Merger to end media baron’s era
Broadcaster Seven will merge with Australia’s biggest radio network in a deal placing media baron Kerry Stokes as chair of the combined entity before retiring.
The Seven Network’s parent company is merging with Australia’s biggest radio owner in a deal that would see billionaire media baron Kerry Stokes retire.
Seven West Media and Southern Cross Media announced their all-scrip deal on Tuesday, in which Seven West shareholders will own 49.9 per cent of the combined group and Southern Cross shareholders, 50.1 per cent.
Under the merger plan, Stokes will chair the combined group’s board of directors until February, when he will retire and current Southern Cross chairman Heith Mackay-Cruise will take over.
“I have every confidence Heith will continue to guide the combined group successfully,” Mr Stokes said in a statement announcing the merger on Tuesday.
Seven West chief executive and managing director Jeff Howard will assume the same job in the new company, with Southern Cross chief executive John Kelly taking the new position as group managing director for audio.
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The companies said the merger would establish a leading integrated media company with size and reach across metropolitan and regional Australia.
“It will add strength to each of the combined businesses’ television, audio, digital and publishing operations across the country,” Stokes said.
In addition to the Seven Network, Seven West Media owns newspaper The West Australian, local and regional WA newspapers, and digital publication The Nightly.
Southern Cross Media owns 99 radio stations across Australia, including the Triple M and Hit networks.
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Mackay-Cruise said the combined group would offer a “one-stop shop” for advertisers to reach the critical demographic aged 25 to 54.
The group said the merger would allow the combined group to save $25 million to $30 million each year by eliminating duplicated corporate costs, consolidating offices and other measures.
Based on Monday’s share prices, Seven is worth $215 million and Southern Cross $201 million, meaning Seven shareholders are being asked to accept a slight discount in the merger.
Stokes told analysts on a conference call that the board took the view that a 50/50 merger ratio was fair for both sets of shareholders.
“Over term we see pretty strong shareholder return potential for shareholders as part of the transaction,” he said.
The deal still requires approval from both shareholders and regulators, including the Australian Communications and Media Authority.
Stokes would not address whether the companies would be forced to divest assets to avoid running foul of legal limits against one company controlling too much media.
“There may be some markets where there may be overlaps, but we are working through that, and we’ll keep everybody informed as that progresses,” he said.
In Tuesday morning trading, Seven West shares were up 7.1 per cent to 15 cents and Southern Cross shares had climbed 4.2 per cent to 87.5 cents.
-with AAP
