Television viewers in regional areas are not expected to suffer any loss of local programming should Nine and Southern Cross Austereo (SCA) merge.
On Monday, SCA said in a statement its board was reviewing a number of options for the company, with that announcement following speculation over a potential $4 billion merger with Nine.
The union of Nine and SCA would bring together Nine stations in Brisbane, Sydney, Melbourne and Newcastle with SCA’s regional television stations in Queensland, NSW, Victoria, Tasmania, South Australia and the Northern Territory.
While the two parties would be prevented from merging under current laws – which restricts a television network from reaching more than 75 per cent of the population – federal Communications Minister Stephen Conroy has proposed abolishing the rule.
Fat Prophets senior research analyst Brian Han said he expected regional viewers to see little change on their television screens in terms of local content should the two parties eventually merge.
“I think the market will ensure that local programming will be maintained,” Mr Han said on Monday.
“The reason for that is because regional viewers want local programming and whoever slackens off on that relative to the competitors will suffer the consequences.
“Regional broadcasters still need to target regional advertising dollars, and that won’t be easy unless there’s a certain amount of local content.”
Speculation about the potential merger sent SCA’s share price up 5.5 cents, or 3.61 per cent to $1.58.
Currently, SCA’s TV stations broadcast programming from the struggling Ten network.
The current agreement with Ten was due to expire in mid-2013.
“SCA understands that there may be speculation regarding the strategic direction of the company in that context,” the company said in a statement.
“SCA is reviewing a number of strategic options.
“The board has not, at this stage, formed a view as to any preferred option.”
Kimber Capital head of research Greg Fraser said the end of the 75 per cent reach rule was likely to trigger yet another round of consolidation in the media market.
Not only would it open the way for Nine to merge with SCA, it could also being Seven and its regional affiliate Prime together.
Australia’s third regional player, WIN Television – which in addition to its country stations also owns Nine stations in Perth and Adelaide – would also be free to seek a partner.
“If you get the all three regional players being swallowed up by the three metropolitan players then you end up with a three-player market instead of six now,” Mr Fraser said.
