Antony Catalano and Bruce Gordon attempt to block Seven’s Prime Media takeover

Australian Community Media (ACM) boss Antony Catalano and WIN Corporation owner Bruce Gordon have both made moves to block the merger between Seven West Media and Prime, with a Prime Media release making its way to the Australian Stock Exchange this morning stating that in light of recent press reports the merger is currently under “consultation”.

The disquiet follows the promise of a $0.03-per-share fully franked special dividend to Prime Media shareholders should the acquisition be approved this month.

Seven wants to offer advertisers one entry point to Australia’s wider regional market with the Prime merger

Seven proposed the $64m takeover bid earlier this year, promising to provide advertisers with a single platform that will deliver superior audience reach across metropolitan and regional markets.

The merger is potentially in trouble though with Gordon holding a voting power of 11.59% of all Prime shares and Catalano 14.57%, giving them voting power over the acquisition, which would need 75% shareholder approval. A vote is due next week.

Should the deal be approved, Seven would offer 0.4582 of its own stock for each share in Prime plus the new additional $0.03-per-share special dividend.

In a statement provided to media, Gordon said he wouldn’t be supporting the merger as it “isn’t good value for current shareholders”. That view is shared by Catalano.

One of the main points of contention inside the deal is that a lack of reform over media laws means only Seven is in a position to attempt a merger. Both Gordon and Catalano are currently lobbying for changes to the ‘one-in-a-market’ and ‘voices’ laws which restrict them from forming their own takeover bids.

Gordon blamed the Minister for Communications for the lack of reform, saying he wasn’t “serious about the future of regional media companies”. Catalano is attempting to build a “diverse multi-media regional business”, something he is unable to do under current restrictions.

A Seven spokesperson said the aims of both Gordon and Catalano weren’t realistic in the current climate.

“The law regarding media ownership as it stands is clear and is consistent for both regional and metro markets. The Minister for Communications made clear as recently as last month that changes to these laws are not on the table. A merger of two regional media networks would compromise media diversity in regional Australia and would likely not be permitted by the ACCC even if the law changed to allow it.

“The changes Mr Gordon appears to be advocating for are in his favour as he also owns WIN. However, other Prime shareholders would consider the changes inconsistent with the best interests of Prime.

“As the largest shareholder of Nine, Mr Gordon’s ambition to control Prime is not achievable under the current Seven affiliation agreement which contains restrictions on change of control. Currently, Prime outperforms WIN, Mr Gordon’s company, in its corresponding markets, so why would Prime shareholders want to put him in charge, particularly given his ambitions to control both licences would diminish Prime?

“The Seven offer lets shareholders participate in a larger media company with national prominence in terms of production and distribution, providing Prime shareholders with certainty and a digital future. We strongly believe it is a compelling offer for Prime shareholders, made more attractive today with the announcement of a special dividend.”

Mumbrella has approached Prime for comment.


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