Anchorage in talks with Warburton as it chases Southern Cross Media

Under regulation requirements Anchorage would get eight metro radio stations, 35 regional stations and the Southern Cross television business.

While ARN Media is tussling with its $226m takeover target Southern Cross Media, its bidding partner Anchorage Capital Partners has been busy looking for executives to run the assets if the bid succeeds.

One well- known name in the media world that the Sydney-based private equity firm is understood to have had discussions with is outgoing Seven West Media boss James Warburton, who announced his departure from the free-to-air television broadcaster last year.

Under Mr Warburton’s watch, Seven West Media Group bought a stake of about 19 per cent in ARN – which owns the KIIS FM and Gold radio networks – and there’s always been some talk that Seven West Media could be part of the media consolidation taking place.

Mr Warburton previously teamed up with Anchorage Capital Partners and CVC to run Prime Media Group when the private equity firm was planning to take over the business.

The deal did not eventuate because he was hired by the Kerry Stokes-controlled Seven West Media to be chief executive.

Mr Warburton, who previously ran Archer Capital’s V8 Supercars and outdoor advertising business APN Outdoor, once owned by Quadrant Private Equity, is believed to be interested in returning to the private equity world and has had talks with various firms about future opportunities.

Meanwhile, another question is whether Anchorage Capital Partners will follow through on its decision to buy part of Southern Cross Media Group, with the buyout fund still in deep due diligence.

Traditional media assets can be snapped up for low prices, but which companies are interested in buying them when they are ready to sell in the future is the question.

Tensions have been escalating between Southern Cross Media and one of its shareholders, Spheria Asset Management, which plans to call an extraordinary general meeting over the lack of progress on a deal.

Southern Cross is yet to accept or reject ARN’s offer, and the understanding is that the delay centres on a KPMG report the merged entity’s value that Southern Cross requested.

ARN argues that the report cannot be produced until Southern Cross provides more information.

Southern Cross responded to the EGM threat on Friday with a statement to the market saying it had not received any notice of a requisition, remained constructively engaged in evaluating the proposal and had provided full financial and commercial due diligence information to the consortium.

It was critical to evaluate the new value of shares to properly assess the proposal, and the board had not yet received the information it required to complete the assessment, it said.

ARN and Anchorage Capital Partners’ offer for Southern Cross is complex. It involves them both buying the business, then creating two new companies with a mix of assets from Southern Cross and ARN.

The Jefferies-advised ARN Media is offering 0.753 shares, and Anchorage Capital Partners is offering 29.6c a share cash, for each Southern Cross share.

Anchorage Capital Partners would get eight metro radio stations, 35 regional stations and the Southern Cross television business – assets ARN Media would need to offload to appease media regulators, which forbid a broadcaster having more than two licences in a single market.

Southern Cross, which owns the Triple M and Hit radio networks and has a regional television business, last week reported a 71 per cent fall in net profit for the six months to December to $4.4m on the previous corresponding period.