The Southern Cross / Seven West Media merger was implemented yesterday when Southern Cross acquired all of the issued shares in Seven West Media Limited via the Scheme of Arrangement.
The newly merged company will begin trading as Southern Cross Media (SXL) on the Australian Stock Exchange today.
It might seem strange that a company which offloaded its regional tv stations to focus on audio is now back in bed with a tv company, but the business reasons for the merger are strong. SCA’s old regional tv assets were losing value and revenue as new video streaming technology made it easy for regional viewers to watch tv from any capital city or indeed from anywhere in the world, devaluing the former strength of regional tv revenue and licence value. The Seven tv network though has a capital city presence with Australian broadcast rights for many sport and premium tv shows, making it possible for it to deal with advertisers and agencies at a national level. The West Australian newspaper also gives the company a presence in Australila’s largest mining state.
Seven shareholders have now received the scheme consideration of 0.1552 Southern Cross shares for each Seven share held at the end of December 2025.
Board changes resulting from the merger see John Kelly focusing on the Audio side of the business and Jeff Howard taking up the role of CEO. Jeff Howard will be paid $1.25 million in his new CEO role.
The key terms of Jeff Howard’s employment with Southern Cross Austereo Pty Ltd as Managing Director & CEO of Southern Cross which takes effect from today are consistent with those disclosed to ASX by Seven Ltd in December. John Kelly has stepped down from the Southern Cross Board as Chief Executive Officer and Managing Director, and will become the Southern Cross Group Managing Director, Audio. Seven CFO Craig Haskins has advised the Board of his intention to retire after a period of transition during the current quarter. Toby Potter will remain as Southern Cross CFO on an interim basis.
The Board of the newly merged Southern Cross company is made up of:
- Kerry Stokes AC (Interim Chair)
- Ryan Stokes AO (Non-Executive Director)
- Michael Malone (Non-Executive Director)
- Teresa Dyson (Non-Executive Director)
- Jeff Howard (Managing Director & CEO)
- Heith Mackay-Cruise,
- Marina Go
- Ido Leffler
Kerry Stokes will assume the role of Chair of the Board until stepping down at the end of February and transitioning the role to Heith Mackay-Cruise.
In a good sign for the newly merged company, investment newsletter MorningStar gave ‘fair value’ advice to SXL investors:
Southern Cross shares enjoyed a strong recovery over the past year, after an extended period of despair. The group has now parlayed the buoyant stock price to acquire a TV entity struggling with cyclical and structural headwinds, while fast losing relevance in the minds of investors.
This move may come across as masochistic, especially as Southern Cross’ prior mantra was “All About Audio” and media merger integration has a poor track record, to put it kindly. But the deal has merits from a digital and valuation perspective, without putting the balance sheet under strain.
Seven’s fast-growing broadcast video on demand, or BVOD, turbocharges Southern Cross’ digital appeal already flourishing with its own digital audio. It also acquired Seven at a paltry 3 times EBITDA. And we see proforma net debt/EBITDA falling from the already comfortable 1.7 starting point.
The merger will require the new company to sell 17 of its regional radio licences in areas where there is overlap with existing stations, mostly in Western Australia. SCA has flagged that it may challenge this ACMA rule as part of its push for “media reform.”
Reporting and Analysis: Steve Ahern