Southern Cross Austereo (ASX: SXL) (SCA) has made a significant move in the strategic review of its non-core regional television assets. The company has signed a heads of agreement to sell its television licences in the three aggregated markets (3-Agg Markets) of Queensland, southern New South Wales, and Victoria to Network 10. This marks the first major step in SCA’s efforts to reshape its regional television portfolio.
The sale will see Network 10 acquire the licences currently used by SCA to broadcast Network 10 programming under regional affiliation agreements. The transaction is expected to be finalised by February 2025, pending execution of final documentation, approval from foreign investment regulators, and resolution of broadcast transmission agreements with service providers.
As part of the agreement, SCA will retain a financial stake in the licences for five years after the sale, receiving a share of the profits during this Participation Period. The company estimates total gross consideration from the deal to be between $15 million and $20 million, with a net present value of $10 million to $15 million.
Additionally, SCA could benefit from a potential “digital dividend” if Network 10 surrenders its spectrum in the 3-Agg Markets to the Government, although no firm plans for such a dividend have been announced.
Long-term impact
Network 10 will take operational control of the 3-Agg Market licences upon completion, integrating them into its broader network operations. This transition is expected to create a more sustainable earnings model compared to SCA’s current regional affiliation arrangements.
To support the ongoing relationship, SCA will maintain its local salesforce in these markets and provide third-party local advertising sales representation services for Network 10 throughout the Participation Period.
A key condition of the sale involves renegotiating broadcast transmission agreements. Network 10 and BAI Communications are required to enter a new contract for transmission services in the 3-Agg Markets, replacing SCA’s existing contract with BAI. This agreement will remain in effect until 1 September 2034, with SCA assuming certain financial liabilities if the contract is terminated by Network 10 after the Participation Period.
Read more at Mediaweek.
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