Southern Cross Media boss John Kelly ‘happy’ as ARN Media takeover plans roll on

John Kelly was only a few months into the top job when ARN Media moved to take over the media company.

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

Southern Cross Media Group boss John Kelly had only been in the top job for four months when rival media company ARN Media launched a takeover bid last ­October.

“Clearly they (ARN) had made their investment (in SCA), but they had said that was a strategic investment. And then this came out of the blue, absolutely it did,” he told The Australian in his first interview since the takeover bid began

“It’s been character-building, the first six months.

“I’m really lucky to have a fantastic leadership team and management team supporting me and a fantastic board, they have been incredibly supportive in what has been a challenging time, but I’m excited about the period ahead.”

ARN Media – led by chairman Hamish McLennan and chief executive Ciaran Davis – purchased 14.8 per cent of SCA in June, and then four months later launched a bid to acquire SCA as it worked alongside Anchorage Capital.

This hit a roadblock when SCA shareholder Keybridge Capital claimed the shares purchased by ARN were done so illegally.

The matter was taken to the Takeovers Panel, which initially declared ARN – which owns radio networks including KIIS FM and Gold – would have to sell 6.84 per cent of its SCA shareholding.

ARN appealed the decision, and last week the Takeovers Panel reviewed the decision and overturned it, which means the company no longer has to sell a portion of its stake in SCA and can forge ahead with the takeover proposal.

Mr Kelly, who officially began his role as SCA boss in July last year following a seven-year stint as chief operating officer, said the proposed takeover dealings negotiated between the two media companies had remained cordial and he was pleased that ARN did not have to sell a significant slice of its SCA shares.

“We are happy with the outcome,” he said. “The last thing we wanted in the market was having 6.8 per cent of our register sold off and causing a whole lot of instability in our share register. The fact those shares are retained by ARN we think is good for the stability of our register.

“They’re happy, we’re happy, so on we go.”

KIIS FM breakfast duo Kyle Sandilands and his on-air partner Jackie ‘O’ Henderson. Picture: Instagram

On Friday, SCA’s share price closed up 1.5 per cent to $0.98, while ARN Media’s share price fell 4.08 per cent to $0.94.

The two companies’ share prices have remained relatively similar over the past year – one year ago SCA’s share price was $1.18, while ARN Media’s was $1.14 – and both companies have been hit by falling adverting revenue due to the tough economic conditions.

SCA has 99 stations nationally across the Hit Network and Triple M stations, and has a growing digital network called LiSTNR.

ARN Media owns 58 radio stations across 33 markets including KIIS FM which is the home to Sydney’s breakfast duo of Kyle Sandilands and Jackie ‘O’ Henderson, 46 DAB+ stations, and it also owns the digital entertainment platform iHeartRadio.

Mr Kelly described the ongoing process for a takeover by ARN as “complex”.

“We are required to assess the value of the proposal put forward. In normal circumstances, if it was a cash-only offer it would be relatively simple – we would say the cash that is being offered is x and the value of our company is y and it’s either the value of the company or not,” he said.

“The problem, or complexity, in this particular proposal is that it provides 30c of cash and it provides us with 0.753 of a share in this new vehicle.

“We have to understand that value and get materials from ARN in order to assess the value to make an overall assessment, which we haven’t yet done.”

ARN Media will release its half-yearly results on February 22, while SCA’s will be announced on February 29.