Publishing & Broadcasting, Melco Buy Land in Macau (Update4)

Written on May 24, 2006 by a2zMacau

Macau, May 22, 2006 (Bloomberg) — Publishing & Broadcasting Ltd. and Melco International Development Ltd. agreed to buy land in Macau for HK$1.5 billion ($193 million) to build their third casino in what's to become the world's biggest gaming market.

The 6,480 square meters of land is in the traditional casino precinct on the Macau peninsula, where the venture doesn't have a site yet, Sydney-based Publishing & Broadcasting Ltd. said in a statement to the Australian Stock Exchange today.

Publishing & Broadcasting Chairman James Packer and Melco's Lawrence Ho want to tap growth in Macau, the only place in China where gambling is legal. Packer is increasingly turning to casinos to expand his company, which also owns Australia's biggest television network.

“It's really the gaming where the growth opportunities lie'' for Packer, said Sean Fenton, who helps manage the equivalent of $760 million at Jenkins Investment Management Pty in Sydney. “Macau is very key to his expansion plans.''

Packer and Ho paid Wynn Resorts Ltd. A$900 million ($684 million) in March for a license giving them greater control of the Crown Macau and City of Dreams casinos they're developing in the former Portuguese colony.

Macau, with $5.76 billion of gaming revenue in 2005, is expected to overtake Las Vegas in casino sales this year , according to Jonathan Galaviz, a partner at Las Vegas-based Globalysis Ltd., which analyses the gaming market. The Las Vegas Strip earned $5.54 billion in the first 11 months of 2005, according to the Nevada Gaming Control Board.

Shares of Publishing & Broadcasting rose 2.3 percent to A$19.08 at the 4:15 p.m. market close in Sydney today, while Australia's benchmark S&P/ASX 200 Index dropped 1.9 percent, its biggest fall in more than seven months. The stock has gained 16 percent this year.

The latest land purchase is expected to be completed in the first quarter of 2007, according to today's statement. It's still subject to approval by the Macau government.

The size and design of the third casino, which will also include a hotel, hasn't been decided yet, the companies said.

Earnings at Publishing & Broadcasting's gaming unit surged 60 percent in the six months ended Dec. 31, compared with a 13 percent drop in television profit as the company's Nine Network is fighting to defend its five-year lead as Australia's most- watched network.