Seven West Media and Prime to merge
Seven West Media has announced it intends to buy regional media operation, Prime.
At the same time, it is proposing to sell its radio assets in Western Australia to Southern Cross Austereo (SCA) for $28m.
Prime deal
Prime is currently Seven’s affiliate broadcaster in regional Australia, with Seven contending the proposed transaction would provide advertisers with a single platform that will deliver superior audience reach across metropolitan and regional markets.
In addition, the merger would provide the debt-riddled Seven West Media with expected cost synergies of $11m on an annualised basis to be fully realised within 12 to 18 months of completion. Seven also said there was “potential revenue upside”.
The cost savings would come from duplications between the two businesses including head office operations, board costs and ASX-listing costs. Seven also hasn’t ruled out looking at selling off properties after the deal.
Seven’s acquisition of Prime would be through a 100% scrip-based prime scheme arrangement. Seven would acquire all of Prime’s shares, with Prime shareholders receiving 0.4582 Seven West Media shares for each Prime share they held.
Following completion, Seven shareholders would own 90% of the new, combined entity, with Prime shareholders holding the remaining 10%.
The deal will need to be approved by Prime shareholders, the courts, the Australian Communications and Media Authority (ACMA), and the Australian Competition and Consumer Commission (ACCC).
The merged company will be led by Seven’s new CEO James Warburton and chaired by Kerry Stokes.
Warburton called the deal a game-changer.
“The proposed transaction is a game-changer for advertisers and media buyers and cements SWM’s position as the superior advertising offering,” he said. “Overnight, SWM will be the leading wholly-owned commercial premium network that amasses a monthly Australian audience reach of 18m people.”
Speaking to Mumbrella this morning about the transaction, Warburton said it will halve the workload of media buyers and clients who can now call up and have one conversation to reach 90% of Australians.
He also noted it helps further the work of Boomtown – a joint media initiative which encourages brands to redirect more of their spend to the regions.
And Warburton said he intends for the operation to remain connected to regional communities.
“We’re not suggesting for a moment that Prime goes anywhere,” Warburton told Mumbrella this morning. He did, however, note that outside the separate Prime News offering, the content schedule of the broadcaster is already made up wholly of Seven’s slate.
The deal will also provide Seven with the opportunity to roll out its broadcast-video-on-demand (BVOD) service, 7Plus, to regional markets, he said.
The radio deal
Seven is also looking to divest its Western Australian radio assets, Redwave.
SCA intends to buy it for a cash consideration of $28m, representing enterprise value/ EBITDA (earnings before interest, tax, depreciation and amortisation) multiple of eight.
The combination of the two deals will go some way to helping Seven get on top of its balance sheet, Warburton said.
“Through these actions, SWM will have a strengthened balance sheet, lower debt levels and improved efficiency in the delivery of content across a range of metropolitan and regional platforms.”
Just noticed a spelling error in the last sentence – “Seven also sid there was…”
Just in case you want to amend. Very interesting news!
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That’s got to be up there with buying the Sunday Times
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Thanks, Katrina.
I was obviously a bit rushed, so thank you for flagging. I have amended.
Vivienne – Mumbrella
Hilarious headline by The Australian trumpets this as Seven buying a “rival”.
Such experienced staff in the quality press.
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so lets ” decode the spin”…head office operations, board costs and ASX-listing costs. Seven also hasn’t ruled out looking at selling off properties after the deal….= I mean really, how much are they going to save in asx listing costs? a few thou here and there…and “head operations” means all prime management will go, as will MCR and presentation , because they will move it to NPR in Sydney like they did with Nine. “Selling off properties” = all prime real estate, pun intended.
Look fellas…FTA business is a dinosaur…let go of the 80’s and move on…were nearly at the second decade of the 21st century..
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Wonder what’s going to happen with the AM station Spirit 621 in Bunbury? SCA already has a Hit and Triple M in Bunbury, so either they’ll need to close down the station or sell it off again to another broadcaster as to not upset ACMA…
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Where’s Noddy ?
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If only you knew how fiercely competitive the metro and regional TV broadcasters have historically been.
Ever wondered why their audiences are reported separately and not combined as a national number to the detriment if television as a whole.
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ummmmm…..isn’t streaming services such as their own 7 Plus going to eventually kill the regional TV industry….not such a great move I say. #justsayin
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We’re actually nearly at the third decade of the 21st century…
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Weren’t they already under Seven??? Such boring news!
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I worry about the sackings and redundancies ??Look out!!!
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SPRIT 621 BUNBURY MAY HAVE MMM ON TIER STATION AND H\SHIT DOWN THE CURREBT MMM STATION IN BUNBURRY
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