Catalano and Gordon ‘unrelated parties’ on Prime

Antony Catalano insists he and Bruce Gordon are not working together to block Seven West‘s acquisition of Prime Media.

Antony Catalano says Seven West’s offer for Prime is not good value. Picture: David Geraghty

Antony Catalano has distanced himself from media mogul Bruce Gordon, insisting they are not working together to block Kerry Stokes-backed Seven West Media’s acquisition of regional TV broadcaster Prime Media.

Mr Catalano, who took ownership of the former Fairfax Media’s regional newspaper operations with billionaire investor Alex Waislitz mid-year, said Seven’s $64m offer, plus a 3c special dividend is “not good value” and it is not surprising that other Prime investors aren’t keen on the deal.

“No. We are unrelated parties,” Mr Catalano told The Australian on Tuesday.

“We are individual shareholders that share a common view, it would seem, that the proposed deal is not good value.

“Nobody should be surprised that some shareholders don’t want to see the business sold at a discount to fair value.”

Mr Catalano, who is currently on a family holiday, said it is “open to all options”, including working with Seven.

“We have a great deal of respect for them (Seven), it’s been a very successful company in Australian media for a very long time and we’re more than interested to work closely with them on an asset that we both want.”

The comments came a day after WIN Corporation chairman Mr Gordon, who has voting power of 11.59 per cent in Prime, declared he was against Seven’s takeover. Mr Catalano, who has accumulated a 14.57 per cent stake in Prime since February, first publicly voiced his opposition to the deal in October.

Collectively, their investment in Prime gives them a 26.16 per cent blocking stake to Seven’s bid, which needs 75 per cent Prime shareholder approval to get over the line. In a bid to save the deal before next week’s Prime shareholder vote, Prime said on Tuesday it was in talks with Seven.

It is the first major test of Seven’s new boss James Warburton, who was tasked by Mr Stokes in mid-August to overhaul the loss-making free-to-air TV broadcaster and publisher. Just days after taking over from Tim Worner, Mr Warburton declared he was on the hunt for acquisitions, and has since agreed to sell Seven’s magazines business and West Australian regional radio broadcaster Redwave.

In a brief statement to the ASX, Prime acknowledged that if the two businessmen voted against the scheme of arrangement it “would not be approved”.

“In accordance with its obligations under the scheme implementation deed, Prime is consulting with Seven in relation to the scheme …” Prime said.

A Seven spokesman declined to comment.

Mr Catalano was coy on the issue of a counter-bid for Prime, which would require the sale of newspapers to ensure it didn't breach Australia’s media laws.

“There’s only a few assets that mean we’re in breach of the voic­es test. We could divest … a handful of titles, which would make a bid for Prime possible,” he said.

Mr Catalano is focused on growing ACM, which consists of more than 160 newspapers including The Canberra Times, The Newcastle Herald and The Ballarat Courier, into a “multimedia regional business” and wants urgent reform to the media laws.

“We started buying shares in Prime in February of this year, as part of our intent to become a large-scale regional media player. We made that known to both Prime and Seven throughout the year that we’re interested in the company, and at no point were we discouraged from pursuing that growth strategy,” he said.

During the pair’s due diligence on Prime, they discovered it “over­layed almost identically to the ACM footprint”, Mr Catalano said.

“It naturally comes with operational synergies if we could tie the businesses together,” he said.

“One of the things that prevents its happening immediately is the current legislation, but it wouldn’t be very onerous of the Communications Minister Paul Fletcher to make a minor amendment to the media laws which rec­ognises that the internet exists.

“That an absurdity that makes the legislation completely antiquated.”

Mr Catalano said it was time the federal government take a “mature approach to media”, and recognise the internet is a medium and Facebook is a publisher.

“Bruce Gordon has said that buyers are limited because of the one broadcast licence to a market, and because of the voices test. The government needs to wake up and realise that television is not the medium it once was,” he said.

In a statement released to The Australian on Monday, Mr Gordon, said: “We will not be supporting the scheme of arrangement as we believe the proposal isn’t good value for current shareholders.”

Sources close to WIN have told The Australian its rejection has come simply because the company believes the Seven offer is a “lousy” deal, despite Seven sweetening its deal with a proposed 3c a share dividend.

Mr Gordon also issued a statement that appeared to indicate 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,” he said.

“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”