ARN Media Limited (ARN) and Anchorage Capital Partners Pty Limited (ACP) have made a non-binding indicative offer to Southern Cross Media Group Limited (SCA) to acquire 100% of the fully diluted share capital.
SCA’s shareholders would receive under this proposal 0.753 ARN shares and 29.6 cents cash per SCA share with at least double digit pro forma earnings accretion for existing ARN shareholders expected in the year of acquisition.
Under the proposed transaction radio and television assets of ARN and SCA would be separated and independently owned by ARN and ACP, subject to regulatory approval.
There would then be two separate, national media organisations able to compete independently of each other, and a 10 station metro radio network across Sydney, Melbourne, Brisbane, Adelaide and Perth, anchored by the KIIS and Triple M brands, with differentiated, national and local talent. ARN would grow regionally from 47 to 88 stations and fully own the currently shared stations in Canberra. Digital assets would become a joint venture as well.
ARN Media Chairman, Hamish McLennan said:
“The Board has carefully considered numerous strategic options to continue the company’s growth and believe this transaction would be transformative for both sets of shareholders. ARN’s regional radio footprint would be almost doubled while we would maintain a focused metro radio network, underpinned by the recognised KIIS and Triple M brands in metro areas. The increased scale supports the potential for future index inclusion and liquidity once the transaction is complete.”
ARN CEO and Managing Director Ciaran Davis said:
“There is a significant value creation opportunity bringing together certain ARN and SCA radio and digital audio assets. ARN is ideally positioned to support and operate an expanded regional radio network and as a combined group of scale in digital audio, positioned to compete efficiently and effectively with international competitors.”
SCA has confirmed it has received the proposal, recommending shareholders to take no action at this stage due to it being subject to the unanimous recommendation of the SCA Board, due diligence, shareholder and regulatory approvals from both the ACCC and ACMA, and other terms and conditions.
This is an observation only on the Sydney market.
ARN control: KIIS106.5, 2WS and CADA (96.1 formerly 2KA).
SCA control: 2DAY and MMM.
Unless there is lobbying to the Federal Parliament to change the law in regards to the number of stations in a particular market owned by one entity, the combined entity may have to sell stations in order to stay within the law.
Illustration:
Pre amalgamation:
2GB and 2CH owned by entity MRN.
2UE owned by then Fairfax.
Fairfax takes over 2GB and 2CH. They owned then 2CH, 2UE and 2GB.
Due to the law limiting station ownership in one market, 2CH was sold.
Reiterating, unless the law changes in regards to the number of stations owned by an entity, a combined MMM, 2DAY, 2WS, KIIS106.5 and CADA will necessitate the selling of three of these stations.
Thank you
Anthony, Strathfield South, in the land of the Wangal and Darug Peoples of the Eora Nation
To cite the law I avert readers to Division 2, Section 54 of the Broadcast Services Act (Cth),
"A person must not be in a position to exercise control of more than 2 commercial radio broadcasting licences in the same licence area."
https://www.legislation.gov.au/Details/C2023C00068
Thank you
Anthony, Strathfield South, in the land of the Wangal and Darug Peoples of the Eora Nation