Gordon, Catalano block Seven West bid for Prime

The fight for Prime Media has become a three-way battle between Seven West Media, a media mogul and an emerging media player.

WIN owner Bruce Gordon. Picture: John Feder.

The fight for control of Prime Media has escalated into a three-way battle between Seven West Media, a veteran media mogul and an emerging media player.

Small but strategically significant, Prime Media has become the key media asset in Australia’s regional media war, with billionaire WIN Corporation owner Bruce Gordon and Australian Community Media boss Antony Catalano both announcing they would reject Seven West’s $64m takeover bid for control of Prime, instead staking their own claims for ownership.

With Mr Gordon holding more than 11 per cent of voting shares in regional rival Prime, and Mr Catalano and Alex Waislitz holding almost 15 per cent, it now appears impossible for the bid to get up in its current form, which requires 75 per cent shareholder approval.

Rejection of the scheme of arrangement came despite a last-minute 3c-a-share fully franked special dividend sweetener by the Kerry Stokes-backed Seven.

A vote on the bid by Prime shareholders is due next week.

The decision is also a huge blow to the plans of Seven chief executive James Warburton, who signalled that the acquisition of their regional affiliate was a “game changer” when the takeover was announced in October.

The deal would see Seven offer 0.4582 of its own stock for each share in Prime plus the 3c special dividend.

At the time, Seven said the transaction would generate about $11 million in cost savings.

In a statement released to The Australian, Mr Gordon, who only flew into Australia last week, said: “We will not be supporting the scheme of arrangement as we believe that the proposal isn’t good value for current shareholders.”

Sources close to WIN have told The Australian its rejection had come because the company believed the Seven offer was a “lousy” deal.

Ironically, it was Seven West that sold Mr Gordon 39 million Prime shares in 2017 at 40c a share.

WIN sources also questioned why Mr Gordon would sell the Prime Media stock for Seven shares that he had calculated were worth half of what he paid, with Mr Gordon understood to be “very comfortable with his current holding”.

Mr Catalano has a 14.6 per cent shareholding in Prime with billionaire Alex Waislitz’s Thorney Investments, with many of those shares being purchased from Mr Gordon.

Mr Catalano issued a statement on Monday rejecting the deal.

He said the 3c dividend offer “does not change our view that the bid price by Seven West Media continues to represent unfair value for shareholders.

“As a result, we intend to vote against the scheme of arrangement.

“It is difficult to see how the special dividend is nothing more than a half-year dividend which existing shareholders might otherwise be entitled to.”

Both parties cited regulatory restrictions as a reason to reject the deal, with both Mr Gordon and Mr Catalano restricted from buying Prime outright by the “one-in-a-market” and “voices” rule which restricts ownership of competing regional media assets.

Mr Gordon blamed “out of date” media rules for the fact there was only one offer on the table.

His statement indicated he would be interested in buying Prime if he could.

“There is only one offer right now for Prime because other potential buyers are constrained by out of date media ownership legislation.

“If the Minister for Communications was serious about the future of regional media companies, he would hasten the removal of the ‘one to a market’ and ‘voices’ rules in regional Australia and let Prime media have more than one potential buyer.”

Mr Catalano made clear his interest in owning Prime and putting together a regional media powerhouse with Mr Waislitz.

“When we purchased Australian Community Media, we stated publicly that our intention was to build Australia’s largest and diverse multi-media regional business.

“Prime Media was always part of our strategic focus and our interest in the business was made clear to Prime and Seven West earlier this year.”

In a sharp rebuke, a Seven spokesman said Mr Gordon’s ambition to control Prime was “not achievable” under the current affiliation agreement and “his ambitions to control both licences would diminish Prime”.

“The changes Mr Gordon appears to be advocating for are in his favour as he also owns WIN. However, other Prime shareholders would consider the changes inconsistent with the best interests of Prime,” a spokesman said.

“Currently, Prime outperforms WIN, Mr Gordon’s company, in its corresponding markets, so why would Prime shareholders want to put him in charge, particularly given his ambitions to control both licences would diminish Prime.”

Prime Media chairman John Hartigan told The Australian that Mr Gordon’s ambitions were regulatory and had very different goals to other Prime shareholders.

“Bruce is playing a ‘long game’ for a legislative change and we respect that.

“But those are very different from other shareholders.”

additional reporting:
Zoe Samios