A $250 million plan to redistribute assets in the Australian radio broadcasting market has collapsed with the withdrawal of private equity firm Anchorage Capital Partners.

With the backing of Anchorage, ARN Media (ASX: A1N) had bid to acquire rival Southern Cross Austero (ASX: SCA). The pooled assets were then to be redistributed into two new media companies with Anchorage being left with some assets.

ARN owns the KIIS and Pure Gold radio networks plus a network of regional radio stations. Southern Cross owns the Triple M and Hit radio brands, a network of regional radio stations and contracts to broadcast free-to-air television signals in various regional areas.

In mid-October, ARN and Anchorage made an indicative bid at 85.5 cents a share. On 15 March the consortium said it was willing to increase its offer to 87 cents a share subject to the satisfactory completion of due diligence.

On 13 May, ARN announced that Anchorage had notified it two days earlier that, following due diligence and engagement with Southern Cross, it was withdrawing from the consortium.

As part of the process, Anchorage and its advisers had completed an extensive review of regional television.

ARN said the review had concluded that Anchorage’s regional television investment thesis, on which the October offer had been based, was no longer viable in light of a continued decline in the trading performance of regional television, the further deteriorating outlook for regional television, and the existing long-term contractual obligation of Southern Cross for outsourced TV broadcast transmission.

ARN said the departure of Anchorage meant that it had to withdraw the consortium proposal but it was still considering bidding for some Southern Cross radio assets and seeking the combination of ARN and Southern Cross digital audio assets.

At ARN’s annual general meeting on 14 May, Chairman Hamish McLennan and chief executive Ciaran Davis confirmed that the company was still considering combining ARN and Southern Cross Media assets and acquiring some Southern Cross radio assets.

Davis said: “After many months of diligence, the transaction is actionable now and able to be undertaken efficiently without undue execution risk.”

He said the market was “tough” but the company’s revenues to the end of April were ahead of last year.

Image: The KIIS radio network is operated by ARN.