Over the past few months, Mr Packer has spent Adollars 125m (pounds 58m) buying Fairfax shares. The latest foray came late on Tuesday when he doubled his 5 per cent holding. This took him within striking distance of the maximum 15 per cent he is allowed under laws which prohibit one person from controlling newspaper and television outlets in the same city. Mr Packer already controls Channel Nine, the country's largest and most profitable commercial television network.
Tuesday's raid made Mr Packer Fairfax's second-largest shareholder, after the Telegraph, which controls 15 per cent, the maximum permitted under foreign investment guidelines. Mr Black publicly welcomed Mr Packer's lightning share raid. 'I view him as a friendly investor. It is a great vote of confidence to have him as a shareholder,' he said. But the response raised even more questions than the raid.
The most significant of these concern the underlying motives of Mr Packer's action. Is he planning to become a press baron in the mould of his father, the late Sir Frank Packer? If so, is he on the verge of selling his television interests? Do he and Mr Black have a game plan, or does Mr Packer have a long-term view of Fairfax without Mr Black's participation?
Fairfax was Australia's oldest newspaper dynasty through its flagship title, the Sydney Morning Herald, until the company collapsed into receivership in late 1990 after an ill-fated bid to take it private. Its newspapers are still the most profitable in the country thanks to dominance in the classified advertising sector.
The Fairfax and Packer families were once fierce newspaper rivals until Sir Frank sold his Sydney dailies to Rupert Murdoch in 1972, leaving a modest empire of television stations and magazines. This was the base on which Kerry Packer astutely built to turn himself into Australia's richest person, with a fortune now valued at Adollars 3bn.
A consortium headed by Mr Black took Fairfax out of receivership in 1992 and floated the restructured John Fairfax Holdings last year. Mr Packer was an original member of the Black syndicate, but dropped out after a blazing political row over his dominant role in Australia's media scene.
Mr Packer quietly went to ground when his main company, Consolidated Press Holdings, underwent a savage restructuring conducted by Al Dunlap, his then chief executive. An American, Mr Dunlap joined Mr Packer from Sir James Goldsmith after playing a central role on behalf of the two tycoons in the abortive 1989 raid on BAT.
After selling assets, Mr Dunlap left the stripped-down Packer empire with zero debt, Adollars 1bn in cash and three publicly listed and highly profitable core businesses: television companies and magazines in Australia and the Valassis coupon inserting operation in the US. The normally reclusive Mr Packer said in a rare interview a year ago that he was ready to start investing again, but gave tantalisingly few details: 'We can take our time. It may take two years to find the next business we want to go into.'
In fact, it took just seven months. Last November, Mr Packer stunned the markets when he bought 10 per cent of Westpac, Australia's largest bank. He and Mr Dunlap were invited to join the Westpac board, but both resigned after only a week in a dispute with other directors over strategy.
The affair seems to have kindled a falling-out at Packer's headquarters too: Mr Dunlap departed as Consolidated Press's chief executive in February. Mr Packer replaced him almost instantly with another American, Brian Powers of Hellman and Friedman, the US investment group. Hellman and Friedman was an original partner in Mr Black's Fairfax takeover syndicate and holds 5 per cent of non-voting equity in Fairfax. Mr Powers himself was a Fairfax director but resigned after he joined Mr Packer.
Now that Mr Packer is moving into Fairfax through the market, instead of as part of the Black syndicate, his motives have produced frenzied rumours.
The simplest explanation is the one he gave himself when he appeared reluctantly as a witness before a parliamentary committee in 1991: 'I can tell you that my father would turn in his grave if I had the opportunity to own a piece of Fairfax and didn't take it.' However, there is more strategy than this involved. It is suggested in media circles that Mr Packer now sees solidly placed newspapers such as the Fairfax titles as better long-term prospects than television, which is about to face more regulation and competition from the Australian government's belated introduction of pay television.
Whatever his motives, market analysts agree that Mr Packer is unlikely to have spent so much buying into Fairfax - he paid Adollars 2.10 a share, the highest price since last year's flotation - without wanting to acquire greater influence and, probably, control of the group, which he could do by selling down his television interests.
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