The slow-moving Fairfax media group has finally roused itself to do a cross media deal that will take it into radio and TV.
Instead of continuing to expand within the static business of newspapers, with deals like buying the Albury Daily Mail and then merging with the Fairfax family-dominated Rural Press, FXJ looks set to snap up part of Southern Cross Broadcasting.
It will split Southern Cross with Macquarie Media, which operates 85 regional radio stations around Australia, and has small newspaper interests in the US.
The deal could be revealed today and value Southern Cross at$1.3 billion.
Fairfax will take the metro AM radio network of Southern Cross, giving it control of stations like 2UE in Sydney, 3AW in Melbourne and 4BC in Brisbane.
It will also buy the Southern Star TV and film production house.
If the deal is done, it would put Fairfax back into radio, 19 years after it was forced to sell the Macquarie Network (2GB, 4BC and 3AW and others) to meet the cost of the silly takeover for the media group launched by Warwick Fairfax.
Trading in the shares of Southern Cross Broadcasting, Fairfax and Macquarie Media,was halted yesterday afternoon ahead of an announcement, expected today.
Southern Cross has been touted as a likely takeover target since new media laws came into effect earlier this year. The sort of split being envisaged is allowed under the new media laws.
SBC consists of a regional television network for the Ten Network that operates in all states except WA and a metropolitan radio network that includes the flagship 2UE and 3AW radio stations in Sydney and Melbourne.
It also has an internet business and owns Southern Star, the largest TV and film production house in Australia that holds 49 per cent of Endermol Southern Star which produces Big Brother and Ready, Steady Serve for Ten and Deal or No Deal for the Seven Network.
Southern Star also handles overseas sales for programs like Seven's Home And Away.
Southern Cross shares jumped 44 cents yesterday to $16.44 before the trading halt came into effect. The deal will be done around $17 a share.
The regional television network's online presence, MyTalk.com.au, has been growing rapidly. Rural Press has a similar online business for its papers.
The Macquarie Bank-backed Macquarie Media has a 13.81 per cent interest in Southern Cross, which rises to around 14.9 per cent with other Macquarie holdings.
Some analysts say Southern Cross's metropolitan radio stations would be an asset to Macquarie's regional radio network.
But the Ten regional TV business would be a better fit with Macquarie's widespread radio network. Besides Ten, there are smaller regional deals with the Seven Network.
There is some logic to Fairfax with its metropolitan papers, the Sydney Morning Herald and The Age (and the Sunday papers) buying radio with 2UE and 3AW listeners delivering advertising and cross promotional synergies.
The SBC Brisbane station, 4BC would also be a good fit with the recently established online news site owned by Fairfax called The Brisbane Times.
Macquarie Media has been active in the US, buying up community newspapers.
Southern Cross recently sold Channel Nine Adelaide to the WIN Group for $105 million in May.
Fairfax shares last traded at $4.68 yesterday, down two cents, while Macquarie Media stapled securities rose nine cents to $4.94.
