Shares in Australia's largest listed rural broadcaster, Southern Cross Media Group Ltd., have reached 22-month high in Sydney trading after a report from The Australian newspaper disclosed that its board conducted a meeting on its plan to merge with Nine Entertainment Co.
Southern Cross Media's shares increased to 3.3% to A$1.575 when the market closed in Sydney, reaching their highest rate since May 2011 after the newspaper said that the merger could form a company worth A$ 4 billion. It is conducting a review of several strategic options but such potential merger has been barred by current media regulations in the country
Mergers between main free-to-air commercial broadcasters in Australia have been prohibited by the rules, which may change under laws promised by the government to introduce to parliament this year.
According to analyst Fraser McLeish at CIMB Group Holdings Bhd in Sydney, the funds Oaktree Capital Group LLC and Apollo Global Management LLC, which took majority stake in Nine Entertainment in a debt-for-equity swap, would be able to successfully prepare an exit from the investment once they are merged with Southern Cross.
Southern Cross had struggled after a hoax call to a hospital in London, England about the Duchess of Cambridge which resulted to the withdrawal of advertising.
It also attributed its struggles to the weak audience for the shows of Ten Network Holdings Ltd. with which it signed an agreement.
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