Shareholders deliver first strike against Southern Cross Media leadership team

Major shareholders have initiated a first strike against the leadership team at Southern Cross Media as expectations of the sale of its regional TV empire by Christmas disappear.

Triple M breakfast show hosts Mark Geyer and Mick Molloy.

Major shareholders in the troubled Southern Cross Media Group initiated a first strike against the company’s ­remuneration report at Monday’s AGM, with chair Heith Mackay-Cruise telling the gathering it had been a “challenging and disappointing” year.

The adoption of a remuneration report received a 27.8 per cent vote against it, qualifying for a first strike.

All other motions were carried, although in another blow to the Southern Cross Austereo leadership team, 38.44 per cent of the votes were against the resolution to grant performance rights to managing director John Kelly, while the re-election of Mr Mackay-Cruise recorded a vote of 27.76 per cent against. There are fears that shareholder anger may imperil SCA’s bid to offload its regional TV asset, a transaction deemed necessary to reduce the company’s cost base and one the media outfit said in August would be finalised before Christmas.

It was reported that negotiations with potential buyers Seven West Media and Network 10 stalled, while The Weekend Australian noted the SCA board had received five transaction proposals over the past 12 months and shrugged off each of them as the share price kept tumbling. The stock is down from highs of $1.05 last November to 53c on Monday, when it fell 2.8 per cent.

It is understood major shareholders are furious that such ­opportunities to reduce the company’s debt were passed over, particularly as its share price has been on a steady downward spiral for more than year.

The 2DAY FM breakfast crew: Ed Kavalee, Dave Hughes and Erin Molan.

Mr Mackay-Cruise told the AGM the sale of the regional television assets was dragging out.

“While this process has taken longer than we originally expected, we remain in active negotiations with several parties who are interested in acquiring those assets,” he said.

“We will update shareholders as those negotiations progress.”

In a tumultuous period, ARN Media and Anchorage Capital Partners put forward a cash-and-scrip takeover bid 13 months ago, valuing the company at 94c a share. It was ultimately withdrawn after a drawn-out negotiation. In August it was revealed that Australian Community Media was in talks to partner with ARN Media for a merger proposal, which SCA rejected in November.

“Our discussions earlier this year with the ARN/Anchorage Consortium, the time we spent considering a potential transaction with Australian Community Media, and our more recent discussions in relation to sale of our television assets have demonstrated how the regulatory environment constrains innovation, efficiency and the sustainability of Australian broadcast media businesses,” Mr Mackay-Cruise said. “Our largest competitors for audiences and advertising dollars are global giant digital platforms – such as Meta, Google and Spotify – but Australia’s pre-internet regulation severely restricts our ability to compete with them on a level playing field.

“We celebrate our connection to local communities around Australia but, without regulatory change to enable consolidation and modernise regulation of Australian media businesses, that connection will in time become economically unsustainable.”

Southern Cross chairman Heith Mackay-Cruise.

SCA has 99 radio stations, ­including LiSTNR, the Hit Network and Triple M brands, as well as its suite of regional TV assets across Central Australia, and in the regional areas of the eastern states.

In August, SCA reported group revenue of $499.4m for the 2024 financial year, which was 1 per cent below FY23.

Shareholders were told that SCA has permanently removed more than $40m from its cost base while non-revenue-related costs came in below the $310m guidance for FY24, at $308.4m.

SCA said on Monday it would maintain its FY25 guidance for non-revenue-related costs (excluding non-recurring items) to be below FY24 costs.

Mr Mackay-Cruise acknowledged that FY24 was a tough year. “The most recent financial year was a challenging and disappointing one for our company, and especially for our shareholders,” he said.

However, Mr Mackay-Cruise said the company made a positive start to the new financial year.

“Our leading radio shows and podcasts are growing their audiences and attracting strong advertising interest. Our group revenue for the first quarter was ahead of the same period last year, with especially strong momentum in our digital audio brand, LiSTNR.

“We have made significant progress in reducing our cost base and this work continues.”