Kerry Stokes’ share raid could turn Southern Cross hunt into a brawl

High-profile media proprietor Antony Catalano remains unfazed by Kerry Stokes-chaired Seven West Media’s share raid on ARN Media, potentially scuttling his plans to beat ARN in the race to snap up Southern Cross Austereo.

ARN, the home of KIIS FM and Pure Gold radio stations, and Catalano are both chasing ASX-listed Southern Cross, and the process could turn into an all-out brawl after media and mining mogul Kerry Stokes inserted himself into the picture by acquiring a near 20 per cent stake in ARN at the weekend.

Rich lister Antony Catalano is looking to merge his Australian Community Media (ACM) business with Southern Cross Austereo.Credit: Jesse Marlow

Catalano, who is looking to merge his Australian Community Media (ACM) business with Southern Cross, has crossed swords with Stokes before, agitating against his bid for Prime Media Group in 2019.

However, he praised Stokes’ raid on ARN’s register on Monday. “It’s clever. They’ve locked in a good position for themselves,” Catalano said, adding that with Seven West sitting on its register, ARN’s management would have to be mindful of what Stokes did next.

ARN’s initial raid on Southern Cross in June greased the wheels for its non-binding offer to acquire 100 per cent in October. But Catalano – backed by billionaire businessman Alex Waislitz – has lobbed a counteroffer to Southern Cross.

He said the ACM offer was an easier option for shareholders, combining ACM’s key newspaper titles, including The Canberra Times, with Southern Cross’ metro and regional radio assets. Under the terms of the offer, Catalano would receive a 20 per cent stake in Southern Cross and retain his digital real estate business.

Seven West Media chairman Kerry Stokes.Credit: Trevor Collens

Publicly and privately Seven has said the raid on ARN isn’t a smokescreen for a future takeover bid for either Southern Cross or ARN. However, Seven could seek a seat on ARN’s board. A senior source close to the company and not authorised to speak publicly said the Stokes camp remained undecided on whether to get a Seven director installed on ARN’s board.

Several industry sources, who were not authorised to speak publicly, said Stokes had eyed off radio assets for some time and was in conversations with both companies before becoming ARN’s largest shareholder, via an on-market buy of 14.9 per cent and a further 5 per cent through a cash-settled equity swap with banking company Barrenjoey.

“Our investment in [ARN] aligns with our strategic pillar of partnering for growth, and we look forward to continued collaboration across our two companies,” Seven West Media boss James Warburton said in an ASX update on Monday morning.

Close watchers of Stokes have seen similar moves out of his playbook before. He recently took a stake before jostling for greater influence in construction materials company Boral. But media regulations won’t allow his usual “creep” tactics (buying up 3 per cent every six months) to work with ARN.

Meanwhile, News Corp, which also owns 13 per cent of ARN, is locked out of any further action on ARN due to its incoming chairman Lachlan Murdoch’s own private ownership of radio network Nova Entertainment.

E&P Capital analyst Entcho Raykovski didn’t expect Seven to try and acquire the remainder of ARN in the near future, but said it gave Seven an opportunity to have a say in any media consolidation that ensued.

ARN Media chief executive Ciaran Davis is ready to do whatever it takes to get one of the most ambitious media deals in recent memory across the line.Credit: James Brickwood.

ARN chief executive Ciaran Davis said on Monday the investment is “absolutely a positive”, but he remained coy on further consolidation down the line, his focus staying on its own takeover proposal.

“We know we’re undervalued from a market perspective, and what we’re doing is about driving shareholder value for our current shareholders, and if that down the road involves some form of further consolidation, we’ll review that at the right time.”

While Southern Cross directors have remained tight-lipped on intentions, when contacted new boss John Kelly said the company would have more to say later this week.

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