Welcome to Unmade, written for the last time in 2021 at beautiful Sisters Beach, Tasmania.

As I told subscribers to the paid tier of Unmade last week, with international borders opening, I plan to spend some time with family in the UK. I’ll still be working full time on Unmade, albeit from another timezone.

So over the last few weekends, I’ve spent far too much time at Spotlight, getting the place Airbnb ready. If there’s anything more pointless than “European” sized pillows I don’t know what it is. Don’t judge the copywriting on the Airbnb listing - I’ll get to that…

After a few days in NSW, I’ll be flying out next weekend.

Today’s writing soundtrack: The Atlas Underground Fire, from Tom Morello. It’s going to need another listen or two to see if it grows on me.

Happy National Broadcast Traffic Professionals Day, for everyone out there in radioland.

Today: Seven buys Prime; and the ACCC fires another shot across Facebook’s bows, and Southern Cross Austereo’s revenue hit.

Second time lucky for Seven

So this email was mostly written when this one exploded onto the ASX.

Seven West Media is buying its regional affiliate Prime Media. And unlike the failed merger-takeover of two years ago, this time it’s an acquisition.

The shareholders will need to vote on it in December, but it looks like a done deal.

Last time, Prime shareholders Bruce Gordon, and the duo of Antony Catalano and Alex Waislitz, blocked it, feeling that Seven West Media was undervaluing the company.

This time, the deal values Prime at $132m - a 57 per cent premium on its ASX market capitalisation. Because of previous losses, Prime also has a pile of franking credits. That means it will be able to pay out a final dividend to shareholders which won’t be taxable, making the deal more attractive again.

So Catalano seems set to take the money, abandoning what had begun to look like a plan to creep up the Prime share register for a takeover then a merger with his Australian Community Media newspaper group. With the ACM purchase already paid for, he will now have a warchest for investments or acquisitions instead.

SWM said in the announcement that the major shareholders representing 43.5 per cent of Prime ownership have already committed to voting in favour. That would be the stakes held by Catalano, Gordon, and the 15 per cent Seven already holds. Like I say - it seems to be a done deal.

It means that James Warburton will be able to take Seven to the advertising market as the first national offering. In terms of the efficiencies that offers, it will be good for media buyers and advertisers. I wonder how the Prime Media local newsroom and bulletins will fare though.

It explains a couple of things I’ve written about previously as loose ends. I said a couple of weeks ago that Seven’s upfronts felt like they had a hole in them. This would have been the deal they were chasing, but couldn’t get across the line in time. And last week, Prime chairman Ian McGill abruptly stepped down after an unusually short stint.

Given Seven’s battles to control its debt, the reaction of ASX investors will be fascinating. On Friday, Seven had put out a short announcement about being able to extend its debt facilities out to October 2024. But it didn’t update the market on its current cash position or size of debt, which had been $240m previously, although that was likely going to worsen with its Olympic rights payment due.

The company is to to hold an investor call later today “to discuss the acquisition and refinancing”. Either a bigger loan or a new share issue is presumably on the cards.

The deal probably spells bad news for Southern Cross Austereo boss Grant Blackley, who has been trying to sell the regional TV division. Seven is no longer a suitor, leaving Ten’s owner ViacomCBS as the only obvious remaining contender.

Blackley had been seeking a higher multiple than the Prime deal has been done at. But now he has no competitive tension. That may explain what ViacomCBS’s local commercial boss Jarrod Villani was getting at when I interviewed him a couple of weeks ago. SCA may now be forced to come to the table on a lower price.

Speaking of whom, it would appear that Blackley was too optimistic that losing SCA’s affiliate deal with Nine and being forced into the arms of Ten back in July would not cost the company money.

At the time that WIN reunited with Nine, Blackley had sounded positive, making the argument that the revenue share he gave to the lower rating Ten would be a much smaller percentage than the 50 per cent or so he had been giving Nine.

But even taking that into account, agency spending data from Standard Media Index - reported in the Sydney Morning Herald today - suggests the company’s revenues have gone backwards by $17m in just the first three months of the new deal. This includes a 38 per cent revenue fall in Queensland , 31 per cent in Southern NSW and 19 per cent in Victoria.

The drop can’t simply be put down to Seven’s Olympic-boosted performance. The data suggests WIN’s Nine-driven revenue is up $21m.

