Seven’s $64m offer ‘good for Prime’

Seven West Media’s James Warburton is confident the friendly takeover of regional player Prime Media will deliver the goods.

As media bosses jockey to grab a bigger foothold in the market, Seven West Media’s James Warburton is confident the television broadcaster’s friendly takeover of regional player Prime Media will deliver the goods.

Mr Warburton, who has been tasked by Seven’s biggest shareholder Kerry Stokes to overhaul the broadcaster amid rising competition from TV and streaming players, says its $64m offer is very good for Seven and Prime shareholders, despite opposition from Australia’s newest regional publishing proprietors, Antony Catalano and Alex Waislitz, last week.

Mr Warburton believes Seven’s all-scrip transaction, which has the backing of Prime’s board, would deliver about $11m in cost savings and open new revenue streams. It would also help strengthen the output of news, which is a key part of his turnaround plans.

“We believe our deal is highly attractive to all shareholders with clear line of sight on cost synergies of at least $11m, predominantly through leveraging SWM’s resources and with potential revenue opportunities,” Mr Warburton told The Australian.

"Our company brings capabilities and rights to the Prime Group that they have been unable to invest in or leverage in regional markets, which we believe could present a material revenue opportunity for the combined group,” he said.

“Seven is the leading news broadcast network across the country and news is a fundamental pillar in our content strategy and part of our DNA. Regional news will continue to be invested in, as we have done in regional Queensland, which has driven material ratings and revenue share in this market.”

Prime chairman John Hartigan said the group was focused on Seven’s offer of 0.4582 of its own stock for each share in Prime, noting it was the only one on the table. “We’ve got one transaction and that’s the focus for the board and for our shareholders, and the rest is just noise,” he told The Australian.

Last week it emerged that Mr Catalano and Mr Waislitz have built up a 10.26 per cent stake in Prime in recent months, and are understood to want to strike a deal with Seven to bolster their recently acquired regional newspaper business ACM, which consists of The Canberra Times, The Newcastle Herald and The Ballarat Courier.

A partnership would involve sharing newsrooms and resources with Prime, aimed at saving money and reaching more advertisers.

Since the pair came on to Prime’s share registry, the parties have held only two meetings to discuss the regional broadcaster’s “business model and to get a greater understanding of our operation”, Mr Hartigan said.

Mr Hartigan expects Prime shareholders to vote in favour of the tie-up with Seven, noting regional broadcasters have been restrained by existing regulation for decades.

“You can never be overly confident, but I have confidence it’s an attractive proposition, and the scale that it offers is what our regional broadcaster, all regional broadcasters, require,” he said.

Mr Hartigan said since regulation was introduced in 1986 under the Hawke government, regional broadcasters have effectively had to compete against major commercial TV networks, as well as public broadcasters, ABC and SBS.

“In the case of Seven West, which we pay exclusively for their content, they in fact stream over the top of us to our own audiences, and that’s before you look at Google and Facebook and soon-to-be Disney’s streaming service.