Another bump for Mac Southern Cross station sale as ACMA watches closely | radioinfo

Another bump for Mac Southern Cross station sale as ACMA watches closely

Thursday 21 February, 2008
Macquarie Bank's Nicholas Moore

Regional radio sources believe ACMA is being overly cautious in monitoring the impending sale of some Macquarie Southern Cross Media regional radio stations, demonstrated this week when the regulator forced new Macquarie Bank chief Nicholas Moore to temporarily step down from the company’s board for a technicality.

When Nicholas Moore was appointed new Chief Executive of Macquarie Bank he was seen to be “in control” of Macquarie Media Group, but the paperwork to notify ACMA of this fact was out of date due to an “oversight” by Macquarie.

ACMA says it is just following procedure and Macquarie Bank made a statement saying it is complying with ACMA’s directions, but this latest move has yet again stirred rumblings in regional radio groups, who are already unhappy with what they feel are unfair regulations being imposed on their businesses.

The current issue is another bump in the rocky road Macquarie Southern Cross Media is treading as it seeks to finalise the knock on effects of the Southern Cross acquisition late last year. radioinfo understands that most of the negotiations to divest the stations are largely complete and will be announced within weeks, but that ACMA scrutiny is now holding up the process.

In today’s Australian newspaper Mark Day asserts that ACMA is flexing its muscles with the Macquarie Bank owned media network and watching it closely because it breached regulations in the past and cannot be trusted to comply with its obligations this time around.

Mark Day cites the loan to Stuart Simpson’s Elmie Investments company ( see our earlier story ) and the recent breach of the “control” notification procedure by Nicholas Moore as evidence that Mac-Southern Cross needs close scrutiny.

Some regional radio sources view ACMA’s scrutiny as unnecessary, while others say it is understandable given the importance of getting everything right in such a big deal. One source, who did not wish to be named, explained it this way to radioinfo:

“[ACMA is] worried because this is the biggest significant broadcast media deal under the new regulations and they have to be seen to tick all the boxes… it’s nothing unusual for business people, but the regulator has the regional politicians to worry about, if they get it wrong those politicians will be at their throats.”

Another source said: “People in the bush are touchy about this, they remember when the banks pulled out of their towns and they now see that their radio station is owned by a bank, so they are worried.”

Fifteen years ago the regulator (then the ABA) was being pressured to give more radio services to the bush for “public policy reasons” such as extending services available in the cities to regional areas and giving regional listeners more format choice. At the time the counter argument said that there was not enough revenue in many small markets to sustain multiple, often competitive services.

Section 39 licences began being issued to existing owners so they could mount a second service, usually on FM, for the cost of $10,000. Then licence areas were replanned to decide whether additional competitive services were also needed in some areas. At the same time many new community radio licences were also granted in regional areas.

Radio industry people with long memories see the regulatory problems being encountered today as a direct result of those “flawed” policy and planning decisions made over a decade ago.

The “capacity to invest” in small radio markets is limited by the population and the available revenue and makes consolidation inevitable. This leads to the worries about advertising monopolies and ‘share of voices,’ the issues that ACMA is facing when considering this deal.

In July 2007 ACMA warned (then) Macquarie Regional Radioworks (now Macquarie Southern Cross Media) that it must divest itself of stations which would result in “breaches of the statutory control rules” in relation to the Tasmania and Darwin commercial television licence areas and the combined Brisbane and Nambour commercial radio licence areas. In addition it must divest stations where “an unacceptable media diversity situation will arise” in nine commercial radio licence areas (Atherton, Burnie, Charters Towers, Devonport, Emerald, Kingaroy, Mt Isa, Warragul and Young,). ACMA also warned “there will be a reduction in points in three additional commercial radio licence areas in which an unacceptable media diversity situation already exists (Queenstown, Roma and Scottsdale).”

When the deal has finally jumped all the regulatory hurdles, it is thought that the Queensland stations will most likely be bought by Prime Media, that the Tasmanian stations will be snapped up by Janet Cameron’s Grant Broadcasters, and that ACE Radio might grab the stations in Young and Warragul, but nothing can be certain as the negotiations and the deadline are confidential at this stage.

Prime Media is also one of the interested parties looking at another station to be divested in fallout from the Southern Cross Broadcasting sale, River 94.9 Ipswich, with the regulator keeping a close eye on this deal too.

Meanwhile, in other radio station sale news, Star FM Central Coast is for sale if the price is right. A consultancy company was commissioned by DMG to quietly approach various radio groups to see if there was any interest in the network’s only regional station. One regional operator told radioinfo: “We might have been interested, but the documents arrived around Christmas and they wanted a quick answer during the holiday period, so we didn’t bother.”

But the station has interested at least one radio person. John Singleton is reported to have had talks about buying the station, but the normally outspoken media-man is not sufficiently down the track to want to go on the record at this time, telling radioinfo he is “not going to be making any comments on this.”

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