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When genius fails?


When genius fails?

CVC has wrestled with its ownership of Nine ever since it bought the network from James Packer’s PBL Media for $5.3 billion in 2007.  And now CVC’s man Adrian McKenzie has quit the nine board and Goldman Sachs as swapped debt for equity.

Equity owners are last in line and its a salient lesson for investors who must always remember that there is a very high risk owning businesses. In this environment of low interest rates its easy to value companies on equally low discount rates to try and produce a valuation close to the current price to justify a purchase. This is the basic lesson for CVC.

Even in an environment such as this we’d be using 10%, 11% even 13% required returns and walking away from anything that is not cheap enough.

With money burning holes in pockets and fees based on the employment of capital the temptation to bit off more than one can chew is ever present.

The late Kerry Packer taught the world a valuable lesson when he said ‘You only get one Alan Bond’. And James was obviously paying attention.


Roger is the Founder and Chief Investment Officer of Montgomery Investment Management. Roger brings more than two decades of investment and financial market experience, knowledge and relationships to bear in his role as Chief Investment Officer. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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  1. Thanks Roger,

    Wonder what the relevance for TEN is. It continues to fall, but is this in sympathy with Nine?

    I know turn arounds are not your thing, and TV franchises are not what they used to be, but people are still buying them, so at some stage I would have thought TEN would be a buy.


  2. Once upon a tim3e nine owned a big piece of land in Richmond Melbourne.
    It is now being developed.
    Was this sold separately from Nine to anyone’s advantage?
    Who owns it now?

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