When the ASX opens this morning, I’d be surprised if SCA’s share price does not fall.

We’ve been waiting for the latest round of media consolidations to begin. Last week HT&E, parent company of Australian Radio Network, settled its fight with the ATO, leaving it ready to join the party. Now comes the Seven-Prime deal. The game is back on.

Facebook vs the ACCC

One of the many fascinating things about the News Media Bargaining Code is the way it is being played out across unofficial channels.

One the one hand, there’s a legal framework, with organisations able to apply to the Australian Communications and Media Authority to be registered as news businesses, and eligible to force designated digital platforms to negotiate with them.

On the other, no digital platforms - and Facebook and Google are the ones in the frame - have actually been designated. The not-at-all-subtle hint from the government has been that if Facebook and Google throw enough money at media owners, the government won’t designate them.

Both of the digital behemoths have done media deals with the big end of town. But Facebook has taken what is starting to look like the increasingly risky move of deciding that it will ignore the list of registered news businesses, and please itself to whom it gives money. As I’ve written previously, Facebook has already decided to exclude The Conversation, SBS and the entire B2B publishing industry, telling them it had to draw the line somewhere.

Today, the Australian Competition and Consumer Commission’s chairman Rod Sims has raised the temperature significantly, going on the record to the Australian Financial Review’s Miranda Ward to send a warning shot.

Sims described the decision to exclude The Conversation and SBS as a “very, very strange place to draw the line”.

What makes that such a fascinating thing to hear from Sims is that the ACCC drew up the code, and will have a major influence on decisions by the government whether to designate Facebook or Google as governed by it.

As Sims put it to the AFR: “Many small companies have got deals and Google is continuing to do deals – it has done deals with SBS and The Conversation. Facebook has not. So if Facebook has drawn a line on deals in a way that you don’t do a deal with SBS, how does that work? You’ve done a deal with the ABC, and you haven’t done a deal with SBS? Talk about diversity – SBS is the embodiment of diversity.”

With Sims as explicit as this, Facebook now has a choice: Take the hint and go back to SBS and The Conversation, or gamble that the government doesn’t care enough about the smaller publishers to go to war on their behalf by designating Facebook. The latter option carries risk for the government if Facebook pulls the plug on allowing any Australian news sites onto its news feed again.

But equally, if Facebook does cave, then every ACMA-registered news business that does not have a deal will demand one. According to the AFR, Senate Estimates was told last week then 37 organisations have applied to be registered, with 25 already accepted. Just seven have been knocked back, with another five still being assessed.

Last week, the tone from Facebook globally seemed to change. Boss Mark Zuckerberg’s usual “mistakes were made, but we’re going to learn from them and do better” schtick was replaced with a more belligerent and less apologetic approach. He suggested that the publication of the Facebook Papers, provided to a wide range of media outlets by internal whistleblower Frances Haugen, represented a “coordinated effort”.

The government is due review how the code process is working early next year. Politics may also come into it. If an election has not been called by then, the decision on whether to pick a fight with Facebook may well become one based primarily on how it would play with the voters.

This going to be quite a game of chicken.

Woolworths Radio

Last time round, Woolworths picked the wrong partner when it launched instore radio. Back in 2016, Woolworths signed a deal for its playlist to be powered by music streaming service Pandora Radio.

And it wouldn’t just be a single station, Woolworths Radio would reflect "different shopping times, locations and experiences," according to the pair.

But, as occasionally happens with the US-based behemoths, the Australian market was a bit too far away and too hard, and Pandora pulled the plug a few months later, closing its local operation.

Woolworths today announced it has a new partner for Woolworths Radio - Australian Radio Network.

And it won’t just be one station. “This includes using custom built technology with superior audio quality and creating a number of bespoke in-store radio stations to suit different customer demographics, time of day, and geographical locations with the aim of elevating customers’ shopping experiences”.

The bold words are included that way in today’s release. Seem kinda familiar, don’t they?

Time for me to let you go, a bit later than usual today. It was worth getting in some initial thoughts on the Seven-Prime deal. More will shake loose in the coming days, I’m certain.

Meanwhile, I’ve a plane to catch. New South Wales, here I come.

As ever, I welcome your thoughts to letters@unmade.media, or via the comment button.

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Have a great day.

Toodlepip…

Tim Burrowes

Properietor - Unmade