After spending the past few years exiting the television market in favour of its radio assets, Southern Cross Media Group (ASX: SXL) looks set to bring the small screen back into the fold after announcing a $416 million merger with Seven West Media (ASX: SWM).
The latest shakeup in the Australian media sector has been driven by challenging market conditions which led to weaker earnings from Seven West in FY25.
The scrip-based merger, which will see Southern Cross Media shareholders own 50.1 per cent of the combined entity, will create an integrated media company with free-to-air television, streaming, audio, digital and publishing assets across metropolitan and regional Australia.
It also marks a significant shift in strategy for Southern Cross Media which, after selling the last of its regional television assets to Seven West earlier this year, saw underlying earnings surge in FY25 following its transition into a pure audio media group with business assets such as LiSTNR and the HIT and Triple M radio networks.
Seven West Media owns the Seven Network and the 7plus digital platform, as well as The West Australian and The Sunday Times newspapers and the regional Community Newspapers Group.
Based on yesterday's ASX market capitalisation of the separate media companies, the merged entity will have an indicative value of $416 million.
The merger follows several previous takeover opportunities for Southern Cross Media that failed to proceed, including a $225 million bid from KIIS FM owner ARN Media (ASX: A1N) launched in 2023.
“SCA (Southern Cross Media) has been a consistent advocate for value accretive media consolidation,” says Southern Cross Media CEO John Kelly.
“We have invested considerable time and resources evaluating and responding to proposals put forward by third parties. These proposals proved to be not deliverable.
“The proposed merger with SWM provides demonstrable benefits to our shareholders, a clear strategic path forward and is deliverable for our shareholders if approved by SWM shareholders.”
Southern Cross chairman Heith Mackay-Cruise says the merger will create “a leading integrated total TV, audio and digital platform, with the scale, reach and diversification to better serve Australian advertisers, audiences and communities”.
“The combination of SCA’s and SWM’s leading brands on broadcast and digital platforms establishes an indisputable leader across the critical 25-54 ‘audience that matters’ demographic,” he says.
“The merged entity will offer partners and clients a ‘one stop shop’ for opportunities to reach this valuable audience across all mediums, leveraging shared content and commercial opportunities to add value beyond the initial cost synergy estimates.”
The merger is expected to initially deliver pre-tax synergies of between $25 million and $30 million within 18 to 24 months of completion
“The combination of these two companies brings together the best creators of media content in the country, delivering significant financial and strategic benefits for SWM shareholders,” says Seven West Media chairman Kerry Stokes.
“This is an important merger, as the combined company will be better able to serve both metropolitan and regional viewers, listeners, partners and advertisers.
“It will add strength to each of the combined businesses’ television, audio, digital and publishing operations across the country.”
Seven West Media CEO Jeff Howard, who has been anointed CEO of the merged group, describes the merger as a “pivotal moment for Australian media”.
“By bringing together the complementary assets and brands of SWM and SCA, we are creating a truly national, diversified media organisation with extensive scale and reach across our free-to-air television, streaming, audio, digital and publishing assets,” says Howard.
The merger partners have also agreed that Stokes will become chairman until February next year when the role will be assumed by current Southern Cross chair Mackay-Cruise.
This will leave four Seven West representatives on the merged board, comprising Teresa Dyson, Jeff Howard, Michael Malone and Ryan Stokes, and three representatives from the Southern Cross board, namely Heith Mackay-Cruise, Marina Go and Ido Leffler.
“Following the improved performance of Southern Cross Media since Heith Mackay-Cruise assumed the chairmanship, I have every confidence Heith will continue to guide the combined group successfully,” says Stokes.
“Following my retirement from the Board in February 2026 I intend to continue to support the chair and board wherever I can add value.”
Under the terms of the merger, Seven West Media shareholders will receive 0.1552 Southern Cross Media shares for every share in Seven West they own. This will give Seven West Media shareholders 49.9 per cent of the combined group.
Seven West suffered a sharp fall in earning over FY25 with the net profit of $16.6 million down 63 per cent as revenue dipped 4 per cent to $1.35 billion.
In comparison, Southern Cross Media doubled full-year earnings to $9.2 million as revenue increased 5 per cent to $421.8 million. Profit excluding significant items surged 239 per cent to $15.1 million.
Shares in Southern Cross Media rose more than 10 per cent to 93c by 10.18am (AEST) while Seven West Media shares were up 7 per cent to 15c.
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