They never said it would be easy, but ARN Media was initially hoping to be further progressed than it is with its proposal to acquire the jewels in the radio crown from SCA.
With Christmas around the corner, negotiations for what is proving to be a complicated proposition from ARN will drag past Boxing Day and into the new year.
On October 18 ARN Media revealed its proposal, in partnership with Anchorage Capital, to acquire the Triple M network, and 51 of SCA’s regional stations.
Anchorage Capital would take control of the Hit Network, the ARN metro stations ARN needs to divest – Gold 104.3 and WSFM – the regional radio stations ARN doesn’t need and the regional television assets that SCA hasn’t been able to sell.
The SCA annual general meeting was held the week following the ARN proposal was revealed. At that meeting, however, SCA had no guidance for shareholders.
Since then, there has been little comment from SCA about negotiations going on behind closed doors.
See also: Radio goes boom! ARN wants Triple M Network…will the SCA board play ball?
There have been a number of hurdles that have slowed ARN’s hope to have acceptance of a deal in place before the end of 2023:
• The Takeovers Panel got involved when questions were raised about ARN Media’s stake in SCA.
• Seven West Media acquired a stake in ARN Media of 19.9% which made it the largest shareholder. This was shortly followed by the resignation of Seven CEO James Warburton.
• SCA also received a merger proposal from Australian Community Media.
This week in a special Christmas note to the market, ARN has revealed it now has an “objective of delivering a certain proposal to SCA shareholders in early 2024”.
The company further explained:
“Following an initial period of due diligence engagement with SCA and its advisers, including the provision of initial information, the Consortium [ARN and Anchorage Capital] has reconfirmed the Indicative Proposal to the SCA Board of Directors and has been granted a further period of due diligence engagement to access the required information to progress its confirmatory due diligence.”
ARN added in its statement to the ASX:
“No binding agreement to implement the Indicative Proposal has been reached with SCA at this time and there is no certainty that a transaction will eventuate.”
Many in the radio sector believe the ambitious ARN play will eventually happen. Some are doubtful that it will get up. Staff at many SCA and ARN metro and regional radio stations around Australia go into Christmas not knowing who they might be working for in 2024.
Similarly, staff at SCA’s suite of regional TV assets are also unsure of what the future holds. That is a cloud that has been hanging over their heads for some time as the SCA TV assets have been on the auction block previously.
This week SCA updated the market. There really wasn’t much news. SCA said:
“Since receiving the Indicative Proposal, SCA and its advisers have engaged with the Consortium to enable all parties to have a better understanding of the value of the Indicative Proposal.”
SCA confirmed discussions with ARN and Anchorage Capital will continue, but SCA noted:
“The parties have not reached a binding agreement to implement the Indicative Proposal and have not agreed to commence preparation or negotiation of any transaction documentation.”
SCA then echoed a line from the ARN ASX statement: “There is no certainty that a transaction will eventuate.”
What will Anchorage Capital do with SCA assets?
Much of the uncertainty surrounding the deal is linked to the role Anchorage Capital will play. Will it really be a radio and TV operator, or will it look to quickly flip the assets?
Under the original proposal, it was stated “Anchorage is expected to retain ultimate ownership of all existing SCA radio stations not being acquired by ARN, plus acquire 3 metro and 10 regional radio stations from ARN. ACP will also retain ultimate ownership of SCA’s existing television business.”
The initial proposal also said Anchorage would “operate a separate network of 8 metro and 35 regional radio stations, plus SCA’s existing television and digital audio businesses [including LiSTNR]”.
There are a number of current and former Hit Network, Triple M, regional radio and regional TV executives that have reputedly been in negotiation about running this group of Anchorage assets. It wouldn’t be surprising if other radio groups including Nova Entertainment, Nine Radio and ACE Radio might have been involved in informal discussions about possible opportunities.
All that seems certain at this stage is there is still much work to be done to get this deal across the line.