ACCC approves merger between Seven West and Southern Cross Media
Australia’s competition watchdog has approved the proposed merger between Seven West Media and Southern Cross Media, paving the way for the two ASX-listed media giants to form a new $400 million company.
Explaining its reasons for the approval on Thursday, the Australian Competition and Consumer Commission said the two companies compete in different media markets and the merger would not disrupt the way local businesses and media agencies advertise in regional areas.
Additionally, the ACCC found that the new company would not reduce competition in markets for the supply of media content to consumers.
ACCC deputy chairman Mick Keogh said: “The ACCC’s investigation found that Southern Cross and Seven are not close competitors in terms of content. Southern Cross focuses primarily on radio and audio entertainment, while Seven focuses on print news and general TV.”
The ACCC’s investigation also found that the new company will continue to face “strong competition from digital media” as consumers shift to online and digital channels.
“Australian media markets are transforming due to consumers’ increasing preference for digital media,” Mr Keogh said.
“This shift is leading advertisers to invest more 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 post-acquisition.”
“Ultimately, we found that the acquisition was unlikely to significantly reduce competition in any market.”
The regulatory approval marks a significant step towards the merger, which was first announced by both companies in late September.
If successful, the deal will create a free-to-air TV, audio and digital broadcasting giant that will transform Australia’s media landscape.
Seven West’s flagship TV channel features a host of popular shows including My Kitchen Rules and Home and Away.
It also holds the broadcasting rights for AFL and cricket.
As well as TV, its digital and publishing assets include Perth’s The West Australian newspaper and The Nightly, a free national online news service.
Southern Cross owns Hit Network, Triple M and the Listnr app.
Seven West shareholders will receive 0.1552 Southern Cross shares for each Seven West share, resulting in Southern Cross shareholders owning 50.1 percent of the combined group and Seven West shareholders owning 49.9 percent.
The boards of directors of both companies support the merger, which must receive shareholder approval before going into effect.
Billionaire Kerry Stokes owns 40 percent of Seven West through his conglomerate Seven Group Holdings and serves as the company’s chairman.
He supports unification and has said he would step down as president if it happens.
“The combination of these two companies brings together the best media content creators in the country, providing significant financial and strategic benefits to Seven West shareholders,” he said in a statement in September.
“This is an important merger because the combined company will be able to better serve both metropolitan and regional audiences, listeners, partners and advertisers.
“It will strengthen the nationwide television, audio, digital and broadcast operations of each of the combined businesses.”
Outlining the “strategic and financial benefits” of the deal, the two companies said the combined group would deliver “a cohesive content strategy combining news, sports and entertainment”.
They also said the new company will be able to leverage the “power of scaled data and insights” across platforms to accelerate growth in audiences and revenues.
Shares in both Seven West and Southern Cross rose in morning trade on Thursday following the ACCC’s approval.
Seven West rose 1.5 percent to 14 cents, with a market value of $211 million, while Southern Cross rose 1.83 percent to 83 cents, with a market value of $199 million.
