ANALYSIS
A week after launching a hostile share raid on James Packer's Consolidated Media Holdings, it's becoming increasingly difficult to see the downside for Kerry Stokes.
His Seven Network spent another $28.1 million buying a further 10.5 million share-parcel yesterday, taking its stake in Consolidated Media to the maximum 19.9 per cent allowed without launching a takeover.
The lines have now been drawn in the billionaires' standoff - neither can add more shares for the next six months before being able to creep up further.
As they pause to take breath, take a look at the lay of the land.
At a cost of about $360 million, Stokes has secured a blocking stake in the nation's most coveted pay television (Foxtel, Fox Sports) and internet assets (Seek).
He bought the shares for 15 to 20 per cent above the trading price before the tussle - hardly the 30 per cent premium the market would expect in a hostile takeover.
If investors predicting a war of attrition are right, Stokes may well be stuck for now with a minority stake in Packer's collection of investments. At first glance that might appear to be bad news, given Packer has spent more than $50 million defending his patch. He still owns twice Stokes's stake and still calls the shots.
But consider this: With Consolidated Media's expected dividend yield of 6 per cent, the investment didn't cost Stokes much more than leaving his $1.4 billion war chest untouched.
Seven stands to earn about $22 million in dividends from Consolidated Media this financial year, Deutsche Bank expects - in line or better than interest from the bank.
And any dividend rise the supposedly cash-strapped Packer pays himself, Stokes will enjoy too.
Having his investment work for him, Stokes can sit on his blocking stake and watch Packer sweat, knowing he can kybosh any attempts his rival may conjure up to control his exit should he wish or require.
Avenues such as the $3.2 billion failed privatisation last year with Lachlan Murdoch are now out of the question, with Stokes having enough votes to block a scheme of arrangement.
And Seven is prepared should the Government force Telstra to sell its 50 per cent stake in Foxtel. With Consolidated Media and Rupert Murdoch's News Corp holding pre-emptive rights, Stokes is gambling Packer may not be able to afford to make that acquisition, allowing him to pounce. And even if he doesn't get to play, he is likely to benefit from the rising value of Seven's stake in any Foxtel deal.
Then there is the pricing tension in Consolidated Media keeping the value of Seven's investment high - particularly important after the patchy performance of its $715 million stock tipping foray last year.
Should Packer - alone or with the help of an ally such as News Corp - end up bidding for the company to fend off Seven, Stokes could always exit the investment with a healthy profit.
The only thing that can go wrong for Seven investors now is that the volatile media mogul, known for stressing his patience, overplays his hand: Bidding too soon, too high to get his long waited revenge on those who cruelled his ambitions to own pay television almost a decade ago.
