valuation anomaly, page-29

I'm not sure what you are disagreeing with, because we are not really talking about the same thing are we. I'm simply talking about maximising shareholder wealth, whether Packer is a media man or not is irrelevant.

CWN has actually outperformed SEV since the demerger. That's very simple maths. Or you can see it on a charting software.

Given SEV's losses in its other investments, I tend to think Stokes's timing of the deal with KKR is largely a matter of luck. Not saying he's stupid, but if you consider the impaired investments in WAN, GRD, UNW, ENG, I think it's fair to say luck (and bad luck) has certainly played a significant role.

Also note that shareholders could have easily sold CWN if they were not keen in the casinos business. But they cannot sell SEV's investments. That's a big difference and goes back to my point about maximising shareholder wealth.

That $1.1 billion cash is lovable only if it's in your hand. Otherwise, it is going to earn declining rates of return in SEV's bank account as RBA keeps reducing cash rate. It won't even stay at $1.1 billion, because it's being used for buybacks, it will be used to pay dividends (SEV has no free cash flow available for dividends, so SEV will have to pay FY9 dividends out of its cash reserve), and it will be used to buy media assets.

If you look at FY08 income statement, interest income is largest income source for SEV. So the numbers for FY09 are easily predictable. Income will be down. Expenses will be up due to impairment losses. That's why SEV's share price (and SEVPC) is so weak despite the cash reserve. Market is correctly discounting the value of that cash. Stokes needs to unlock the value of that cash and the easiest way to do it is to return the cash to shareholders. If you want, you can always use the cash to increase holdings in the new SMG, (or ENG, you can buy a lot!).

Anyway, that's all academic. Of course Stokes is going to try build a media empire. Maybe his empire will generate better returns than NWS, which is pretty easy to beat.