ARN Media’s planned takeover of Southern Cross Austereo falls flat after Anchorage pulls the pin

One of the biggest takeovers in Australia’s radio history has hit a major roadblock after one party in the negotiations made an abrupt exit on the weekend.

ARN Media chief executive officer Ciaran Davis and Southern Cross Media Group managing director and chief executive officer John Kelly.

One of the biggest proposed takeovers in Australian radio history, the mooted tie-up between ARN Media and Southern Cross Austereo, has been derailed after a private equity firm surprisingly withdrew from long-running ­negotiations at the weekend.

On Sunday it was revealed private equity firm Anchorage Capital Partners had ceased its involvement alongside ARN Media in the planned takeover.

One SCA insider describing it as “extremely disappointing” that the deal had “fallen over at the ­finish line”.

ARN Media executives including chairman Hamish McLennan and chief executive officer Ciaran Davis met on Sunday to discuss Anchorage’s withdrawal.

It is also understood SCA, led by chair Heith Mackay-Cruise and chief executive officer John Kelly, also met on Sunday to discuss Anchorage’s decision to pull the pin.

Sources who did not wish to be named told The Australian that Anchorage was growing increasingly concerned about SCA’s television assets, including the decision last week by WIN Corporation and Seven West Media to end joint-venture operations in the regional Victorian city of ­Mildura.

The change means viewers in the area will from June 30 no longer be able to watch Network Ten programs, which was part of a deal struck between SCA and Channel 10.

One source close to the proposed takeover transaction said while Anchorage was happy with the progress of SCA’s radio and digital assets, the firm was becoming worried about the “accelerated decline” of its TV assets.

SCA broadcasts 93 free-to-air TV signals across Australia, using Ten’s programming and advertising in areas including regional Queensland, southern NSW and regional Victoria.

Last week, Ten also announced it was axing some of its most prominent and long-running ­reality TV programs including The Bachelor and The Masked Singer Australia, which made SCA’s changing TV programming schedule another serious concern at Anchorage.

This was ultimately the catalyst that led to the firm’s decision to quit any involvement in the potential takeover.

Spokesmen for Anchorage, ARN Media and SCA would not comment when contacted by The Australian on Sunday.

Former Southern Cross Media Group chairman Rob Murray departed the company in March.

The original bid for the takeover of SCA by ARN Media and Anchorage was announced on October 18, and one insider described the eight months of negotiating tactics used by ARN Media as “aggressive”.

SCA was also hit by poor half-yearly results which were released in February, and Mr Kelly said at the time it has been a “difficult” six months for the media company.

SCA reported a 71 per cent drop in net profit to $4.4m compared to the six months to December 31 the year prior.

The company’s TV revenue fell by 11.1 per cent from $59.6m in the first half of the 2022/23 financial year to $53m in the first half of ­financial year 2023/24.

ARN Media’s annual results, released in the same month, showed its annual profit dropped by 33 per cent to $32.3m.

ARN will hold its annual meeting on Tuesday morning.

The proposed takeover – which could still happen if ARN Media partners with another entity – is complex and would have involved ARN Media and Anchorage acquiring the radio and digital assets via ARN Newco, redistributing the radio assets to meet legislative requirements, and also reducing the exposure to regional television.

In March, SCA’s chair Rob Murray brought forward his ­retirement by six months amid the planned takeover and he was ­replaced by Mr Mackay-Cruise.

Mr Murray has expressed his intention to end his term as chair no later than SCA’s annual meeting, which will be held on October 30.

On March 18 ARN said in an ASX release that the company and Anchorage were “willing to revise their non-binding indicative proposal to acquire SCA”.

SCA has 99 radio stations including the Hit Network and Triple M stations and ARN Media owns 58 radio stations including KIIS FM – home to ratings juggernaut The Kyle And Jackie O Show, which recently expanded to Melbourne – and Gold.

SCA’s share price closed at 0.94c on Friday, while ARN Media’s closed at 0.84c.