John Dahlsen is one of the few lawyers who has been seriously successful in business and the way he built Southern Cross Broadcasting into a $1 billion company after he was booted out of the Herald and Weekly Times is worthy of some commendation.
From the first subscriber email November 11
Southern Cross Broadcasting continues to power to new record highs each day, this morning lifting another 18c to $15.08.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
It’s certainly a triumph for chairman John Dahlsen who established the company with $4 million in equity and about $20 million of debt in the last 1980s after Rupert Murdoch kicked him out as Chairman of the Herald and Weekly Times in the wake of News Corp’s takeover.
For a long time the operation revolved around 3AW but after a slew of successful takeovers Dahlsen’s personal stake, held through his superannuation fund, is now worth more than $13 million.
According to the latest annual report Managing Director Tony “Slasher” Bell has a direct interest in 616,667 options granted under the executive options scheme, which are now worth more than $9 million, about $3 million of which is profit. He’s certainly no $30 million man like Network Ten chairman Nick Falloon, but Slasher’s wealth from Southern Cross must now be pushing $10 million after more than 10 years running the shop.
However, there is a downside to this so-called success story. Southern Cross is yet another company that has prospered in businesses run with a licence from government.
Banks, telcos, gaming outfits, electronic media companies and the tree-loppers at Gunns are together most of the big out-performers on the Australian market and all of them have that crucial government licence.
When you consider that SCB shares have risen from 70c to $15 in 12 years, how on earth can the government justify all those regional television newsroom closures in places like Townsville, Canberra, Cairns and Darwin three years ago?
The ABA was asleep at the wheel as these sorts of regional news services should have been mandatory conditions of the various television licences that SCB has snapped up over the years.
Southern Cross Broadcasting and regional newsroom closures
From the second subscriber email November 11
David Flint, the former chairman of the Australian Broadcasting Authority, writes:
The ABA did in fact put conditions concerning regional news and information on TV licenses in the aggregated regional markets. The report of the investigation on this, and the media releases are on the ABA site.
And the current ABA spindoctor Donald Robertson writes:
Readers of your item “John Dahlsen’s Southern Cross Broadcasting triumph” may not be aware that following the closure of regional news rooms by Southern Cross and Prime in 2001, the ABA investigated the issue and decided to impose a licence condition on all regional TV stations in the Eastern Australian aggregated markets (those with three competing commercial services).
The condition is bearing fruit for regional viewers as the ABA’s September news release indicates, see this link.
Manager Media and PR
CRIKEY: The Southern Cross share price closed 10c higher at a record $15 today after analysts upgraded their full year profit forecasts by about 10 per cent following yesterday’s bullish AGM in Melbourne.
The main driver was a 14 per cent rise in advertising revenue in the first quarter and UBS now has a price target of $15.80 on the stock.
Much of the momentum is coming from Channel Ten’s strong ratings because Ten’s regional affiliates comprise 60 per cent of Southern Cross’s overall television revenues.
It seems Ten’s regional ratings are still playing catch up with its capital city ratings and there is no sign of any slowdown.
The Ten Network must be feeling pretty silly about selling its 14.4 per cent stake in Southern Cross in August 2001 as they only pocketed $11.90 per share and left about $23 million on the table in what was a $90 million sale that generated a $58 million pre-tax profit.
The Southern Cross acquisition spree
While Southern Cross hasn’t bought as many companies or businesses as Computershare or Toll Holding, the two most acquisition-dependent stocks in the top 200, it would certainly be in the top 10 as you can see from this list:
1994: bought 6PR in Perth
1999: bought Channel Nine Adelaide for $96 million and immediately sacked almost half the staff
2001: paid $90 million to the Lamb family for 2UE and 4BC
2001: All scrip takeover of Telecasters Australia
2003: bought radio station 4BH in Brisbane from DMG
2004: paid around $100 million for television production company Southern Star