Seven West Media plans to acquire Prime Media Group for $131.9m
Seven West Media has announced plans to acquire its regional broadcasting affiliate in a landmark deal for the industry.
Seven West Media has struck a deal to acquire Prime Media Group in a $131.9m takeover, marking the second move on the regional broadcaster and affiliate partner in as many years.
But rather than a straight takeover, Seven West, the owner of the Seven Network will acquire Prime’s business and assets as a going concern to bypass any shareholder resistance.
Based on current estimates, Prime shareholders are expected to receive a distribution of 36
cents per share, including a special fully franked dividend of approximately 26 cents per share. Prime shares surged 74 per cent to close at 40 cents, while Seven shares closed up 14 per cent at 52c.
Seven West chief executive officer James Warburton said the proposal was vital for both companies who have a long history together.
“Seven West and Prime Media are great partners and have a long, successful relationship,” he said.
“Together they will offer the best content for our national audience and unmatchable premium revenue opportunities for our clients.”
The move will require 50 per cent of approval from Prime shareholders to proceed.
There was an attempt by Seven West to take over Prime in 2019 but it was unsuccessful after being blocked by shareholders Bruce Gordon who also has a stake in rival WIN, and Antony Catalano. Mr Gordon still has a 11.4 per cent stake has indicated support for the move.
Mr Catalano’s company with business partner Alex Waislitz has around 23 per cent and has backed the move.
Seven said major shareholders of Prime representing 43.5 per cent of shareholders have shown their support for the move.
Mr Warburton said the acquisition would significantly bolster Seven’s strength in the Australian media market and allow it to reach an even larger audience.
“From a client and media buyer’s perspective to make six phone calls or emails these days, however you want to look at it, to trade with three national signals is something in this day and age is a bit antiquated,” he said.
“Having a national audience like the vast majority of other media mediums is pretty important in the consolidation of the industry, this is why the reach rule was removed a while ago.”
The 75 per cent reach rule which was removed in 2017 previously limited a person from not controlling television broadcasting licences whose combined licence area exceeded 75 per cent of the population.
Mr Warburton also said Prime “underpins local journalism and is strong in it’s local news”.
“The acquisition means Seven will become Australia’s leading commercial premium broadcast, video and news network, with the potential to reach more than 90 per cent of Australia’s population each month,” he said.
“The proposed transition is an exciting and transformative development for advertisers and media buyers.
“It means we will be able to give advertisers easy and seamless access via a single platform to capital city and regional markets.”
Prime’s chief executive Ian Audsley said the transaction removes a number of the “near and longer term headwinds” facing Prime and crystallises cash value.
“On completion...Prime’s key assets, businesses and employees will be transferred to
Seven ownership, which will ensure strong continuity of operations and focus on regional Australia,” Mr Audsley said.
Communications Minister Paul Fletcher said the announcement was a great result for regional audiences.
“I welcome today’s announcement that Seven will acquire the regional television assets presently owned by Prime (subject to shareholder and ACCC approval); this is good news for regional television viewers,” he said.
“Our Liberal National Government removed the ‘reach rule’ in 2017 with the policy objective of allowing metropolitan and regional television networks to merge, in turn producing a more sustainable business structure for the continuing provision of commercial free to air television to people in regional and remote Australia.
“The transaction announced today is precisely what this reform was intended to encourage.
“The merged entity will be subject to increased regulatory requirements concerning the provision of regional news services.”
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