In what should be the last update for 2023 in ARN‘s proposed takeover of SCA, the Australian Government review panel have reaffirmed their initial decision of unacceptable circumstances.
ARN and Anchorage Capital Partners will have hoped to be further progressed but instead will need to provide further submissions in the first week of January 2024.
The review panel will publish reasons for the decision soon on www.takeovers.gov.au.
I asked the chatGPT to summarise the document at takeovers.gov.au:
My question to chatGPT:
Please summarise why the panel did not like the ARN and sca amalgamation https://takeovers.gov.au/sites/takeovers.gov.au/files/2023-12/MR23-046.pdf.
The response:
The panel did not like the ARN and SCA amalgamation because it considered that the proposed transaction would result in a substantial lessening of competition in the radio advertising market in several metropolitan areas⁶. The panel also found that the proposed separation of the radio and television assets of ARN and SCA was not likely to be effective or enforceable, and that the undertakings offered by ARN and Anchorage Capital were insufficient to address the competition concerns⁶. The panel therefore made a declaration of unacceptable circumstances and orders to prevent the implementation of the proposed transaction⁶.
Some additional sentences are:
- The panel's decision was based on the submissions and evidence from various parties, including the Australian Competition and Consumer Commission, the Australian Communications and Media Authority, and other radio broadcasters⁶.
- The panel's orders required ARN and Anchorage Capital to withdraw their indicative proposal, cancel any agreements or arrangements relating to the proposed transaction, and not acquire any further shares or interests in SCA⁶.
- The panel's reasons for its decision are set out in its media release⁶ and its reasons for decision document, which are available on its website⁵.
Source: Conversation with Bing, 12/22/2023
(1) Takeovers Panel Annual Report 2022–23. https://takeovers.gov.au/sites/takeovers.gov.au/files/2023-10/TP-AR-22-23.pdf.
(2) Home | Takeovers Panel. https://takeovers.gov.au/.
(3) Why ARN wants to acquire SCA and its plans for Hit and Triple M. https://www.mediaweek.com.au/why-arn-wants-to-acquire-sca-and-its-plans-for-hit-and-triple-m-networks/.
(4) ARN continues takeover drive; SCA pumps the brakes: 'There is no .... https://mumbrella.com.au/arns-takeover-sca-2024-810831.
(5) Radio wars: ARN makes shock bid for SCA - mumbrella.com.au. https://mumbrella.com.au/radio-wars-arn-makes-bid-to-acquire-southern-cross-austereo-803302.
(6) ARN Media proposal to acquire SCA - radiotoday.com.au. https://radiotoday.com.au/arn-media-proposal-to-acquire-sca/.
(7) A Guide to Takeovers in Australia | Publications | Insights & Events .... https://www.squirepattonboggs.com/en/insights/publications/misc/a-guide-to-takeovers-in-australia.
(8) KWM’s Guide to Takeovers and Schemes in Australia - KWM. https://www.kwm.com/global/en/insights/latest-thinking/publication/kwms-guide-to-takeovers-and-schemes-in-australia.html.
(9) Contents - The Allens handbook on takeovers in Australia. https://content.allens.com.au/the-allens-handbook-on-takeovers-in-australia/contents/.
(10) undefined. http://creativecommons.org/licenses/by/3.0/au/deed.en.
(11) undefined. http://creativecommons.org/licenses/by/3.0/au/legalcode.
(12) undefined. http://www.pmc.gov.au/government/.
I asked chatGPT:
But wouldn't that mean there are two players like before: before it was ARN and SCA. Now you have SCA and ARN combined with Anchorage Capital. so it's two operators before and two different operators now?
Answer:
No, that is not correct. The proposed transaction would not create two different operators, but one merged entity that would control both ARN and SCA's radio stations in each metro market.
Anchorage Capital would not be a separate competitor, but a joint owner of the merged entity with ARN. Therefore, the proposed transaction would reduce the number of independent radio operators in the Sydney market from four to three: the merged entity, 2GB, and Nova Entertainment.
This would likely result in a substantial lessening of competition in the radio advertising market, as well as the quality and diversity of radio content for listeners. That is why the panel did not like the ARN and SCA amalgamation and made a declaration of unacceptable circumstances and orders to prevent the implementation of the proposed transaction.
I asked:
Surely there would be another non-related entity or entities owning those three divested stations creating more competition?
