New kingmaker turns up in Southern Cross battle

Spheria Asset Management has lifted its interest in rival broadcasters ARN Media and Southern Cross Media Group.

Spheria Asset Management is shaping up to have influence in ARN Media’s plans to buy Southern Cross Media Group after lifting its interest in the two rival radio broadcasters.

As of January 18, Spheria increased its holding to 7.01 per cent from 5.01 per cent in Southern Cross after it became a substantial shareholder on January 12.

Also on January 18, Spheria emerged with a holding of 5.7 per cent in ARN Media.

It is understood that the institutional investor is backing the companies because it sees strong upside from a merger, where it creates a broadcasting powerhouse that generates strong cashflow.

In the background remains media entrepreneur Antony Catalano and his backer Alex Waislitz who have a stake in Southern Cross worth less than 5 per cent.

Things continue to move slowly on the transaction between the pair, with ARN and Southern Cross remaining in talks after the offer by ARN first landed in October for the Triple M and Hit radio network owner.

ARN Media, advised by Jefferies, has the KIIS FM and Gold radio networks.

Together with Anchorage Capital Partners, it lobbed a $200m-plus offer for Southern Cross. Before Southern Cross gives its recommendation, it was to carry out due diligence on ARN Media.

Holding a 19.9 per cent stake in ARN Media is Seven West Media while News Corp, publisher of The Australian, holds 13 per cent.

ARN made the Southern Cross bid after amassing a 14.8 per cent stake mid-year at $1.08 per share when shares were 72c.

ARN Media has paid top dollar for some of the most highly rated talent in radio broadcasting with Sydney breakfast duo Kyle Sandilands and Jackie ‘‘O’’ Henderson recently renewing a contract with the broadcaster for 10 years.

Shares in ARN Media and Southern Cross are both at $1.