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Behind closed doors, there’s no way the C-Suiters at ARN Media (ASX:A1N) are having a good week.

After Anchorage capital pulled out of a partnership with ARN on Monday – effectively canning the latter’s proposed takeover of ASX-listed competitor Southern Cross (ASX:SXL) (“SCA”) – a trading update and AGM address from ARN shows statutory NPAT has dropped -95% vs pcp.

Underlying earnings before costs were down -13% and underlying NPAT down -22%.

Net debt, meanwhile, has climbed +23% to $75.1M. Dividends fell to 3.6cps from 7.1cps in FY23.

But behind the subdued performance visible in fundamentals, company chair Hamish McLennan was still keen to highlight to shareholders what value a merger with Southern Cross could unlock.

Over the weekend, Anchorage informed ARN that it was pulling out a consortium between the two due to the poor performance of Southern Cross’s regional TV portfolio.

“In light of the continued decline in the trading performance of Regional TV … Anchorage informed us on Saturday that they were no longer prepared to acquire Regional TV,” McLennan told shareholders on Tuesday.

“It is important to note, the Consortium’s work into radio operations, outlook and the digital audio business was progressing well, with both parties comfortable that diligence in this area was nearing satisfactory completion.”

Between the lines of Monday’s announcement from ARN was the real sticking issue for Anchorage – it would have ben contractually obliged to take on Southern Cross’s regional TV assets across several states. It would also have been obliged to keep them running.

Unfortunately, as far as Anchorage is concerned, no one is watching – and that wasn’t enough to offset what McLennan sees as a compelling radio case.

“Notwithstanding Anchorage’s decision, ARN still considers the proposal represented a unique opportunity to unlock value creation,” he continued.

“As announced to the ASX yesterday, ARN intends to engage with SCA on a revised proposal to preserve this compelling opportunity.”

A revised proposal is set to see ARN keep on gunning for SCA’s radio assets, noting shareholders in the latter could receive up to 0.87 ARN shares for each SCA share held. Shareholders would also retain shares in a newly listed demerged entity, or SCA outright.

McLennan spent less time talking about the regional TV issue, noting only it was open to three-way or otherwise alternative proposals.

There’s larger macro-societal trends to grapple with, too.

“Looking ahead, ARN Media faces the ongoing challenge of uncertain advertising markets,” McLennan said towards the end of his address.

A1N last traded at 83cps; down -3% in late morning trades.

ARN by the numbers
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