ACCC, AMCA will not object to Seven takeover of Prime

Seven’s takeover over Prime Media has been given approval by both the Australian Competition and Consumer Commission and Australian Communications and Media Authority, although it includes an enforceable undertaking by SWM to address diversity concerns.

Elsewhere the proposal faces some resistance from key Prime shareholders.

Here are the statements from both government authorities.

ACCC:

The ACCC will not oppose Seven West Media’s (ASX: SWM) proposed acquisition of Prime Media Group (ASX: PRT).

Seven West Media, a national media company with commercial television, publishing, radio and digital operations, is proposing to acquire Prime, its main regional television broadcasting affiliate. The ACCC notes recent media speculation that Prime’s shareholders may not vote in favour of the deal at their vote scheduled for Thursday 19 December.

The ACCC’s approval of the deal is made on the basis that Seven West Media will divest its Spirit and RedFM radio networks in regional WA to a third party to meet requirements of the Broadcasting Services Act 1992.

The ACCC’s investigation focused on regional WA, where Prime’s television broadcasts overlap with the distribution of Seven West Media’s print/online newspapers, including The West Australian and regional mastheads.

“In assessing this proposed deal, we considered the likely impact on competition in providing local news and content to audiences in regional WA,” ACCC Chair Rod Sims said.

“We found that Seven West Media’s largely weekly regional newspapers and Prime’s weeknightly TV bulletins generally cover different news stories.”

“We also looked at the likely impact on advertisers and news consumers across a number of different media markets, and concluded that the proposed acquisition was unlikely to substantially lessen competition or choice for advertisers and consumers,” Mr Sims said.

“Feedback from advertisers and advertising agencies suggests that Prime’s television and Seven West Media’s newspapers don’t compete closely for advertising revenue, and most advertisers have alternative ways of reaching their target audiences.”

The majority of Prime’s broadcast content is currently supplied by Seven West Media, but Prime produces its own regional news broadcasts in some areas, including regional WA where it broadcasts the GWN7 News on weeknights.

ACMA:

The Australian Communications and Media Authority (ACMA) has given prior approval for a transaction that will result in breaches of the media diversity rules. The transaction involves a proposed merger between Seven West Media Ltd (Seven) and Prime Media Group Ltd (Prime).

The transaction, if it proceeds, will result in breaches of media diversity laws in six regional areas in Western Australia.

The ACMA has accepted a court-enforceable undertaking from Seven that it will remedy the breaches in the areas affected within a specified period. The enforceable undertaking will involve the sale of Seven’s Redwave radio network.

The ACMA has also given prior approval for a transaction that will result in breaches of the media diversity and two-to-a market radio rules. This transaction involves the purchase of the Redwave radio network in regional Western Australia by Southern Cross Media Group Ltd (Southern Cross) from Seven.

This purchase will also cause a breach of the limitation on directorships, as Southern Cross would be in a position to exercise control of more than two commercial radio broadcasting licences in Bunbury through its subsidiary Regional Broadcasters Australia Pty Limited.

To remedy these breaches, the ACMA has accepted a court-enforceable undertaking from Southern Cross to divest a commercial radio licence in Bunbury.

Updated: Prime shareholders Bruce Gordon and Antony Catalano have voted down a takeover by Seven. Seven says it is disappointed. Prime Media Chairman John Hartigan says majority of other shareholders voted in favour. Seven acquires 14.9% shares in Prime.