Southern has Nine in sights on law review

NINE Entertainment is believed to be the subject of a merger proposal with Southern Cross Media that would join the Nine network with Sydney's 2DayFM - the radio station behind the prank hospital call to the pregnant Duchess of Cambridge.

NINE Entertainment is believed to be the subject of a merger proposal with Southern Cross Media that would join the Nine network with Sydney's 2DayFM - the radio station behind the prank hospital call to the pregnant Duchess of Cambridge.

It is one of the deals being floated as media companies jockey for position ahead of promised changes to media rules governing how much of Australia's population the commercial television networks can broadcast to - no more than 75 per cent.

If these audience reach rules are abolished, Australia's three commercial television networks could then profit by merging with their regional broadcast partners and cutting out any duplicated costs.

The lapse of Nine's affiliate deal with its regional partner, WIN Television, last year, and the expiry of Ten's deal with Southern Cross this June, adds the possibility of the networks swapping partners in advance of any potential merger activity.

The media industry heavyweights are acting accordingly.

Reports this week said Kerry Stokes had joined the list of billionaires on the share register of embattled Ten Network despite having a controlling interest in its market-leading rival, Seven.

Under no circumstances will Mr Stokes be allowed to acquire a second network.

Nine Entertainment insiders confirmed this week that the company had been approached by Ten's regional broadcast partner, Southern Cross, about a deal in which the television and radio group would break with Ten and join up with Nine instead.

It is now believed that any deal could go much further. The major shareholder of Southern Cross, investment bank Macquarie Group, has put a proposal to Nine's new owners to merge the media companies in a transaction that would also see Nine re-emerge as a publicly listed company.

Executives from Nine and Macquarie declined to comment.

Such a deal would rely on Communications Minister Stephen Conroy successfully abolishing media ownership rules that prevent commercial television stations from having access to more than 75 per cent of the Australian population.

It is one of a number of changes the senator is proposing in response to the media Convergence Review last year.

The step-up in media manoeuvring may reflect the fact that the government's only chance of getting the legislation passed will be gone by the end of this month.

Last November Senator Conroy said the government would develop legislation by March this year to go before Parliament.

On Friday, Senator Conroy said he did not want to get into the specifics of proposed changes in response to the review - including the 75 per cent reach rules - as details had yet to be finalised.

In an interview on radio station 3AW on Friday, Senator Conroy said the laws, introduced by the Howard government, allowed for a "damaging" reduction in media diversity and he defended the federal government's inquiries into media ownership.

"John Howard weakened our rules that protected diversity. That's the truth," he said.

The government's Convergence Review was set up in response to the loosening of media ownership laws under John Howard in 2007.

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