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Seven West Media (ASX: SWM) has swooped on the remaining television assets of Southern Cross Media Group (ASX: SXL) after an earlier agreement with independent media group Australian Digital Holdings fell through.
Southern Cross Media says all negotiations with Australian Digital Holdings, a company backed by James Packer, had ceased after the company failed to meet the final conditions of the deal.
Seven West Media, which is controlled by Kerry and Ryan Stokes, has secured a binding agreement to acquire the television licences and assets of the Southern Cross Media operations in Tasmania, Darwin, Spencer Gulf, Broken Hill and Mt Isa, as well as remote, central and eastern Australia.
The deal has been struck at an up-front cash payment of $3.75 million, the same as that being paid by Australian Digital Holdings, which operates as ADH TV.
However, the ADH deal totalled $6.35 million as an additional $2.6 million was to be paid through the provision of “transitional service arrangements”.
Seven West Media says the licences it has acquired currently broadcast the Seven Network television signal in each market under its affiliation agreement with Southern Cross Media.
The company says the acquisition “largely completes” its national broadcast network and opens new markets to the group.
"The acquisition of these television licences is another positive step in SWM's strategic transformation program,” says Seven West Media CEO Jeff Howard.
"Seven is Australia's largest commercial, free-to-air broadcaster and we are excited by the opportunity to further leverage our leading news, sport and entertainment content in these new markets, across both Seven and 7plus to drive incremental revenue, earnings and cash flow.
"Following this acquisition, Seven will reach almost 100 per cent of Australia's population [ex-Riverland].
“With the successful launch of our Phoenix total television platform, our valued advertising partners and media buyers will be able to seamlessly reach and target these new and attractive audiences across both broadcast and digital campaigns.”
The deal is expected to settle on 30 June 2025 with the acquisition described by Seven West as earnings accretive in FY26.
The latest divestment comes on the heels of Southern Cross in December announcing the sale of its television licences in the three aggregated markets of Queensland, southern NSW and Victoria to the Paramount Global-owned Network 10.
The company estimates the television assets will deliver proceeds of between $19 million and $24 million, which on a proforma FY25 EBITDA basis represents a multiple of between four and five times.
Once the sale to Seven West Media is completed, Southern Cross Media will have completely exited its television assets, with the proceeds used to cut group debt.
The sale of the group’s television assets follows a strategic review of the business which will now be solely focused on its regional and metropolitan radio and digital audio networks, which includes the Triple M and Hit stations.
Today’s announcement by Southern Cross Media was accompanied by a trading update which reveals that audio revenues for the first four months of calendar 2025 had grown by 9 per cent, ahead of previous guidance.
Forecast group costs for FY25 have also fallen to $265 million, down from the previous estimate of $270 million.
“This ongoing momentum, which was first evident in the second half of FY24, is ahead of previous guidance and reflects our focus on building sustainable revenue growth across both broadcast and digital audio segments,” says Southern Cross Media CEO John Kelly.
The company has also flagged a return to paying dividends in FY25 following a rebound in its trading performance.
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