Country TV woes sink takeover deal between ARN and Southern Cross

Southern Cross Media Group (ASX:SXL) was down -6.35% in morning trades on Monday, similar to ARN Media (ASX:A1N), which was down -5%.

The catalyst for the sell-off of both companies’ shares is an announcement released this morning outlining a failure in the proposed merger deal between both companies.

ARN Media consortium partner Anchorage Capital Partners Pty Ltd (ACP) has pulled out of the deal, unconvinced that acquiring Southern’s regional TV assets will be a smart move.

The withdrawal follows a due diligence exercise carried out by ACP.

“In light of a continued decline in the trading performance of Regional TV since the Consortium Proposal was made in October 2023, [and] the further deteriorating outlook for Regional TV … it does not support ACP’s Regional TV investment thesis,” ARN Media wrote of ACP’s decision on Monday.

The consortium partner was concerned it would be left contractually obliged to keep SCA’s stations alive, which – given the wording around ACP’s sentiment on the deal – clearly isn’t something the firm desires.

Southern Cross described itself as disappointed by the move.

“At considerable expense, SCA has engaged with the Consortium’s proposal for nearly seven months, during which time the Consortium has reconfirmed its proposal to SCA at least five times,” Southern Cross wrote on Monday.

“SCA is disappointed that the Consortium has now withdrawn its proposal.”