Seven West Media-Southern Cross Media merger: Shareholders approve media deal with 99 per cent vote

Shareholders in Seven West Media, the owner of the Seven television network, the West Australian newspaper and The Nightly, today overwhelmingly voted in favour of a merger with the company behind the Triple M radio network, Southern Cross Media Group.

Ninety-nine per cent of shares cast supported the $385 million deal, which will go to the New South Wales Supreme Court for approval on Tuesday and come into effect on January 7, according to Seven West Media.

The size of the vote demonstrates that Seven shareholders, led by chairman Kerry Stokes, believe a larger business with exposure to the fast-growing podcast field - Southern Cross owns the popular LiSTNR online audio service - will provide greater financial stability at a time when streaming services such as Netflix are putting conventional television stations under pressure.

Mr Stokes gave a short speech by video link then handed over to son and fellow director Ryan Stokes, who oversaw the vote at Seven’s headquarters in Sydney.

“It’s a somewhat momentous day in Seven’s history - the conclusion of one chapter and the exciting stage of another,” Ryan Stokes told The Nightly after the 14-minute meeting finished. “We become a much larger, stronger and better-positioned media company and that only bodes well for the journey going forwards.”

Equal ownership

Although Southern Cross Media is legally buying Seven West Media, the scrip-based transaction will result in shareholders of both companies ending up with about 50 per cent of the combined company.

Until a new name is chosen next year, the business will be called Southern Cross Media and trade on the stock exchange under the SXL ticker.

The sale marks an important moment in West Australian business history. One of the state’s most-influential and best-known companies, which publishes a newspaper almost as old as the original colony, will join a Melbourne-based radio group best known for a station that emerged in Sydney in 1980 at the dawn of FM radio.

The merged business will own 104 radio stations, a national TV network, a national online newspaper and newspapers across Western Australia. Annual revenue will be about $1.96 billion and operating profit $233 million, according to Seven West Media’s chief executive officer, Jeff Howard, who has been chosen as the new company’s CEO.

Seven chairman Kerry Stokes will step down as chairman February 26 and be replaced by Southern Cross chairman Heith Mackay-Cruise. The 85-year-old and founder has said he intends to remain as an adviser to the board, while the family will be formally represented by Ryan Stokes, the chief executive of SGH, an industrials conglomerate that will hold 20 per cent of Southern Cross Media.

“The combination of these two great companies will bring together the best content creators in the country and deliver significant financial and strategic benefits,” Kerry Stokes told the meeting.

“This is an opportunity to create a national, diversified media organisation with extensive scale and reach across free-to-air television, streaming, audio, digital and publishing assets.”

Southern Cross investors were not required to vote on the deal. The combined company will be able to reduce costs by between $25 million and $30 million, executives have said, by sharing offices and reducing duplication.

The radio stations will get access to more television footage for their websites and allow the television network and newspapers will be able to distribute podcasts through LiSTNER, a radio app. Southern Cross also owns the Hit Network, which operates music stations in every state, while the Seven Network broadcasts the Australian Football League and Ashes cricket.