The takeover can now go ahead and will be completed on 31 December. However, the news didn't elicit a positive response from the market.

As of today's close, the Seven West share price is 61 cents, 0.81% lower than its previous close.

Meanwhile, the Prime Media share price surged 2.27% higher to trade at 45 cents.

For context, the S&P/ASX 200 Index (ASX: XJO) finished the day 0.31% higher.

Let's take a closer look at the latest update on Seven West's proposed takeover.

Seven West share price flops despite takeover news

The market bid the Seven West share price lower today despite its latest takeover surpassing the progress of its previous attempt to buy Prime Media.

Back in 2019, Seven West's merger proposal was blocked by 53.5% of Prime Media's shareholders. Today, more than 99% of Prime Media shareholders approved of the transaction.

Seven West is now set to take over its media peer for $131.88 million. That will see Prime Media shareholders receiving 36 cents per security they hold.

While that's currently 20% less than the Prime Media share price, at the time Seven West posed its offer it represented a 56% premium on Prime Media's previous close.

Prime Media operates the Prime7 television network in Eastern Australia and its sister network GWN7 in parts of Western Australia.

The transaction will be conducted through the acquisition of Prime Television, Seven Affiliate Sales, and all their subsidiaries, by Seven West.

The company believes the takeover will "create the leading wholly-owned commercial premium broadcast, video, and news network".

Despite today's dip, the Seven West share price is 32% higher than it was prior to announcing the acquisition. It has also gained 69% year to date.

The post Seven West (ASX:SWM) share price slumps despite good news of Prime acquisition appeared first on The Motley Fool Australia.

The Australian Competition and Consumer Commission (ACCC) has given the deal the thumbs up. The ACCC concluded that combining the companies won't affect media competition in a major way.

Despite the good news, the Seven West Media share price is tumbling. At the time of writing, it is trading at 62 cents, 3.91% lower than its previous close.

Let's take a closer look at the acquisition and the ACCC's verdict.

Seven West share price slides despite ACCC approval

For the second time in 2 years, Seven West Media is trying to buy fellow Australian media entity, Prime Media.

Seven announced it was going to make a second attempt to buy Prime Media in early November. The ACCC has approved the deal, as it did back in 2019, but Seven still has to win over Prime shareholders.

That was the hurdle that tripped up the pair's first proposed merger in 2019. It was scrapped when 53.5% of Prime Media shareholders voted against the transaction.

The Prime Media Board has unanimously recommended that shareholders vote in favour of this second proposal.

ACCC chair, Rod Sims said that while the merger received the watchdog's approval in 2019, the media market's importance drove it to conduct another review.

Sims commented:

Consistent with our findings in 2019, we concluded that the proposed acquisition was unlikely to substantially lessen competition or choice for advertisers and consumers. This is because Seven West Media and Prime are not particularly close competitors in the supply of advertising opportunities or the supply of media content, and other competitors will constrain the merged entity.

Prime Media's shareholders will cast their vote on the acquisition on 23 December.

The Seven West Media share price is up 18% since it announced its second attempt to buy Prime on 1 November.

The Seven West Media share price is also 70% higher than it was at the start of 2021.

The post Seven West Media (ASX:SWM) share price dips despite ACCC green light on Prime Media deal appeared first on The Motley Fool Australia.

At the time of writing, shares in the media company are swapping hands for 50 cents apiece, up 9.9%. As a result, the company's share price is now 18.6% away from its 52-week high.

Let's take a look at the latest price moving announcement.

What's moving the Seven West Media share price today?

Investors are getting excited about Seven West Media on Monday as the company looks set to expand its media presence through an acquisition. The entity being acquired is the Australian-based and fellow ASX-listed media corporation, Prime Media Group.

According to the release, Seven West is acquiring Prime Television, Seven Affiliate Sales, and all its subsidiaries. At present, Prime operates the regional television network Prime7 in eastern Australia and GWN7 in regional Western Australia.

In turn, Seven West believes the acquisition will create a broadcasting, video, and news powerhouse — reaching more than 90% of the Australian population every month.

Furthermore, the bid for Prime Media's business values it at $131.9 million. Based on the current number of shares on issue, this equates to 36 cents a share. Meanwhile, Prime Media was going for 23 cents per share at the end of Friday.

Unsurprisingly, shares in Prime Media have skyrocketed today on the significantly higher offering. At the time of writing, they are trading 69.57% higher at 39 cents a share.

Seven West shareholders will likely be distributed cash on the balance sheet of the acquired companies. Moreover, this spare cash is expected to be in the realm of $10 million from Prime and its various subsidiaries.

Additionally, accounting for the cash and share of distributions, Seven Media's net investment is expected to be roughly $72 million. This would suggest a payment 2.9 times enterprise value to FY21 earnings before interest, tax, depreciation, and amortisation (EBITDA) for the acquisition.

Management commentary

Commenting on the acquisition, Seven West Media CEO James Warburton stated:

This proposal is an important step forward for both companies. SWM and PRT are great partners and have a long, successful relationship. Together, they will offer the best content for our national audience and unmatchable premium revenue opportunities for our clients.

