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The Australian Competition and Consumer Commission (ACCC) sees no issue with Seven West Media's (ASX: SWM) proposed acquisition of Prime Media Group (ASX: PRT), following an investigation into the deal's likely impacts on broadcasting in regional WA.
SWM shares rose 3.1 per cent on the announcement to reach $19.92 each in early trading, even though Prime believes the deal is unlikely to be given the green light by shareholders.
Major shareholders Bruce Gordon and Antony Catalano, who collectively hold 26 per cent of PRT shares, have indicated they are against the deal.
In an update today, Prime said proxies ahead of a shareholder vote tomorrow indicate the scheme of arrangement for the $58.7 million merger is unlikely to succeed.
The deal would create Australia's leading wholly-owned commercial premium broadcast, video and news network, and was initially worth $65 million but has since fallen in line with Seven West shares.
However, if an unexpected vote in favour of the acquisition were to occur, Australia's competition watchdog has concluded Seven West Media's weekly regional newspapers in the state Prime's weeknightly TV bulletins generally covered different news stories.
The ACCC's approval of the deal is made on the basis that Seven West Media will divest its Spirit and RedFM radio networks in regional WA to a third party to meet requirements of the Broadcasting Services Act 1992.
The investigation focused on the overlap between Prime's TV broadcasts and Seven West Media's publications including The West Australian.
"In assessing this proposed deal, we considered the likely impact on competition in providing local news and content to audiences in regional WA," says ACCC chair Rod Sims.
"We found that Seven West Media's largely weekly regional newspapers and Prime's weeknightly TV bulletins generally cover different news stories.
"We also looked at the likely impact on advertisers and news consumers across a number of different media markets, and concluded that the proposed acquisition was unlikely to substantially lessen competition or choice for advertisers and consumers."
The ACCC notes the majority of Prime's broadcast content is currently supplied by Seven West Media, but Prime produces its own regional news broadcasts in some areas, including regional WA where it broadcasts the GWN7 News on weeknights.
"Feedback from advertisers and advertising agencies suggests that Prime's television and Seven West Media's newspapers don't compete closely for advertising revenue, and most advertisers have alternative ways of reaching their target audiences," Sims says.
The move is another shake-up in the country's media landscape within a year of the completion of Nine Entertainment Company's (ASX: NEC) $4 billion takeover of Fairfax - a deal made possible by former Prime Minister Malcolm Turnbull's changes to media ownership laws.
The merged media behemoth would have the potential to reach 90 per cent of Australia's population each month, with estimated cost synergies of $11 million annually excluding transaction and integration costs.
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