Southern Cross Media Group has confirmed that it has revived attempts to sell its regional television business and is talking to prospective buyers.
While handing down its full year result on Thursday, the Hit Network and Triple M radio broadcaster said it had re-started a strategic review of its non-core regional television assets and was in “active negotiations with several parties with an interest in acquiring those assets”.
It comes as the group reported a 1 per cent fall in annual revenue for the year to June to $499.4m and a $224.6m loss.
DataRoom reported on July 24 that the broadcaster may be about to sell its television unit to the Paramount Global-owned Network Ten.
The understanding is that talks remain ongoing between Southern Cross and Ten about a potential acquisition by the latter.
For the year to June, the Southern Cross television unit generated $97.5m of revenue and $13.3m of earnings before interest, tax, depreciation and amortisation, down 28.9 per cent from the previous corresponding period.
It blamed market pressures and audience challenges, which come at a time that advertising falls across the industry in a soft economy and viewers are increasing choose to stream content over watching free-to-air television.
Southern Cross said that a sale of its regional television assets would enable the company to focus on optimising its leading radio and digital audio assets, led by LiSTNR, HIT and Triple M.
The group has $107.5m of net debt, just under its $127m market value as it paid an interim dividend but not one for the second half of the year.
The sale talks are playing out after concerns surrounding the future performance of the Southern Cross television unit and declining advertising revenue prompted Anchorage Capital Partners to walk away from a joint acquisition plan of the company with rival ARN Media.
Anchorage was to take a selection of both assets from both companies to appease regulators, including the television business.
As well as the future earnings outlook, the $50m-odd long-term BAI contractual obligation for outsourced television broadcast transmission was also a deterrent for Anchorage.
Now there are questions whether Antony Catalano and Alex Waislitz step up and buy some of the assets within Southern Cross Media Group in partnership with ARN, although this could be preceded by Mr Catalano and Mr Waislitz, who own digital and regional print publisher Australian Community Media, first increasing their stake in Southern Cross from 14.2 per cent.
ACM has made two previous merger proposals for Southern Cross that have both been rejected by the company.
Seven West Media may also be a buyer for three licenses of the Southern Cross television business, including Tasmania and central NSW.
Working with Southern Cross has been investment bank UBS.
Southern Cross Media, which has 99 radio stations, had placed the television operation that broadcasts the content of other networks up for sale in 2022, but received no conforming offers.
It has an affiliation agreement with Network Ten to broadcast its content.
Market watchers expect any deal struck would be at a nominal sum.
Complicating matters for Ten has been the takeover battle playing out with its parent company in the United States, CBS owner Paramount Global, which had earlier agreed a deal to merge with David Ellison’s Skydance Media.
Skydance would spend more than $US8bn on the transaction, with Shari Redstone selling her family’s controlling stake.
However, the Wall Street Journal reported last week that Edgar Bronfman had submitted a $US4.3bn bid for Redstone’s National Amusements and Paramount Stake, which would scuttle the transaction.
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