 per cent shareholder and manager-operator, Alcoa of Australia, declined to exercise its rights on Thursday, interpreted by some as a sign that it knew Marubeni and CITIC would block the overseas bid. Observers last night suggested the sale to existing shareholders would be welcomed by Alcoa as it would not have to contend with new and possibly rival players'on the project's register. Some commentators had queried whether the Asian financial crisis would have dampened CITIC's and Marubeni's enthusiasm and capacity for bidding, but now they both move to 22.5 per cent holdings. Spokesmen for both companies were unavailable last night. Eyes may now turn to the only sharemarket-listed Portland partner, values the Portland project at just under $2 billion.

Marubeni and OTIC were both 10 per cent Portland shareholders before yesterday's knockout bid. Earlier this month the Government had nominated a consortium of the Swiss commodity trader Glen-core International AG and Century Aluminium Company of the United States as preferred bidder for Aluvic. The consortium, advised by the investment bank CS First Boston, bid $485 million, considered solid in the environment of depressed aluminium prices and some global overcapacity. But the sale process gave existing shareholders "pre-emptive" rights to the stake. Eastern Aluminium waived its rights earlier in the month after pressure from one of its key shareholders to the Japanese trading house Marubeni and the investment company China International Trust and Investment Corporation.

The state Treasurer, Mr Alan Stockdale, said yesterday that the $500 million price realised was "very pleasing in the current market "a very good outcome for and reflected continued investor confidence in Victoria. A spokesman for the Government said the $500 million offer for Aluminium Smelters of Victoria or Aluvic the holder of the Government stake included about $8 million towards the Government's sale and legal costs. Aluvic also holds a 16 per cent stake in Eastern Aluminium, a company that in turn holds 10 per cent of the smelter, and some aerospace materials businesses. The bid for the one-quarter stake Two shareholders trump the preferred bidder for Victoria's share of the Portland aluminium smelter. By JOHN ROUW and KIRSTY SIMPSON 'ITie Victorian Government yesterday extracted another big figure from the privatisation process $500 million when two existing Portland aluminium smelter shareholders trumped two international commodity companies in the fight for the state's 25 per cent stake.

The Government said last night that it had sold its 25 per cent stake The bid values the Portland aluminium smelter at $2 billion. Soccer scores decade deal with Seven BUSINESS WATCH THE SPORTS MICHAEL LYNCH Warning from NatMut Asia National Mutual Asia, the 69 per cent-owned subsidiary of National Mutual Holdings, said yesterday it expected much lower investment earnings this financial year despite the group's move to cushion the impact of adverse market conditions by going overweight fixed-interst and cash. However, NatMut Asia said its operating earnings had not been materially affected by the regional meltdown, and that sales and in-force annualised premiums for the life and health insurance operations were well ahead of last year. JILL FERGUSON Writedown hits Reef Reef Casino Trust has made a $107 million writedown on its interests in the Keef Hotel Casino Complex after an independent valuation. The writedown resulted in a net loss of $1 13.49 million for the year to 30 June, compared with a $16.9 million net loss the year before.

AAP Adacel beats prospectus Stronger-then-expected sales growth helped lift profits of the software engineering development group Adacel 7 per cent above the prospectus forecast for the nine months to 30 June. Adacel reported yesterday that it had earned $1.89 million compared with the $1.77 million forecast. Revenue was $12.9 million compared with the forecast $10.5 million. JASON KOUTSOUKIS Cinema ad firm eyes UK deal Television and Media Services, which owns businesses including the Val Morgan Cinema Advertising group, has confirmed it is in talks to buy a majority stake in the UK cinema advertising giant Pearl Dean. The confirmation came after a UK media journal reported that Val Morgan, which sells advertising in Hoyts cinemas, wanted to follow Hoyts into the UK market.

