Ten and DMG on or off?

The Australian Financial Review has written today about the likely result of any sale of TEN's Eye Corp business.

A sale of Eye Corp is looking more likely with at least three buyers reported to be considering the asset.

There has been speculation that the funds from any sale may be used by TEN to acquire Lachlan Murdoch's 50% share of DMG Radio, held through his private company Illyria.

However the AFR reports:

"…such a move would raise concerns among TEN's institutional shareholder base – namely, why TEN would swap Eye Corp for a radio investment at a time when strategic investors are flocking to outdoor advertising…"

"…Any TEN/DMG tie-up would also present related party issues. Institutional investors would  take some convincing that such a related party deal was in TEN's best interest when the company's earnings are suffering from poor ratings and weak advertising markets".

The AFR notes that the TEN share registry is dominated by a small number of high net-worth individuals with Lachlan Murdoch, James Packer, Gina Rinehart and Bruce Gordon controlling 42% of the company, and therefore even were there institutional opposition to the (rumoured) deal this may not prevent it going through.

The article goes on to speculate that Illyria's exit of Prime Media last week allows Seven West Media to buy a controlling stake in, or buy outright, Prime Media. Seven West Media presently own 11.4% of Prime.