Australia’s competition watchdog will not block a proposed merger between Seven West Media and Southern Cross Austereo. In its ruling, the ACCC said that it does not consider the two media companies compete heavily enough in the markets where they both operate.
With ACCC approval, the merger is one step closer and now awaits a vote from Seven West Media shareholders. The Seven West Media unanimously recommends shareholders vote in favour of the merger.
Seven owns and operates free-to-air TV broadcaster the Seven Network, as well as the publishers of The West Australian, the Sunday Times, 11 suburban newspapers and 19 regional publications in Western Australia. Crucially, it does not operate any radio stations.
Southern Cross operates 104 FM, AM and digital commercial radio stations through the Triple M and HIT brands and holds 88 radio licences in metropolitan areas and regional areas of Australia.
Southern Cross also produces over 800 podcasts, 50 music stations and live sports coverage, but does not publish any newspapers or own any TV licences or assets.
In May, Southern Cross divested away from the TV market by selling its remaining regional TV licenses to Seven. These included Tasmania, Spencer Gulf, Broken Hill, Mt Isa, Darwin and Remote, Central and Eastern Australia.
It appears that this move paved the way for the two companies to merge six months later.
Other considerations included the changing dynamics of the Australian media market, including the dominance of global tech platforms.
‘They attract different advertisers’
In its investigation, the ACCC focussed on various local markets in regional Western Australia where Southern Cross and Seven are the main traditional media outlets offering advertising opportunities for local businesses.
“We found that Southern Cross and Seven attract different advertisers and are not close competitors for the supply of advertising opportunities in these regions,” ACCC deputy chair Mick Keogh said.
“Local businesses and media agencies seeking to advertise in regional areas will continue to have a range of options in these local markets, including online and social media advertising with geo-targeting capabilities.”
The ACCC also considered whether the proposed merger could lessen competition in markets for the supply of media content to consumers or for the acquisition of media content from producers.
“The ACCC’s investigation found that Southern Cross and Seven are not close competitors for content. Southern Cross is primarily focused on radio and audio entertainment, while Seven is focused on print news and general TV,” Keogh said.
Also important in the ACCC’s decision was the impact of broader industry trends on competition, including the rise of streaming services and the significant growth of online advertising.
“Australian media markets are being transformed by consumers’ growing preference for digital media,” Keogh said.
“This shift is leading advertisers to invest more heavily in online and digital channels.”
“Owners of traditional media platforms such as radio, free-to-air television and newspapers will continue to face strong competition from digital media. Southern Cross will be no exception, even after the acquisition,” Keogh said.
“Ultimately, we found that the acquisition would be unlikely to substantially lessen competition in any market.”