JANE SCHULZE ERG funds on the way The ticketing technology group ERG said yesterday it was set for a $100 million boost now that the refinancing of its Melbourne automated fare collection project could begin. ERG said the initial phase of the refinancing was ready to go thanks to the issue of acceptance certificates from the Public Transport Corp of Victoria for equipment being used in the project. AAP Gas model gets nod The Australian Competition and Consumer Commission yesterday approved the principles behind the Victorian Government's gas market model, the Victorian Market System Operations Rules. However, the ACCC still wants some procedures altered to prevent distortions and to enhance accountability, transparency and information flows. Controversial regulatory decisions on profits allowed to privatised gas distributors are due within the next month.

JOHN ROUW NAB names new team National Australia Bank reshuffled the decks yesterday, unveiling a wholesale shake-up of its management, reflecting the bank's "succession planning process" and the roll-out of the new organisational structure. Mr Frank Cicutto, the heir-apparent to Mr Don Argus's throne, has gathered about himself a new team of executives. JILL FERGUSON New tack at AMP AMP Asset Management's new managing director, Mr Andrew Mohl, has wasted little time stamping his authority on the underperforming group. After only six weeks in the job, he has unveiled a new management structure that splits the team into investment management and client support and services. It continues the process begun earlier in the year to revamp AMP Asset Management's investment style.

JILL FERGUSON by Nine jt y(T (CI (tf Vs' Nfc don't think there will be noticeable changes to programming," he said. Mr Bruce Gordon's WIN Television was also expected to have vied for the business, but analysts said Mn Kerry Packer's Publishing and Broadcasting (which owns the Nine Network) would not have been contender as it made enough money from the NWS affiliation agreement) Meanwhile, the Australian casting Authority said yesterday it had completed gathering evidence In, its investigation of whether the appointment of the former Publishing and Broadcasting chairman Mil Brian Powers to the chair of John Fairfax Holdings breached cross-i media rules. The ABA's chalrmanj Professor David Flint, said he expect-j ed to give an Indication of progress1 next month. fi ijt rf fA Goal as Aurelio Vidmar scores: Seven now has rights to the Socceroo games, picture: vince caligiuri if a week is a long time in politics, then in the media business 10 years is an eternity. But such a time-frame has not deterred Soccer Australia, which has struck a 10-year deal with the Seven Network for coverage of the round-ball code.

The contract, which has numerous elements involving pay-television rights, coverage of the domestic league, the finals series and the various national teams headed by the Socceroos and Olyroos is worth a minimum of $25 million over the next decade for the cash-strapped organisation. (Soccer Australia is used to selling its broadcast rights to the non-commercial SBS for much less.) It also contains a yet-to-be-disclosed escalation clause that could net the sport higher returns should it reach ratings targets. The long-term deal which the outgoing Soccer Australia chief David Hill said was worth five times the code's current rights revenue could be a potential gold mine-for the commercial network if Seven can build the sport's popularity and cash in on the success Australian sides are expected to enjoy in the Sydney Olympics tournament and in the qualifying competition for the 2002 World Cup. At $2.5 million a year, the entry cost for Seven is small. In comparison, the station is paying $125 million for its latest three-year deal with (he AFL, while British soccer's Pre-rhier League nowadays the most cashed-up competition in the world pulls in more than $500 million a year in television cash.

The likelihood is that the network, with its promotional and marketing skills, will be able to leverage a higher value-added return'on its investment without a huge effort. Most of the soccer industry's stakeholders favor the new arrangements, which take effect this season and give Channel Seven the TV ownership of three of Australia's four major football codes Australian rules, rugby union and soccer. Rugby league, of course, is a mainstay of the Nine network. The only dissent that has been voiced is over the length of the contract. Some club chiefs argue the sport would be left in a weak bargaining position should it, in the next few years, restructure the national league format, rationalise some existing clubs and franchise others in new markets an achievement that would undoubtedly make it a more NSW TAB ahead by By ANNE HYLAND SYDNEY NSW TAB's maiden net profit as a listed company $49 million for the June year has exceeded prospectus forecasts by 3.4 per cent.

