Radio broadcaster ARN Media has acquired an interest of 14.8% in competitor SCA for $38.3 million.
A statement this morning: "ARN Media acquired the stake as a strategic equity investment in a sector that it knows well and sees the equity position in Southern Cross Media as representing attractive value for ARN Media’s shareholders."
SCA shares took off on the announcement. A short time ago they were up 25% to $0.955, but still below the one year high of $1.245.
SCA told the ASX that ARN Media would be deemed to control SCA’s commercial radio and television broadcasting licences if it held an interest of 15% in SCA.
SCA and ARN Media control the maximum permitted two commercial radio broadcasting licences in all metropolitan markets and several regional markets.
And so the Broadcasting Services Act prohibits ARN Media holding an interest of 15% or more in SCA.
In February, ARN reported radio revenue up 53% to $344.9 million in the year to December but profit suffered due to a non-cash impairment following a downturn in economic conditions.
But in a trading update last month, radio revenue was down 5% in the four months to April, partly due to shrinking government spend and uncertainty impacting advertising sentiment.
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