Nine in talks with Southern Cross Media on regional affiliate deal
Sources close to the two media companies confirmed that Nine and Southern Cross recently began talks on a potential affiliate deal that would see Nine dump long-term regional partner, Bruce Gordon's WIN Corp, and Southern Cross drop its embattled partner, Ten.
Such a deal is possible as Southern Cross's rights with Ten expire in June, while Nine has been on a rolling contract with WIN since their deal expired last year.
Nine and WIN began talks only recently after Nine's new owners formally took control of the media group this month.
Insiders denied that a closer relationship is planned between Nine and Southern Cross despite the latter's share price rocketing 35 per cent in a matter of weeks on takeover speculation.
"I don't comment on speculation," the Southern Cross chairman, Max Moore-Wilton, said on Thursday in response to the rumours. "If we've got something to say we'll put out a release."
Nine also declined to comment.
A merger between the two would not be possible at the moment due to the 75 per cent audience reach rule, although this is now under review.
Analysts have said mergers between TV networks and regional affiliates would make sense - if the audience reach rule is changed - due to cost savings that could be extracted from combined operations.
Nine would still need a deal with WIN unless it is prepared to abandon the Perth and Adelaide markets where WIN owns the Nine network stations.
Industry observers said this raised the prospect that talks could serve to extract better terms for Nine and Southern Cross as they negotiate with their current partners.
Southern Cross, which sources the bulk of its programming from Ten under the affiliate deal, has suffered from Ten's poor ratings performance over the past year and reported television revenue was down 16.5 per cent to $113 million for the December half year.
Southern Cross hands over 30 per cent of its television revenue to Ten as part of the deal, while Seven and Nine's regional affiliates pay fees of about 33 per cent to 34 per cent.
Speaking at the company's first half results last week, the Southern Cross chief executive, Rhys Holleran, said he remained supportive of Ten.
"TV ratings are challenging, but we believe we are turning the corner and we remain supportive of our supply partner Network Ten," he said.
Late last week, Ten sacked chief executive James Warburton and replaced him with the News Corp executive Hamish McLennan.
"Network Ten is in talks with Southern Cross Media about extending our current program supply agreement," said a spokesman for the network. "Those talks are, of course, confidential and we are not in a position to discuss them publicly."
Frequently Asked Questions about this Article…
Sources say Nine and Southern Cross have begun discussions about a potential regional affiliate deal. The talks could reshape how Australia's major broadcasters and regional affiliates work together — for example, by changing which network supplies programming to regional stations — although both companies have declined to comment publicly.
The talks involve Nine Entertainment and Southern Cross Media. The story also mentions long‑term regional partner WIN Corp (owned by Bruce Gordon) and Network Ten, because a new arrangement could affect existing affiliate relationships across those businesses.
Timing matters because Southern Cross’s rights with Network Ten expire in June, and Nine has been operating on a rolling contract with WIN since that deal expired last year. Additionally, Nine’s new owners recently took control of the media group, which prompted fresh discussions.
No — a merger would not be possible at the moment because of the 75 per cent audience reach rule, although that rule is currently under review. Analysts say mergers could make sense financially if the rule is changed, due to potential cost savings from combined operations.
Industry observers say the talks could be used as leverage to extract better terms from current partners. The article notes Southern Cross pays about 30 per cent of its TV revenue to Ten under their deal, while regional affiliates for Seven and Nine pay roughly 33–34 per cent.
Southern Cross reported television revenue down 16.5 per cent to $113 million for the December half-year, which the article links to Network Ten’s poor ratings. For investors, that decline and the percentage of revenue paid to Ten (about 30%) are key factors when assessing the company’s affiliate risk and earnings outlook.
Southern Cross’s share price rose about 35 per cent in a matter of weeks on takeover and deal speculation. Southern Cross chairman Max Moore‑Wilton said he would not comment on speculation and that the company would issue a release if there was something to say.
Yes — Network Ten recently sacked chief executive James Warburton and replaced him with News Corp executive Hamish McLennan. Ten also confirmed it is in confidential talks with Southern Cross about extending their program supply agreement.
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