The Players: Sydney-based media group Seven Network Ltd., controlled by Australian billionaire Kerry Stokes and buyout firm Kohlberg Kravis Roberts & Co.

The Plan: In November, Seven Network and KKR announced the creation of Seven Media, a JV that will hold Seven Network's television, print and online businesses. KKR will invest A$735 million ($580 million) into the JV, which will also hold A$2.5 billion in debt. Seven Network's executive chairman, Kerry Stokes, and CEO David Leckie will head Seven Media. KKR will have equal representation on the board.

The Context: The private equity and strategic billionaires are coming out to play in advance of relaxed media ownership rules in Australia. Those rules currently limit foreign ownership of individual media assets to 14.9% and restrict any player to a single TV, radio or print holding in any city market. The rules, expected sometime in 2007, will allow a single owner to operate two of three media in a single market, and foreign ownership will be unrestricted, though deals must be approved by Australia's treasurer. The Seven-KKR deal mirrored a JV struck by James Packer's Publishing & Broadcasting Ltd. and buyout firm CVC Asia Pacific Ltd. in October. Indeed, when KKR missed out on that deal, it turned to Seven to strike a similar agreement. Rupert Murdoch and Irish billionaire Anthony O'Reilly are also positioning themselves for acquisitions, along with Macquarie Bank Ltd., Telstra Corp. Ltd. and other private equity groups. Canada's Asper family and Australian billionaire Bruce Gordon are looking to sell their respective television assets.

The Risks: Seven Network has not put its strategic investments into the JV and retains the right to continue making deals independent of Seven Media. This could set up some competitive issues between the company and the JV. KKR paid a high multiple -- 12.5 times estimated 2006-2007 Ebitda of A$320 million -- for its stake, and the investment is considered to be high in a cyclical, highly competitive and, some say, waning industry.

The Reward: Stokes' Seven Network receives a cash injection of A$3.2 billion and deeper pockets for acquisitions, while KKR buys itself a seat at the table for industry rationalization.

What's Next: Seven Network has already made a share market raid on Perth-based WA Newspapers Ltd. and bought a 3% stake in another publishing group, Fairfax Media Ltd., possibly ahead of a bid. However, Fairfax has made its own A$2.8 billion agreed bid for regional media group Rural Press Ltd. Both Seven Network and the JV will have to wait until the new media ownership laws are officially enacted later this year before either can move on any additional assets. - Giles Parkinson

Join Corporate Dealmaker's LinkedIn forum