Networks join forces to create $416m media monolith
Derek Rose |
A media merger uniting the corporate owner of the Seven Network with the parent company of the Triple M and the Hit radio networks appears to be a hit with investors.
Shares in Seven West Media and Southern Cross Media received a significant bump after the all-scrip transaction that will reshape Australia’s media landscape was announced on Tuesday.
Seven West shares climbed 7.1 per cent to a nearly four-week high of 15 cents, while Southern Cross shares rose 6.0 per cent to a year and a half high of 89 cents.
Under the terms of the deal, which still must be approved by regulators and shareholders, Seven West investors will own 49.9 per cent of the combined group and Southern Cross shareholders 50.1 per cent.
Under the merger plan, billionaire media baron Kerry Stokes will chair the combined group’s board of directors until February, when he will retire and 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.
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,” Mr Stokes said.
As well as 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 stations across Australia, making it the country’s biggest radio broadcaster.
Mr 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.
Mr Howard told analysts the board took the view a 50-50 merger ratio was fair for shareholders of both companies.
“Over term we see pretty strong shareholder return potential for shareholders as part of the transaction,” he said on a conference call.
Mr Howard 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.
Earlier in 2025, Seven West paid $3.75 million to buy Southern Cross’s TV regional licences, including in Darwin and Tasmania.
AAP
