Prime Media board directors are heading into crisis meetings to devise a new strategy after plans to merge with Kerry Stokes’ Seven West Media were nixed by billionaire Bruce Gordon and regional media player Antony Catalano.
Mr Gordon, who has a voting stake in Prime of about 11.6 per cent, and Mr Catalano, with 14.57 per cent, revealed on Monday they would oppose the $64 million deal that will be voted on by Prime shareholders on December 19. The scheme needs support from 75 per cent of voting shareholders to win approval, meaning opposition from Mr Gordon and Mr Catalano effectively thwarts the merger.
“If the shares in respect of which Bruce Gordon and Antony Catalano have voting power were voted against the Scheme, the Scheme would not be approved,” Prime said in a statement posted to the ASX on Tuesday.
Bermuda-based billionaire and rival regional broadcaster WIN TV owner Mr Gordon has been burned by several major media deals in the past few years, including losing hundreds of millions of dollars on his stake in Network Ten when the free-to-air broadcaster went into administration in 2017.
Sources with knowledge of the deal said Mr Gordon is unwilling to budge on his refusal to accept the deal, even if the offer is increased substantially.
Australian Community Media executive chairman Mr Catalano is also unlikely to change his position in the next nine days but is likely to jostle for a close relationship between his newspaper business and Prime.
The regional broadcaster’s management is now hoping to come up with a strategy for a future without the merger but is still unlikely to drop the scheme ahead of the shareholder vote, the sources said. While abandoning the deal would avoid the embarrassment of it being voted down it would still incur a $600,000 break fee. It would also like lead to falls in the Prime share price.
Regardless of whether the December 19 vote goes ahead, the situation has left Prime management grappling with what an alternative strategy looks like. While Prime chief executive Ian Audsley has been pushing for regulatory changes in Canberra, there is a view among several senior media executives that the government is unlikely to move quickly enough to reform the rules relating to media ownership and diversity.
Prime chairman John Hartigan warned in October that regional newsrooms would fail if regulations limiting mergers in regional markets were not removed, or if there was no direct government support for rural newsrooms.
The possibility of newsroom cuts will likely be up for discussion in strategy meetings, sources said. But Mr Hartigan said the broadcaster would take a “considered position” and wouldn’t rush any decisions.
“We’re going to sit down and look at our options,” he said.
Source: Thanks smh.com