Southern Cross Media is set to become the biggest and most powerful radio network Australia has ever seen having formally announced its offer to buy Austereo.
The offer of just over $2 a share represents a 28% premium on Austereo’s three month VWAP average. The deal is worth around $700 million.
Austereo directors have indicated that, in the absence of a better offer, they will unanimously recommend the SCM offer to all its shareholders.
If Austereo’s majority shareholder, Village Roadshow, accepts the offer it will give SCM a 52.5% controlling interest.
The newly merged combination of SCM’s network of 68 regional radio and 14 television stations together with Austereo’s dominance of metropolitan FM and digital stations will command revenues in access of $670 million and earnings (EBITDA) of better than $215 million per annum.
It will be interesting to see how such a powerful network that offers a potential reach of over 90% of the population affects the radio market as a whole.
SCM’s CEO Rhys Holleran said of the deal, “We are really looking forward to working with the team at Austereo to build a great Australian media company with coverage across regional and metro Australia. On top of that it will create great opportunities for on and off air talent.”
Although the deal is still contingent on the ACCC having no objections.
Although this is greenlit by the government organisations that are mandated to watch these sort of things, I can't help but feel a little worried that again we see our media conglomerating into fewer and fewer owners.
With the power that the media holds, having so few owners of all of mass media should ring alarm bells.