The result was after an abnormal gain of $19.4 million related to the cut in a State Government tax on wagering turnover from 52 per cent to 28.2 per cent which was backdated to 1 October. If the abnormal gain is excluded, the profit is $30.3 million. TAB shares slumped 13 cents to as low as $2.62 after the result before closing at $2.65. listed in June with a retail price of $2.05. The total number of shareholders has dropped from 734,000 to 630,000 since listing.

Share analysts said yesterday's share price drop was caused by disappointment that TAB had not exceeded its "conservative" prospectus forecasts by a greater margin. overhanging the share price was speculation that TAB's two major shareholders, Publishing and Broadcasting and News Corp each owning 5 per cent may consider' spiling down their stakes. ii TAB did not declare a dividend as slated in the prospectus. i- "We have met the predictionswe have made for this result and in fact we have slightly exceeded them," TAB's chairman, Mr Gary Pember-ton, said. "We expect to deliver our -forecasts in the prospectus for 1998-99." ixTAB's revenue Increased from $581.4 million to Still, attractive (and valuable) product.

Seven's main interest as its director of the Olympics and sport, Alan Bateman, and corporate spokesman Simon Francis make clear is in covering the inter-, national teams. Matches involving the Socceroos and Olyroos are, at this stage of the sport's commercial-TV development, likely to deliver higher ratings. Seven is offloading to the ABC (for a four-year period) the rights to the domestic Ericsson Cup competition. It is expected to show one live game a week and produce a highlights package for Seven. Live and delayed telecast games will also form an important part of the product mix for Seven's pay TV operations, while it is also envisaged that live matches (particularly those involving national teams, major games against overseas club teams and finals matches in the domestic competition) will be part of the product offered at the new Docklands stadium venue Seven is building.

In addition, says Francis, the network will embark on joint ventures and marketing the sport, helping it to build sponsorships. The deal with the ABC is still being worked on. A sticking point is whether the government broadcaster or Seven will cover the finals series. Whatever that outcome, it looks like a shrewd move by Seven to offload the local league for a few years and let another station put in the hard yards. If it is starting to get reasonable ratings on the ABC and build up a following, Seven can exercise its rights four years hence and add more soccer to its mainstream, free-to-air mix.

Will advertisers go for soccer historically a game riven by ethnic rivalries and a failure to deliver on its market potential on a commercial network? No reason why not, says Peter Galucci, the Melbourne-based general manager of the leading agency George Patterson Bates. No reason at all as long as it's priced correctly. The critical issue, he says, is the cost-per-thousand viewers Seven charges to advertisers. At present, the cost for an AFL match is about $35, says Galucci, and "even if soccer were to rate at sixes or sevens, at that price it would be a good buy to reach a target market of men aged 18-plus. I would expect the internationals to rate in double figures, around the average rating of a lot of AFL in Melbourne.

A 10 to 15 finishes a nose Gary Pemberton: Expects to meet forecasts for 1 998-99. the TAB's on-course wagering turnover declined by 2 per cent in the year. It fell to $3.57 billion, which was below prospectus forecasts of $3.6 billion. The decline was caused by wet weather in May and June which affected race meetings. But this was offset by efficiencies in the production of wagering materials, reduced tax payments and some savings in privatisation costs.

The net profit was after the amortisation of goodwill relating to Sky of $2.49 million. Mr Pemberton said TAB had written down some of the Sky assets since the acquisition earlier this yefer. rating is a good rating for the bread-and-butter AFL games here." Another important factor for Seven is that soccer is now a summer sport, running from October through to May. It adds another product to its armory in the summer scheduling "If we were going to go ahead with a commercial station we needed to strike a long-term arrangement. The game here still needs a long time to develop, and this will help it by delivering much more exposure," he said.

email: nilynclitheage.fciirfa.x.com.au. Southern Cross buys Adelaide TV station ANZ beefs up its consumer focus with $100m deal WHO OWNS CHANNEL 9 battle with Nine, which is top-heavy with international cricket. For Soccer Australia, battling to become a mainstream sport, the deal is a huge bonus. Stephen Copping, its publicist, says the 10-year deal was deliberate. etary trading book.

