Southern Cross has Nine in its sights if rules overhauled
Controlling interest ... Kerry Stokes. Photo: Alex Ellinghausen
NINE ENTERTAINMENT is understood 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 phone call to the pregnant Duchess of Cambridge.
It is one of the deals being floated as media companies jockey for position before promised changes to media rules governing how much of Australia's population the commercial television networks can broadcast to - presently 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, raises the possibility of the networks swapping partners ahead of any potential merger activity.
The media industry heavyweights are acting accordingly. Reports this week said Kerry Stokes has joined the list of billionaires on the share register of the embattled Ten Network despite having a controlling interest in its market-leading rival, Seven.
Under no circumstances will Mr Stokes be allowed to buy a second network.
Nine Entertainment insiders confirmed this week that the company has been approached by Ten's regional broadcast partner Southern Cross about a deal that would see the television and radio group break with Ten and join with Nine instead.
It is now understood that any deal could go much further. The major shareholder of Southern Cross, the 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 the 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 several changes the senator is proposing in response to the media convergence review last year.
The step-up in media manoeuvring may reflect the fact 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 this month 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 convergence review - including the 75 per cent reach rules - as details have 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.
He also defended the federal government's inquiries into media ownership.
''John Howard weakened our rules that protected diversity. That's the truth,'' he said.
with Georgia Wilkins