SCA confirms discussions underway for ARN takeover; set to cut over $15m in costs
Southern Cross Austereo (SCA) has fronted its shareholders just a week after ARN announced a proposal to take over the rival network.
Chair Rob Murray and CEO John Kelly led SCA’s annual general meeting (AGM) on Friday in Sydney, where the biggest topic of discussion was predictably the takeover bid, which would see ARN, alongside Anchorage Capital Partners, create a “focused” metro radio network of 10 stations across Sydney, Melbourne, Brisbane, Adelaide and Perth with each city featuring a KIIS and Triple M brand.
Addressing shareholders from SCA’s Sydney office, Murray claimed that the network “had no knowledge” of the proposal before receiving it last week, but confirmed that discussions are now underway.
“Since receiving the proposal last week, we have set up sub-committees of our Board and management to consider the proposal and our financial and legal advisers have held initial discussions with the Consortium’s advisers,” Murray said.
While an in-principle agreement is hoped to be reached by ARN and SCA by December, Murray was less enthusiastic about the timing saying it is “highly optimistic and frankly, we’re not going to be rushed”.
Meanwhile, when updating shareholders on SCA’s performance in the current financial year, Kelly announced that the network’s annualised cost base will be reduced by more than $15 million, with $10 million to come out this financial year (by June 30, 2024).
Kelly added that he expects total cost growth will be below CPI for the full year.
On a recent episode of the Mumbrellacast, former national director of operations and general manager of 2DayFM and Triple M Sydney and former Macquarie Media CEO, Adam Lang, said the impact of the proposal will be felt by advertisers who have campaigns on both ARN and SCA, as well as staff, particularly at SCA.
“You know, if you’re working at either one of these companies, yeah, you’ll be feeling concerned,” Lang said.
“Particularly if you’re at SCA and this is the bold announcement from ARN – what’s my role in this? What’s the future look like?”
In some heartening news for SCA, Murray confirmed that despite the capital expenditure and losses to date, its LiSTNR platform is “on target” to be profitable in the last quarter of this financial year. This comes after ARN confirmed in its proposal that it intends to “form an independently managed, separate and equally owned digital audio joint venture, comprised of substantially all of ARN and SCA’s respective existing digital audio assets and operations”.
Kelly reiterated at the AGM that LiSTNR is “fully owned, developed and controlled” by SCA and that it is “looking forward in the years ahead to delivering the benefits to our shareholders, our partners, and our communities.”
Earlier this week, it was reported that Nick Bolton – managing director and CEO of Keybridge Capital – claimed ARN’s recent purchase of SCA shares was a breach of the Corporations Act.
Takeover Panels chief, Allan Bulman, issued a statement on Wednesday, confirming that Keybridge had submitted an application to the panel, however a sitting panel is yet to be appointed.
