More bad news for James Packer as Crown slumps to massive loss

A day after announcing that his Consolidated Media business was selling its stake in Seek, James Packer has revealed his Crown casino business has taken a buffeting from the downturn.

This morning, Crown reported a $1.2 billion loss for 2008-09. The result was dragged down by $1.4 billion worth of writedowns, mainly related to the company’s disastrous investments in the North American casino market.

Crown boss Rowan Craigie was even forced to admit to shareholders that the company had got its push into the North American market very wrong.

“The global financial crisis has had a major adverse impact on the North American casino industry leading to a requirement to writedown the carrying value of Crown’s investments in these markets. In this context, Crown’s investments in North America were ill-timed,” he said in a statement.

However, Craigie says that the company’s Australian casino businesses (Crown in Melbourne and Burswood in Perth) are trading well and its properties in Macau are due to improve.

Of course, the market is still reeling from Packer’s decision yesterday to sell Consolidated Media’s stake in online recruitment classifieds firm Seek.

While most commentators are tipping Packer will use the cash generated from the sale to launch a share buyback at Consolidated Media – thereby increasing his own stake in the business and protecting the company from a takeover by rival Kerry Stokes – another theory suggests Packer could find a way to take the cash out of Consolidated Media and use it to launch a privatisation bid for Crown.

However, such as bid would cost as much as $3.5 billion, making any potential deal difficult even for a person of Packer’s resources.