History and politics tell us the CBS purchase of Ten is not a done deal

While CBS's acquisition of Network Ten has been largely reported as a done deal, the transaction still faces a number of barriers. The history of politically expedient and opaque decision making by the Foreign Investment Review Board and politicians means we shouldn't assume this deal is done, says Mumbrella's Paul Wallbank.

When Monday’s announcement dropped, it looked like the administrators had made a pragmatic choice – to take the certainty of a binding bid for Ten from US giant CBS over a more complex offer from Lachlan Murdoch and Bruce Gordon.

But there are hurdles remaining that could yet derail the deal. Creditors – including News Corp’s Fox Studios – have to vote on the offer, the Federal court needs to unwind existing company deeds and the Foreign Investment Review Board must approve the investment. And the latter could yet prove to be an unexpected stumbling block.


Ian Robertson, media law partner at Holding Redlich, tells Mumbrella: “It needs FIRB approval. Although as CBS is a relatively new entrant I would expect the application would pass the the regulatory hurdles.”

Robertson’s comments are echoed by other legal sources contacted by Mumbrella. However the FIRB is far from a transparent or consistent organisation, having in 2016 waved through one Chinese company’s acquisition of the Port of Darwin but partially blocked another Chinese bid for the iconic agricultural company S. Kidman & Co.

US companies haven’t been immune to the FIRB’s displeasure, with agricultural giant Archer Daniel Midland blocked from acquiring Graincorp in 2013. Then Treasurer Joe Hockey boasted in the media announcement: “of the 131 significant foreign investment applications we have dealt with, this is the only application we have prohibited.”

Since its establishment in 1976, the board has been notoriously opaque and its six members act only as advisors with any final decisions relating to approving or denying foreign investment decisions resting with the Treasurer. Which will give Scott Morrison a say in what happens next.

The only historical guidance on how the FIRB might respond to a CBS acquisition comes from 2007 when the Canada-based Canwest won approval to take a 56.7 percent stake in Channel Ten from Treasurer Peter Costello. That deal was subject to requirements including Ten remaining a listed company headquartered in Australia with the CEO and CFO being local residents.

The Canwest deal was further complicated by the necessity for it to have economic but not management control in order to get around foreign ownership regulations which have since been removed.

Interestingly, a search of the FIRB’s archives finds little in relation to its decisions on other media acquisitions, most notably nothing on the US-based News Corp’s purchase of APN’s Australian Regional Media last year.

When asked by Mumbrella about the ARM deal, previous media approvals and whether the FIRB had a position on the CBS/Ten deal, a Treasury spokesperson says: “Treasury cannot comment on the application for the foreign investment screening arrangements as they apply or could apply to particular cases.

“At times, the Treasurer may explain, via press release the Government’s decision on major cases that are already in the public domain (or applicants may issue their own media statements). News articles and media releases that have been published on the FIRB website are available at :https://firb.gov.au/about/news-media/

Canwest’s restrictions were a reflection of the political realities of the day, as were the government responses to earlier major ownership changes such as Canadian media mogul Conrad Black’s brief Fairfax stake and News Ltd’s acquisition of the Herald and Weekly Times.

Today’s political environment is no less frantic than the times of the HWT being acquired or the Conrad Black years, and the current government’s troubles add to the uncertainties of what either FIRB, the Treasurer or cabinet may decide.

Certainly this has not gone unnoticed in Canberra, with The Greens’ Sarah Hanson-Young telling the Australian Financial Review she feared News Corporation may try to “squeeze” the treasurer into making a deal.

That Morrison is part of a government desperately courting News Limited papers, as seen by the ‘leaking’ of refugee stories to the Daily Telegraph last weekend, Hanson-Young’s fears are far from unfounded.

Should Morrison or cabinet choose to block CBS’s move it would be far from the first time a Treasurer has buckled before News Corporation – Paul Keating’s folding over the Herald & Weekly Times comes immediately to mind – and the opacity of FIRB recommendations would provide Scott Morrison with ample excuses.

The truth is we can’t assume the CBS takeover of Ten is a done deal until the creditors, the courts and the government have decided to approve the purchase. This story has a long way to run.


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