In an analysts' briefing last week, Mr John McFarlane, ANZ's chief executive, confirmed that the bank would rebalance its books away from wholesale banking into the less volatile retail sector following the bankls $78 million trading loss on the Russian debt markets. Since his ascension to the top Job, Mr McFarlane has consistently voiced his desire to reduce the volatility of ANZfe earnings a strategy which suffered credibility problems when the trading loss came to light earlier In the month. While the purchase will boost ANZfe mortgage market share by about 1 per cent to 13 per cent, the bank still significantly trails Commonwealth Bank, Westpac and National Australia Bank In terms of market share. Mr Hawkins said that ANZ was positioning Itself to be one of the endgame players In the consolidating mortgage market. But, with organic growth at about 0.S per cent, ANZ will need to acquire something else to give the business critical mass.

ANZ and Westpacfc "conceptual" discussion to link up mortgage processing was greeted warmly by analysts. By JANE SCHULZE The owner of 3AW and Magic 693, Southern Cross Broadcasting, has bought Channel Nine's Adelaide affiliate NWS-9 for $98 million. The station was sold by the Lamb family, which also owns 2UE in Sydney and 4BC in Brisbane, and has owned the Adelaide station for 16 years. Southern Cross, which also has television stations in regional Victoria, New South Wales and Tasmania, said the Nine Network had agreed to a long-term affiliation deal on similar terms to the existing arrangement. The acquisition, which the directors expected to enhance earnings this financial year, puts Southern Cross in the unique position of broadcasting the product of each of Australia's three commercial television networks.

The Southern Cross chairman, Mr Peter Nixon, said the business was being acquired debt-free, and Southern Cross would "fully fund the purchase by debt, increasing total debt to $153 million. However, assets would grow by $140 million to $350 million when land, other businesses and the broadcast licence were taken into account. "This acquisition is strategic, logical and exciting, and now gives the company a strong presence in five states with a potential reach of approximately 47 per cent of Australia's total population," he said. The managingi.dlrector of South- By JILL FERGUSON ANZ Bankto grand plan to refo-cus the business on consumer banking accelerated yesterday, when the bank snapped up the Primary Industry Bank of Australia's mortage book for about $100 million. Mr Peter Hawkins, ANZb global head of personal banking, said: "We're developing a broader, deeper presence In the Australian personal banking market." ANZ will pick up a $1.5 billion, largely metropolitan, mortgage book and access to more than 20 Independent mortgage originators from PIBA the former Rabobank subsidiary.

Mr Hawkins said the purchase would be earnings positive from the first year. "It gives them access to a different customer base. Hopefully they can leverage off it, said one analyst. But the acquisition will not alleviate ANZb problems in the crucial New South Wales market. Analysts estimate the purchase adds about $Z0 million to ANZfe bottom line.

While a nice earner, It will hardly replace the Income lost by ANZfe decision to effectively shut down its propri Television stations owned by Kerry Packer's PBL GTV-9 Melbourne TCN-9 Sydney NTD-8 Darwin Affiliated stations not owned STV-9 Perth majority owned by Sunraysia Television NWS-9 Adelaide -to be owned by Southern Cross Broadcasting ern Cross, Mr Tony Bell, said the company would restructure NWS-9 to take advantage of the "significant" infrastructure savings. The financial controller, Mr Eddie Chia, said the group was unable to quantify the savings as if had only visited the station once. He said the group would share "knowledge and concepts" between its TV stations but would not achieve savings' through synergies because NWS-9 would be in competition with the other stations. But a media analyst said the group should be able to reduce non-programming costs by 10 per cent "pretty Mr Chia said it did not plan to make significant changes to NWS-9. "We will continue with the local news and certain local programs so I.