This was published 8 years ago
Nine and Southern Cross in multi-year affiliation deal
By Dominic White
Nine Entertainment Co and Southern Cross have announced a five-year affiliation deal worth almost $500 million in a dramatic switch from their respective affiliates, billionaire Bruce Gordon's WIN Corp and Ten Network Holdings.
In the landmark deal, revealed by Fairfax Media on Friday afternoon, Southern Cross will pay Nine 50 per cent of the advertising revenue it generates as a result of broadcasting Nine's signal to regional Queensland, Southern NSW and regional Victoria.
Under the deal, which begins on July 1, the Southern Cross television brand will disappear and Nine's brand will appear on its channels in regional Australia for the first time in its history.
The metropolitan and the regional broadcaster have been locked in intense negotiations in the past fortnight working to strike a deal that will end their long-standing relationships with WIN and Ten.
Nine and Southern Cross are switching affiliates.Credit: Phil Carrick
The news will inevitably be seen by some as a precursor to a potential merger if the government abolishes the reach rule which prevents mergers between metro and regional television networks. Nine acquired a 9.9 per cent stake in WIN in March. Nine chief executive Hugh Marks told a Senate enquiry on Friday that buying a regional network was "not high" on Nine's "priority list".
WIN has been in talks with Ten about switching to the lower-rating network, whose audience and revenue performance has improved significantly in the past year. Bermuda-based Mr Gordon owns 14.99 per cent of Nine and 14.99 per cent of Ten.
Under the deal, Southern Cross will provide national sales services for Nine's NBN channel in Northern NSW and NTD9 in Darwin.
Southern Cross, which has been seeking to focus on its radio assets over television, which is under greater structural pressure, was paying Ten around 34 per cent of revenues, say sources.
But Grant Blackley, chief executive of Southern Cross, told Fairfax Media: "We hadn't come to a conclusion on what Ten's new rates would be and that rate arguably would have been higher."
A Credit Suisse broker note in January stated that under a six-month extension to WIN and Nine's affiliation deal on December 30, WIN's payments to Nine rose to equivalent to 47 per cent of WIN's revenue. Others maintained that WIN is only paying 39 per cent.
Mr Blackley said of Ten: "We will continue to deal with Network Ten in good faith to extend our agreement for Northern NSW."
Of the deal with Nine, he said: "Nine is a high-profile network with a very strong set of multi-channels and fundamentally has performed exceptionally well over a long period of time. It brings the attraction of picking up a larger audience and therefore a commensurate larger revenue opportunity."
Mr Marks said in a statement: "This is a great outcome for Nine and Southern Cross. We are confident that, together, we will offer a premium viewing experience for audiences and a best in class platform for advertisers."