Australia media groups announce $274 million merger as they battle streaming giants

By Scott Murdoch

SYDNEY (Reuters) -Australia's Seven West Media said it would merge with Southern Cross Media to create a A$417 million ($273.97 million) metropolitan and regional media group to better compete with global streaming platforms.

Seven West shares, controlled by mining and media billionaire Kerry Stokes, were up 7% on Tuesday to A$0.15, while Southern Cross stock was 6.6% higher. Stokes' Seven Group holds about 40% of Seven West.

Under the deal, Seven West shareholders would receive 0.1552 Southern Cross Media shares for each share held.

The offer values Seven West shares at A$0.13 each, slightly below the stock's A$0.14 closing price on Monday. The combined group will be worth A$417 million based on the current market capitalisations of both entities.

Southern Cross owns major radio networks and podcast platforms across Australia, while Seven West holds metropolitan and regional television licences. Southern Cross announced the sale of its remaining regional television businesses to Seven West for up to A$24 million in May.

MERGER COMBINES RADIO AND TV ASSETS

Southern Cross shareholders will own 50.1% of the merged group while Seven West will hold 49.9%, the companies said.

"Southern Cross is a much better business with an audio focus and going to buy old world media assets like television and print businesses" said Gabriel Radzyminski, founder of activist investor Sandon Capital which owns 11.2% of Southern Cross.

"They are adding different businesses to the portfolio which from a Southern Cross perspective makes it worse." Sandon is trying to vote the Southern Cross board out at the company's annual meeting due in November.

A Southern Cross spokesperson said the company would engage with all of its investors on the bid, which was backed by both groups' boards.

Free-to-air television in Australia, like all major markets, has faced severe revenue and earnings pressure from streaming giants like Netflix, Paramount Skydance and Walt Disney.

MERGER TO COUNTER STREAMING GIANTS

"We have both (Southern Cross and Seven West) been on the record as being substantial advocates of consolidation," Southern Cross CEO John Kelly said. "It needs to happen, we need to take the mantle and really fight back against the global behemoths."

The deal requires 75% support from Seven West shareholders at a meeting that will be held in the first quarter of 2026, the companies said, once the deal receives regulatory approvals.

Communications and competition regulators, as well as the Australian Securities Exchange, must sign off on the transaction.

Seven West said that the board unanimously recommended that its shareholders to vote in favour of the merger, with all directors also pledging to support the deal.

Seven West's current CEO Jeff Howard will lead the combined entity, the broadcaster said.

The company added that both boards expect to record annual pre-tax cost savings of A$25 million to A$30 million ($16.44 million to $19.73 million) in the next 18 to 24 months.

($1 = 1.5221 Australian dollars)

(Reporting by Scott Murdoch in Sydney; additional reporting Roshan Thomas in Bengaluru; Editing by Alan Barona, Jamie Freed and Louise Heavens)