No conversations with SWM says Ciaran Davis, but HT&E ‘can’t dictate the rumours’
With both Seven West Media and HT&E delivering earnings over the past week, the former’s CEO Ciaran Davis has told Mumbrella “there have been no conversations”, but that the company remains open and proactive to any deal that creates shareholder value.
Despite the merger being touted in market for some time, speculation has heated up over the past week.
Davis hints at consolidation
“This is a rumor that’s been there for a while, as you know,” Davis said on this week’s Mumbrellacast, to be released this afternoon. “There have been no conversations.”
“I think we’re all on the record in terms of the theoretical improvements and deficiencies to be had with consolidation, both from a content perspective and a revenue generation perspective, that hasn’t changed.”
“But I think what we have been doing is focusing on our business, and focusing on creating shareholder value post the sale of Soprano”
HT&E has boosted its position with the sale of the design firm for $66 million, which Davis said places itself as being in a place of “minimal net debt”.
While he quashed the suggestion that a deal was already in play with Seven West Media, Davis said HT&E’s door is open to conversations around tie-ups.
“We’ve improved the dividend policy for shareholders, and we remain open and proactive with any initiative that would see us create shareholder value in the future, and if that involves conversations around consolidation, we’ll absolutely have them.
“But we can’t dictate a lot of what rumors are said, and what’s out there. What we can dictate is the performance of our business, and that’s what we’re focused on.
On last week’s Mumbrellacast, Wilson Asset Management senior equity analyst Shaun Weick said further consolidation the Australian media sector was “inevitable”.
Weick: It makes sense, but there are hurdles
“The local players need to look to do what they can to compete against the global giants like Google, Meta, Amazon, and Netflix really to maintain advertising dollars.”
In this case, Weick said the idea of a tie-up between HT&E and SWM “makes plenty of strategic and financial sense”.
When asked what does an ideal partner look like for HT&E Davis responded: “I don’t have a theoretical ideal partner to be honest.
“I think we would analyse any approach that’s made for the business, and again, there hasn’t been, but we would analyze any approach for the business on the merits on the lens through what shareholders would feel as a value accretive piece for them.”
Despite the appeal, Weick added there are “a number of hurdles” in the way of a deal.
“You’ve got Kerry Stokes with effective control of 39% of Seven, and I think he’s unlikely to entertain any capital raising to undertake M&A, and clearly his focus would be the restarting of dividends so he can get some capital back out of his investments.”
“You also add in the other angle from HT&E’s perspective, News Corp owns 13% of that business, so yeah, to me it does feel as though there are a number of hurdles that would need to be crossed in order for the deal to get across the line. But strategically, it does make sense.”
Hear the full interview on this week’s Mumbrellacast. (HT&E’s Ciaran Davis – 18:35)
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Calum Jaspan was news editor at Mumbrella, based in Melbourne. He was also the producer and host of the Mumbrellacast. He left Mumbrella in May 2023.
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