2CH sale to be finalised Friday. Or else.

Comment from Peter Saxon

When asked if the ACMA imposed deadline of September 30 to dispose of 2CH would be met, Macquarie Media (MML) COO, Adam Lang told radioinfo, “We’re busily working towards that deadline,” which is not exactly a definitive YES and could indicate that a deal may not yet be finalised.

What happens, then, if no deal is inked by COB on Friday? 

Apart from 2CH, Macquarie also owns 2GB and 2UE – under the rules, one station too many in any one market.

But, with special extensions granted by the ACMA, MML has had more than 18 months to find a buyer. Why has 2CH not sold? Our mail is that it’s not due to a lack of interest but simply because the offers have been too low. Perhaps what’s needed is a sense of urgency.

Anyone who has ever bid in an online auction like those on eBay, knows that all the action happens in the final seconds before the auction closes. Perhaps, in the same way, MML is using the deadline to pit the bidders against one another in a heightened sense of urgency in the hope of driving the price up.

But what happens if the strategy backfires and there’s no deal on the on the table when the deadline is reached? Then MML, having used up all it’s extensions and having entered into an “enforceable undertaking” to sell 2CH by September 30 would be in breach of the two station rule. And that could cost them plenty.

According to the ACMA website:

Remaining in breach after the period approved by the ACMA under section 61AJ expires is an offence that attracts 20,000 penalty units ($3,400,000). It also attracts civil penalties for each day.

Remaining in breach after the period approved by the ACMA under section 67 expires is an offence that attracts 20,000 penalty units (commercial television) or 2,000 penalty units ($340,000) (commercial radio).

On top of that, MML could be forced into a fire sale. Within two days of the deadline, an ACMA approved ‘Divestiture Agent’ must be found. Once appointed, the ‘Divestiture Agent’ has full power of attorney to sell the station for virtually any price offered.

Here’s what the ACMA website has to say on that subject:

9. Failure to divest within the Divestiture Period 

9.1 Sale of Unsold Business

In the event that a sale of the Divestiture Business is not completed by the end of the Divestiture Period in accordance with this Undertaking, the business becomes an Unsold Business.

9.2 Notification of proposed Divestiture Agent

Within 2 Business Days of the Divestiture Business becoming an Unsold Business, the Undertaking Parties must notify the ACMA in writing of the identity of the proposed Divestiture Agent, together with such information as the ACMA reasonably requires to assess whether the ACMA will object to the appointment of the proposed Divestiture Agent.

9.5 Powers of Divestiture Agent

The Undertaking Parties will grant the Divestiture Agent an irrevocable power of attorney conferring all necessary power and authority to effect the divestiture of the Unsold Business on terms considered by the Divestiture Agent in its sole discretion to be consistent with this Undertaking.

No wonder Mr Lang says that MML are ‘working to meet the deadline.’



Peter Saxon

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