Guessing game on Nine / Southern Cross talks
Speculation about a possible merger between Nine Entertainment and Southern Cross Media Group continues.
- Published by David Knox
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Speculation about a possible merger between Nine Entertainment and Southern Cross Media Group continues, as The Australian claims there have been talks between the two companies.
The catalyst for the merger and acquisition activity are likely changes in federal ownership rules governing the industry. Minister for Communications, Stephen Conroy, is to put to cabinet plans to relax the so-called “reach” rule that prevents metropolitan free-to-air TV networks from merging with their regional affiliates.
Such a move could force WIN TV’s Bruce Gordon to negotiate new affiliation agreements or even a sale of Perth and Adelaide stations.
On Friday there were also reports of Seven Network chairman Kerry Stokes buying a 5 per cent stake in TEN.
Neither Stephen Conroy, nor the opposition’s communications spokesman, Malcolm Turnbull, were commenting on the merger talks yesterday.
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The Financial Review reported (without naming sources) that Conroy’s plan will involve scrapping the 75% reach limit but imposing a local news requirement (as was done when restrictions on radio ownership were relaxed).
They also claim Conroy’s cross media test will divide the market into TV, Pay TV, Radio and Newspapers. Internet and Magazines ownership will not be counted. His plan would restrict media owners to ownership in any 2 of the 4 areas. Thus preventing News from expanding but allowing Nine and Southern Cross Austereo to merge their TV and Radio businesses.
Fairfax will be pissed though because they are locked into a declining print business and a radio network they have failed to sell for 2 years.
Southern Cross against stated their is no merger deal and they have only had discussions about affiliation after their deal with Channel 10 expires in June.
The $4b merger is just the media looking at a possible merger and adding up the value of Nine and Southern Cross Austereo, adding in $80-100m in back office savings, a couple of hundred million in synergies and coming up with a round figure of $4b as the merged entities market value.
@jason…thats a good point…and heres just another point…there is loads of content..and i mean loads… that dont see the light of day here in Australia… or if they do, they dont last long…prob cause most of it is rubbish… so i think alot will change this year…and Nine beating themselves on the chest… could mean arrogance breeds stupidity… just a thought…
@D@GP
Yes that is all possible. The hedge funds want to build Channel 9 back up and flog it. (at the moment they are falling behind 7 though). An 18 month timeframe was mentioned.
The Government would have to ditch the reach limits. There will still be some cross media restrictions though, mostly targeted at News because Conroy hates them, but Southern Cross is such big player in regional TV and National Radio (since they merged with Austereo) that they many not be permitted to become a national TV and Radio network. And they have been building integrated regional TV/Radio presence they won’t want to abandon.
WIN and Southern Cross are both rumoured to being interested in deals with Nine. First will be the affiliation contracts while they jockey for position in the regional TV market and try to stop the other one from gaining an advantage.
What happens after that will depend on the legislation and many things. It is all very complex and anything could happen.
If they ever get around to stopping problem gambling then Packer might want to get back into TV and buy back Channel 9 with Lachlan. Stranger things have happened.
I’m sure the idea of a national digital broadcasting infrastructure and the take-overs and mergers to produce National networks is something that Macquarie will have looked at. But the days of them charging massive fees to run such businesses are over.
@chadsterboi- Why would it be the end of Imparja? If Sthn Cross in NT is 7, and they went to 9, wouldn’t Imparja go to 7 or 10?
@camo2- History could well repeat itself. When 7 & 9 wouldn’t sell any program content to WIN, the then owner, Rupert M, went to LA, bought up everything worthwhile for the following year, shutting out 7&9, then sold programs to 7&9 on condition WIN got News, Bandstand, Rugby League, etc. WIN could well repeat this scenario, moreso now.
Camo2, haha! A two-part ABC miniseries called, ‘WINning: That’s Our Bruce.’ 🙂
how about this…Brucey G has programming deals or friends in places in USA that could mean…nine merges with STH Cross…Brucey buys TEN, alot of nines USA outputs change to TEN (because BG has friends in places) as well and remember Cricket TV rights still has to be decided yet…. so many different possibilities and outcomes…only time will tell…. i could see a miniseries by the ABC though LOL…or Bruce packs up and retires and his son sells WIN TV to Nine…
And what about the independent owned Imparja television who takes nine programming? Is this the end of them – as sth cross in that area is 7 ?
and don’t forget sports broadcasting rights and how this would affect them imparja in regional south Australia can show the cricket all day but win in Adelaide cannot unless sold out. We of course don not get 7,9,10 via foxtel either
Gentlemen, this is nothing more than an eventual takeover of the 9 Network by Southern Cross Austereo.
Messrs Rhys Holleran & Rod Brice (backed by Macquarie Bank) continue their obsession to engulf and devour Australian media.
80 radio stations across the country (many in unprofitable areas), together a handful of under performing TV licences (thanks to their TEN affiliation) doesn’t sit well with these guys, so – when an opportunity to grab a bargain arises, grab it with both hands.
Remember, the current owners of 9 intend to publicly list and sell the network in a few years – methinks their buyer has arrived.
A merger first, followed by full acquisition.
The current government will allow it to happen – before their absolutely ridiculous censorship laws come into force.
Roll on September.
Pertinax – your thoughts?
On the Gold Coast we get all the channels, the capital cities as well as the regional. We get 9 & NBN, 7 & Prime and 10 & Southern Cross 10. It does get confusing sometimes though.
