SCA chair Heith Mackay-Cruise said that the company considered a number of offers before settling on a merger deal with Seven West Media. He said SCA had been working on a tie up for the last two years.
https://adnews.com.au/news/sca-considered-a-number-of-offers-before-going-with-seven
Ah yes, the famous move of letting your partner walk away from regional TV before luring them to essentially re-acquire it.
Wonder what economic sense that made.
This situation isn’t about SCA seeking to scale up by acquiring a free-to-air network. Rather, it’s an exit strategy for Kerry Stokes — a way to offload assets weakened by scandals, poor financial management, and a string of costly long-term sports rights deals that underpin Seven’s annual programming slate.
Put simply, this move is Stokes’ tacit admission of those failures, disguised as a supposedly “highly transformative” merger. In reality, it would make Seven a smaller yet more expensive component of a larger SCA group, rather than the grand, Nine-Entertainment-style powerhouse that Stokes and other SWM shareholders likely imagine.
Stokes knows he needs this deal to go through. His business instincts have faltered, and his ego has caused him to miss better opportunities — as seen with the failed Fairfax Media approach, the rejected Prime Media reverse-takeover bid, and the ill-fated attempt to merge SWM with Paramount.
SCA’s board, for their part, appear eager to highlight the benefits of Seven’s proposal because it would pave the way for Comcast/NBCUniversal to eventually acquire Seven with minimal resistance. However, SCA’s shareholders seem to view a potential Nine bid as a far more attractive prospect.
SCA CEO John Kelly will move to head up audio in the merged entity
Independent experts employed by Southern Cross Austereo to audit its proposed merger with Seven West Media have given the deal an enthusiastic green light. The approval has been comprehensively rejected by investor Sandon Capital, which holds around 11.3% of SCA stock.
Financial advisory firm Kroll said the merger was fair, reasonable and in the best interests of SCA shareholders in the absence of a better offer. On Kroll’s analysis, SCA will be contributing 46.7% to 47.3% of value but will own 50.1% of the new entity. This sits on the higher end of what would be considered to be the “fair range” (42.2%-51.9%).
But Sandon founder and managing director Gabriel Radzyminski told Mumbrella the merger undervalues the company, moves away from a clean audio-only strategy and is designed to reduce the influence of investors such as itself.
Seven cuts deeper on costs as ad market slows
“Bringing together the complementary assets and brands of Seven West Media and Southern Cross will create a truly national, diversified media organisation, one with extensive scale and reach across free-to-air television, streaming, audio, digital and publishing assets,” CEO Jeff Howard told the AGM.
“The possibilities will bring a new energy to Seven West Media.
“Building our digital audience through both content creation and cross-promotion, we will be able to extend our story telling into new audience access points.
“For us, that could be podcasting on LiSTNR; for Southern Cross, it could be more video.
“What we can do when we put our creative minds together will be very exciting. Our news will be even more comprehensive and available everywhere. Our sport even more insightful, powered by a true audio plus video opportunity. And our ability to weave talent into storytelling across all platforms will drive entertainment to a new level.
“Our intention is simple: to build one of Australia’s leading integrated media platforms, combining world-class content creators with unmatched local and national audience reach and engagement.”
And it’s a done deal: ACCC clears Seven West Media and Southern Cross merger
From ACCC
The ACCC will not oppose the proposed acquisition of Seven West Media Limited (ASX:SWM) by Southern Cross Media Limited (ASX:SXL).
Seven owns and operates free-to-air TV broadcaster the Seven Network, as well as the publishers of The West Australian, the Sunday Times, 11 suburban newspapers and 19 regional publications in Western Australia. Seven does not own any radio licences or assets.
Southern Cross operates 104 FM, AM and digital commercial radio stations through the Triple M and HIT brands and holds 88 radio licences in metropolitan areas and regional areas of Australia. Southern Cross also produces over 800 podcasts, 50 music stations and live sports coverage, but does not publish any newspapers or own any TV licences or assets.
The ACCC’s review considered how closely Seven and Southern Cross compete across different markets, including in the supply of advertising opportunities, the supply of media content to consumers and the acquisition of media content from producers in Australia.
In its investigation, the ACCC focussed on various local markets in regional Western Australia where Southern Cross and Seven are the main traditional media outlets offering advertising opportunities for local businesses.
“We found that Southern Cross and Seven attract different advertisers and are not close competitors for the supply of advertising opportunities in these regions,” ACCC Deputy Chair Mick Keogh said.
“Local businesses and media agencies seeking to advertise in regional areas will continue to have a range of options in these local markets, including online and social media advertising with geo-targeting capabilities.”
The ACCC also considered whether the proposed merger could lessen competition in markets for the supply of media content to consumers or for the acquisition of media content from producers.
“The ACCC’s investigation found that Southern Cross and Seven are not close competitors for content. Southern Cross is primarily focused on radio and audio entertainment, while Seven is focused on print news and general TV,” Mr Keogh said.
Also important in the ACCC’s decision was the impact of broader industry trends on competition, including the rise of streaming services and the significant growth of online advertising.
“Australian media markets are being transformed by consumers’ growing preference for digital media,” Mr Keogh said.
“This shift is leading advertisers to invest more heavily in online and digital channels.”
“Owners of traditional media platforms such as radio, free-to-air television and newspapers will continue to face strong competition from digital media. Southern Cross will be no exception, even after the acquisition,” Mr Keogh said.
“Ultimately, we found that the acquisition would be unlikely to substantially lessen competition in any market.”
Further information can be found on the ACCC’s public register: Southern Cross Media Limited- Seven West Media Limited.
Click here for notes to editors and background.
The parties have done a fantastic job to make this path as clear as possible including the movement of SCA TV stations across to SWM to clear ACCC hurdles.
I think Sandon may just need to sell while they’re ahead.
SCA are buying back assets they once sold off for being a debt burden, while also acquiring Seven’s metro stations and the former Prime/GWN stations — hardly a fantastic outcome, in my opinion.
They’re effectively re-entering a sector they previously wanted to exit, and doing so by purchasing a larger set of TV assets than they ever held before, which doesn’t inspire much confidence either.
Kerry Stokes clearly viewed Nine as a threat to his plan to ‘abandon ship’. He knew that unless he made Seven West appear attractive enough, SCA would likely pivot toward Nine — leaving him to deal with ARN instead.
Now, I’m just waiting to see the many ‘cost-saving’ measures the merged entity’s board will inevitably roll out, and how the new, leaner network performs under the ownership of a company primarily driven by audio.
Can’t be any worse than when Austereo was bought out by a regional television company 
How is it done? The Shareholders of Seven still need to vote for this.
Outside of Sandon, are there any other major shareholders with objections to the deal?