Takeover bid for Southern Cross Media

Broadcaster ARN and private equity investor Anchorage Capital (ACP) have made a takeover bid for radio and television company Southern Cross Media.

The parent company of Southern Cross Austereo, it operates 99 radio stations, LiSTNR and 96 TV signals, and provides national sales representation for 56 other radio stations and 39 TV stations.

As part of the Proposed Transaction, it is intended for the radio and television assets of ARN and SCA to be separated into independent ownership by each of ARN and ACP subject to all necessary regulatory approvals. The Proposed Transaction and Separation will result in two separate, media organisations that will compete independently of each other on metro and regional radio, and more broadly.

ARN Media Chairman, Hamish McLennan (pictured) said: “The Board has carefully considered numerous options to continue the company’s growth and believe this transaction would be transformative for both sets of shareholders. ARN’s regional radio footprint would be almost doubled while we would maintain a focused metro radio network, underpinned by the recognised KIIS and Triple M brands in metro areas. The increased scale supports the potential for future index inclusion and liquidity once the transaction is complete.”

ARN CEO and Managing Director Ciaran Davis said: “There is a significant value creation opportunity bringing together certain ARN and SCA radio and digital audio assets. ARN is ideally positioned to support and operate an expanded regional radio network and as a combined group of scale in digital audio, positioned to compete efficiently and effectively with international competitors.”

SCA said in a statement, “The proposal is unsolicited, complex, and highly conditional. SCA recommends shareholders take no action in relation to the Indicative Proposal from ARN and ACP. The Indicative Proposal is subject to the unanimous recommendation of the SCA Board, due diligence, shareholder and regulatory approvals from both the ACCC and ACMA, and other terms and conditions. The Board of SCA will consider the Indicative Proposal and has appointed Grant Samuel as its financial adviser and Corrs Chambers Westgarth as its legal adviser to help assess the Indicative Proposal. SCA will update shareholders as required.”

Mediaweek speculates the takeover could also mean SCA’s ambitious $200m play to re-sign Kyle and Jackie O would be abandoned. If that was the case, it could mean that ARN doesn’t have to match the huge offer SCA made to secure the two KIIS 106.5 breakfast stars for a new contract period.

Anchorage Capital currently has only a handful of investments. The company lists a portfolio of five businesses, two of them based in New Zealand. Its major investment is in retailer David Jones. Anchorage invested in the company in March this year when it became the operator of its network of 43 stores around Australia and New Zealand.

It’s too early to know what sort of impact the arrival of Anchorage would have on staff numbers. It could put a freeze on contract negotiations and it would be expected staff numbers would be under the microscope.