The only thing that would compel WIN Corp to sell Nine Perth & Adelaide is if the 75% laws are scrapped, Southern Cross Austereo & Nine Entertainment merge, then Bruce makes a full take-over bid for TEN Holdings (he’s now their biggest shareholder at around 14%), merging WIN & TEN. Even then, Nine will still have to deal with WIN in regional WA, SA, Mildura & Griffith.
But if it’s just affiliation between SCA & Nine, then WIN can still keep Nine in all of WA, SA, Tas, Mildura & Griffith. SCA might have to stay with TEN in northern NSW.
If the rules on reach are changed I would hope that rules are also put in place to ensure that each regional region has some form of local news and other local productions.
Southern Cross already have relationships with the 3 main free to air networks.
I would expect if a transaction were to occur there would also be a rationalising of this so that the resultant company had channel 9 programming coast to coast and the relationships with 7 and 10 ceased.
If they could then get consistent brands across the country this would then lead to an overall reduction in costs.
They should look at doing the same thing in radio and go for Today or Fox or something new across the country for their pop/female brand and MMM for their rock/male brand.
In Tassie, our affiliates are Southern Cross (7), Win (9), Ten is a 50/50 project of both Win and Southern Cross.
So I guess you add Tassie to Adel and Perth possibly seeking new affiliation?
Maybe Win would seek to buy a bigger share of Ten and BG could use Ten as his main affiliate.
Affiliates agree to an arrangement where they take content from a capital city network and pay them a percentage of their revenue in return. The percentage varies from 30-34%. It gets around the 75% reach rule which stops the capital city networks owning stations nationwide.
We are getting ahead of ourselves with mergers at the moment.
For now the affiliation agreements for South Cross and WIN in some major markets are expiring soon. The rumour is that Southern Cross wants to dump the failing Ten in NSW and affiliate with Nine.
They could then merge if the reach limit is dropped by Conroy and there are no other anti-competitive objections.
Yes there are all sorts of cross connections between the various TV broadcasters in different parts of the country. Southern Cross has affiliations with 7, 9 & 10 in different areas. So any such move would likely trigger a game of musical chairs where lots of affiliation agreements change and stations could be bought and sold.
The end game would be 3 (or 2) national networks. With national pay TV and internet and the national success of shows like MKR and The Voice making national ad buying sensible the 75% reach rule is archaic and makes little difference anyway.
Gordon was rumoured to be likely to make a bid for Channel 9 if it went into bankruptcy and was sold by the receivers. Gordon also is a major shareholder in Ten, so a plan B could be merging WIN and Ten.
Wouldn’t that make it a little difficult in regional NSW, considering NBN – a wholly owned subsidiary of Nine – is Nine’s affiliate, whilst Southern Cross is Ten’s affiliate, meaning that Southern Cross would have to maintain relationships with all 3 commercial networks in some form?
Can someone explain what would happen to WIN TV and Imparja TV with their programming,as those two tv stations are the only two in the country that takes all Nine programs.
I am in regional Australia and at the moment Southern Cross broadcasts Channel 7 content into remote areas, such as Mount Isa, Alice Springs and that is a reach of about one million homes. In remote areas, Imparja Television carries all Nine programming.
So would I be right in saying, if this deal between Southern Cross and Nine is signed off, the big losses would be WIN TV and Imparja, as the only affiliate station for them left to merge with would be the Seven Network who is also affiliated with 7Prime along the east coast.
You wouldn’t expect after a deal Imparja, WIN and Southern Cross would double up and show all Nine programs into the same remote/rural districts, that makes no sence on sales etc. No viewer would have access to the 7 network in remote areas..
Can anyone please tell me if what I suggest is accurate. The biggest losers would be WIN and Imparja as they’d have to someone keep a float and join 7 who’s the only one left.?
Would be theorising only, so probably not much point. Remember to please limit caps in future, not necessary for every channel thanks.
k..thx tmorgan96..and the reason the regionals exist is that,in the interests of diversity,no network can broadcast to more than 75% of the country?It is confusing..tho the owned entity is restricted,the same program content reaches 100% of country anyway.curious country…harkens me back to the platypus..lol.Let me guess..Win is in Adelaide and Perth,but considered a regional.And this deal would give 9,10’s regionals?I need a drink.
Nicks,
The way that Australian TV works is that the regional affiliates generally pay for programming from their metro counterparts. I could elaborate further but it would take decades.
Basically, WIN is affiliated with Nine, Prime is affiliated with Seven, and Southern Cross is affiliated with TEN. ABC and SBS don’t need affiliates. There are some markets where WIN takes Seven or TEN programming. Its all confusing really.
Back on topic, this is very interesting. I wonder what Bruce can do to stop this… probably nothing,
Then expect Murdoch to “merge” his DMG radio network with TEN, 7 buys out Prime TV (and radio) and Bruce Gordon is left out in the cold.
Let me just ask one question tho..is an affiliate a station that is contracted to show a network’s programs,but is not owned by that network,either by law or choice;or merely the relationship between stations showing same network’s programming,irrespective of ownership?
What would happen to Southern Cross Ten?
I’m sorta new to oz tv..but I don’t know if I want to invest the time and effort to understand the ownerships,cross ownerships,affiliations,Win 9,regional metro, etc…it’s byzantine to me..If someone could come up with a family tree kind of graph explaining it,I might be able to understand that..lol