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Nine Entertainment and Southern Cross Austereo sign ‘landmark’ affiliate agreement

Nine Entertainment Co., is set to switch its affiliate TV broadcast rights to Southern Cross Austereo from WIN Corporation as of July 1.

Channel Nine-SouthernCrossAustereo - joined logos

Under the terms of the new agreement, hailed in a press release as a “landmark”, SCA will pay Nine 50% of its ad revenues to rebroadcast its content in regional areas in Queensland, Southern NSW and Victoria.

According to the release the companies will also “work together on a number of opportunities to mutually grow their businesses” with the deal set to run for five years.

The deal signals the end of Nine’s long-standing relationship with Bruce Gordon’s WIN Corp.

Tensions between the pair have been high with a six-month affiliate deal extension secured just hours before it was due to expire on December 31, with WIN then launching legal action against Nine over its streaming service 9Now.

Yesterday a court ruled Nine could continue to stream its 9Now service into regional areas after WIN claimed it was undermining its business model.

Gordon is also the largest shareholder in Nine, owning just under 15% of the shares in the listed company. The Bermuda-based businessman also owns 14.99% of the shares in Network Ten.

It now looks likely WIN and Ten will be forced into an affiliate agreement as of July 1.

Nine CEO Hugh Marks

Nine CEO Hugh Marks

Earlier today Nine CEO Hugh Marks had poured cold water on the idea of the network acquiring a regional broadcaster even if reforms to media laws allowing it were passed telling a Senate inquiry: “What does adding an acquisition of regional Australia add to us as a content business? Perhaps very little.

“We run this company as a content business which is focused on expanding the number of platforms on which we provide content; the business models around that.

“I don’t see acquiring a regional broadcaster as high on our priority list.”

A merger between Nine and SCA had been speculated, with Nine taking a 9.9% stake in SCA in March.

Marks said in the statement: “This is a great outcome for Nine and SCA. We are confident that, together, we will offer a premium viewing experience for audiences and a best-in-class platform for advertisers.”

Grant Blackley, CEO of SCA said: “I’m excited SCA is entering into this landmark long-term agreement with Nine, a media company which has so successfully informed and entertained Australian audiences for many decades.”

The deal will give SCA, which has struggled in recent years in its TV business on the back of poor ratings for its current affiliate Network Ten, access to Nine’s content proving significantly more popular with audiences and advertisers. Nine has also achieved the 50% ad revenue target it was aiming for from WIN in its last affiliate agreement.

It may also see Nine given more ready access to promote its content on SCA’s national radio networks TripleM and the Hit Network.

Related:

Are Nine and WIN headed for divorce?

Acquiring a regional broadcaster ‘not high on priority list’ claims Nine CEO Hugh Marks

WIN loses bid to get 9Now live streaming service banned from its broadcast area

The tie-up also has interesting connotations for theories around which media companies will merge if and when the government scraps controversial media laws prohibiting ownership of more than two of three traditional media or reaching more than 75% of the population, the one which prevents Nine and SCA merging officially.

Those laws were due to come before parliament this year, but have now been shelved with Prime Minister Malcolm Turnbull expected to call an election for July.

Alex Hayes

The release:

 Nine Entertainment Co. (Nine) (ASX:NEC) and Southern Cross Austereo (SCA) (ASX: SXL) have today announced the signing of a new regional television affiliation agreement.  The five year agreement will see SCA broadcast Nine’s metropolitan free-to-air television content into regional Queensland, Southern NSW and regional Victoria from 1 July 2016.

Under this landmark agreement, the SCA channels will carry Nine’s branding and broadcast its premium Australian and international content including The Voice and The Block, as well as all NRL and Cricket broadcasts, providing a seamless Nine brand across metropolitan and major regional markets.

SCA will pay Nine an affiliation fee of 50 per cent of its television revenue.

As part of the new affiliation deal, Nine and SCA have agreed to work together on a number of opportunities to mutually grow their businesses.

The agreement provides for a substantial expansion of news services broadcast by SCA.    Nine’s market leading News bulletins featuring international, national and locally produced news will be broadcast to regional markets across Queensland, Southern NSW and Victoria.

As part of the arrangements, SCA will provide national sales services for Nine’s NBN channel in Northern NSW and NTD9 in Darwin.  This will provide advertisers with a centralised port of call for their regional advertising on Nine’s content across the entire Eastern seaboard.

Hugh Marks, CEO of NEC said “This is a great outcome for Nine and SCA.  We are confident that, together, we will offer a premium viewing experience for audiences and a best in class platform for advertisers.”

Welcoming the agreement, Grant Blackley CEO of SCA said “I’m excited SCA is entering into this landmark long term agreement with Nine, a media company which has so successfully informed and entertained Australian audiences for many decades.”

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