Answer:
According to the web search results, the proposed transaction between ARN and SCA would involve a separation of the radio and television assets of both companies into independent ownership by each of ARN and Anchorage Capital². This means that ARN would have to divest three of its stations in Sydney: WSFM, CADA, and either KIIS 106.5 or Triple M². However, it is not clear who would be the potential buyers of these stations, or whether there would be any regulatory or competitive barriers to their sale. The web search results do not provide any information on the possible candidates or scenarios for the divestment of the three stations. Therefore, I cannot answer your question with certainty. However, I can speculate that some of the existing radio operators in the Sydney market, such as 2GB, smoothfm 95.3, Nova 96.9, or ABC Sydney, might be interested in acquiring one or more of the divested stations, depending on their format, audience, and price. Alternatively, some new entrants or investors might see an opportunity to enter the Sydney radio market by purchasing one or more of the divested stations. However, these are just my guesses, and they are not based on any factual evidence or sources.
Source: Conversation with Bing, 12/23/2023
(1) Why ARN wants to acquire SCA and its plans for Hit and Triple M. https://www.mediaweek.com.au/why-arn-wants-to-acquire-sca-and-its-plans-for-hit-and-triple-m-networks/.
(2) ARN joins private equity bid for SCA's Hit & Triple M radio networks. https://www.mediaweek.com.au/arn-joins-private-equity-bid-for-sca-and-its-hit-and-triple-m-radio-networks/.
(3) Radio wars: ARN makes shock bid for SCA - mumbrella.com.au. https://bing.com/search?q=ARN+and+SCA+divestment+of+radio+stations.
(4) Radio wars: ARN makes shock bid for SCA - mumbrella.com.au. https://mumbrella.com.au/radio-wars-arn-makes-bid-to-acquire-southern-cross-austereo-803302.
(5) ARN takeover bid for SCA - AdNews. https://www.adnews.com.au/news/arn-takeover-bid-for-sca.
(6) Ben Shepherd's Signal - Unpacking the investment thesis of the ARN bid .... https://www.adnews.com.au/news/ben-shepherd-s-signal-unpacking-the-investment-thesis-of-the-arn-bid-for-sca.
I asked:
So in your last two sentences there would be more competition in the Sydney market with other entities purchasing the divested stations?
Answer:
Not necessarily. The panel did not accept the argument that the divestment of the three stations would restore or enhance competition in the Sydney radio market. The panel considered that the proposed transaction would create a merged entity that would have a dominant position in the market, with a combined market share of 20.1%, and the top two FM stations and breakfast shows. The panel also doubted the effectiveness and enforceability of the proposed separation of the radio and television assets, and the adequacy of the undertakings offered by ARN and Anchorage Capital to address the competition issues. Therefore, the panel did not approve the proposed transaction and made a declaration of unacceptable circumstances and orders to prevent the implementation of the proposed transaction.
Conclusion (by me).
Even if the combined entity divested three radio stations in order to satisfy section 54 of the Broadcast Services Act, because of the dominance of a combined market share of 20.1% of the market.
Therefore the constraints of the transaction are 1. Divesting by virtue of section 54 of the Broadcast Services Act but also 2. of reduced market choice.
Thank you
Anthony, "I learn! I learn!" says Manuel of Fawlty Towers, Strathfield South in the land of the Wangal and Drug Peoples of the Eora Nation
I noticed that the chatGPT's response produced an amusing response of the ABC interested in buying!
Amusing.
Thank you.
I also note that Smooth and Nova are owned by Nova Entertainment (Illyria) and 2GB and 2UE are owned by Nine Entertainment.
So they cannot buy an interest in three divested stations.
Could the SuperRadioNetwork buy one of the three divested stations or another entity or entities buy the other two divested stations.
The answer is that there would still be a market dominace by the ARN, SCA and Anchorage Capital.
On the other hand, there is an assumption that the amalgamated entity will continue to sustain the same 20.1% media audience in the future.
The use of chatGPT is great for summarising data. Just like its inability to solve an insolvable trinomial quadratic equation of the form ax^2 + bx + c, it too does not compute the ownership relations including the ABC as possible candidates to purchase the divested stations.
This is because the commercial stations are part of a two licence group such as Nova and Nine. Goodness, the ABC is iwned by the government.
Thank you
Anthony, I love AI but not treat all info as gospel especially when it comes to ownership, Strathfield South, in the land of the Wangal and Darug Peoples of the Eora Nation