Southern Cross Media Peter Bush pushes for change to compete with digital

Southern Cross has joined the chorus of broadcasters who want change to let them compete with digital players unhindered by legislation.

Southern Cross chairman Peter Bush (left) and CEO Grant Blackley. Picture: John Feder

Southern Cross Media Group will look for opportunities to grow its regional broadcasting footprint, but has called for changes to legislation to allow the business to compete against digital platforms.

At its Annual General Meeting, chairman Peter Bush said the business believed in the “resilience” and “value” of regional radio, but said the regional television model faced challenges that needed to be addressed.

Read more: Seven West Media to bulk up with $65m Prime purchase

Mr Bush said broadcasting legislation “constrained” the operating model for regional broadcasters, and prevented them from competing in the internet era.

“There are significant disparities in regulation of content and advertising on broadcast platforms compared to online platforms,” he said.

“The ACCC’s final report on the digital platforms inquiry has recommended that the government should address these regulatory disparities.”

Mr Bush’s comments were similar to those of Australian Community Media boss, Antony Catalano, who has previously called for the abolition of the television “one-to-a-market” rule that means a business cannot control multiple television licences in one area, as well as the removal of television licence fees.

Last week Prime chairman John Hartigan said Prime had been in a “regulatory straitjacket” due to the inability of regionals to break out of their territories.

“We’ve seen streaming coming over the top of us, which is totally unregulated. We’ve seen shifts to all forms of digital media and again, free from all the regulation that we have,” Mr Hartigan said.

Mr Bush’s comments come a week after Southern Cross announced the acquisition of Seven West Media’s regional radio network, Redwave. 

It also follows a grim trading update by the broadcaster earlier this month that warned its first-half earnings would fall as much as 27 per cent, due to the “short” and “volatile” advertising market.

“We are strong believers in the resilience and value of regional radio as an asset class, and will continue to explore opportunities to expand the footprint of our regional radio network,” Mr Bush told shareholders in Sydney on Thursday.

“In contrast to audio, the regional television model faces significant structural challenges. Competition for audience and advertisers is coming from subscription video-on-demand platforms. Increasingly, competition is also coming from the metropolitan television networks that provide their live programming on-demand and for catch up in regional markets.

“The networks have also increased their product placement and other in-program integrations, reducing the incentive for program sponsors to buy advertising from regional broadcasters,” he said.

Merger a ‘logical response’

Mr Bush made reference to the proposed merger of Seven West Media and regional broadcaster Prime, which came the same day as its proposed acquisition of Redwave, describing it a “logical response” to market dynamics. But he assured Southern Cross was focused on “disciplined management of operating costs.''

“Against this backdrop, shareholders should be assured that your board and executive team have a clear understanding of the available strategic options for SCA to secure and optimise our company’s future position,” he added.

“I can assure shareholders that your board and executive team have been proactive in managing the current difficult trading conditions and in shaping the business for the future.”

Last week in an interview with The Australian, chief executive Grant Blackley said the Prime deal would raise questions for Nine and Ten around their relationships with regional affiliates, but reiterated the value of regional assets for advertisers.

“[Regional media] are strong profitable assets and if we had the opportunity to buy more regional radio we will, as long as we can,” he added.

Southern Cross is an affiliate of Nine Entertainment. At the time, Mr Blackley also did not rule out Seven attempting to purchase other parts of his business.

“There is a very long and fruitful path forward. If Seven want to knock on the door, they are more than willing, they know our number, but they will need a reasonable cheque to entice our shareholders,” he said.

On Thursday Mr Blackley said the business had “trimmed” costs and “restructured” to ensure front-of-house activities could continue.

At 11:15am, Southern Cross shares were at 0.84 cents. Market capitalisation is at $661.35 million.