The proposed transaction is an exciting and transformative development for advertisers and media buyers. It means we will be able to give advertisers easy and seamless access via a single platform to capital city and regional markets.

The market is showing enthusiasm for the Seven West Media share price with cost synergies expected. In fact, an estimated $5 million to $10 million cost synergies are anticipated on an annualised basis. These are forecast to be realised within 12 to 18 months from the acquisition completion.

Finally, the Seven West Media share price is up 196% in the last year.

The post Seven West (ASX:SWM) share price lifts 10% amid Prime Media acquisition appeared first on The Motley Fool Australia.

Unfortunately, not all shares are in favour with them right now. Three ASX shares that have just been given sell ratings by brokers are listed below. Here's why these brokers are bearish on them:

Magellan Financial Group Ltd (ASX: MFG)

According to a note out of Goldman Sachs, its analysts have retained their sell rating and $47.97 price target on this fund manager's shares. This follows the launch of Magellan's FuturePay equity income product, which will pay a fixed distribution benchmarked to inflation. While the product may be appealing for advisors, Goldman doesn't believe it is for investors. As such, it isn't adjusting its earnings forecasts to account for its launch until it can better gauge demand. In light of this, and with its performance still skewing earnings risks to the downside, it has retained its sell rating. The Magellan share price is trading at $48.86 today.

Prime Media Group Limited (ASX: PRT)

A note out of Morgan Stanley reveals that its analysts have retained their underweight rating but lifted their price target on the regional television focused media company's shares to 9 cents. The broker believes that regional TV advertising is improving after the recent downturn. However, while this may be positive, Morgan Stanley continues to believe that its medium to long term earnings are under threat due to a structural decline in the regional advertising market. The Prime Media share price is trading at 23 cents this afternoon.

Virtus Health Ltd (ASX: VRT)

Another note out of Morgan Stanley reveals that its analysts have retained their underweight rating and $5.05 price target on this fertility treatment company's shares. The broker notes that IVF cycles are growing strongly versus both 2020 and 2019 levels and are expected to continue doing so during the second half. However, due to its stretched valuation, Morgan Stanley believes there are better options for investors in the industry. The Virtus Health share price is fetching $6.23 on Thursday.

The post Top brokers name 3 ASX shares to sell today appeared first on The Motley Fool Australia.

At yesterday's market close, shares in the rural and regional broadcaster were trading at 21 cents each.

Let's take a closer look at today's news and what it might mean for the Prime Media share price.

ACM buys Prime assets

The Australian Communications and Media Authority (ACMA), approved ACMs purchase from Bruce Gordon, owner of WIN Network and third-largest owner of Nine Entertainment Co Holdings Ltd (ASX: NEC).

The purchase increased ACM's stake in the company to 19.99% from its previous 14.67%. Under the Broadcasting Services Act (1992) any party which seeks to control 15% or more of a media company must first obtain the approval of ACMA.

ACM made the purchase one month previously.

The purchase has made ACM the largest shareholder in Prime Media, overtaking Seven West Media Ltd (ASX: SWM) major owner Kerry Stokes.

In a note to ACM staff, as reported by The Australian, part-owner Antony Catalano said:

The Prime Media Group is in a strong financial position, it is well-managed, and we believe it has an important role to play in the evolving regional media landscape.

ACM and Prime audiences have similar interests, aspirations and goals. We hope to explore ways in which we can work more closely to ensure we continue to deliver the highest-quality journalism for regional Australians.

As part of the deal, ACM will need to sell its regional newspapers in Bendigo and Wagga Wagga. This is to comply with Australian legislation.

Prime Media share price snapshot

Despite today's dearth of price movement, the Prime Media share price has been very successful over the past 12 months. In the past year, Prime Media's value has increased by 112.12%. Media companies suffered heavily from the COVID-induced market crash of last year.

Prime Media has a market capitalisation of $75.2 million.

The post Prime Media (ASX:PRT) share price unmoved as ACM tightens grip appeared first on The Motley Fool Australia.

After edging slightly higher throughout the day, the Nine share price closed flat at $3.00 per share. In contrast, the S&P/ASX 200 Index finished the day down 0.84%.

Let's take a closer look.

Nine wants a WIN

The Australian is reporting Nine Entertainment is in talks with WIN chair Bruce Gordon about absorbing his business into Australia's largest publicly listed media company. WIN Corporation owns the WIN regional television network, Crawford publications, and several local radio stations.

It is reported Gordon sold his shares in Prime Media Group Limited (ASX: PRT) to the owners of Rural Press Ltd. That move coming, allegedly, as Gordon looks to focus his attention on a potential deal with Nine. The Australian also reported that Rural Press is looking to take over Prime Media.

The article claims Gordon will be paid in scrips (i.e. a promissory note for shares in Nine). The paper speculates the deal could be worth anywhere between $50 million to $100 million.

Gordon, through company Birketu Pty Ltd, already has a 15% stake in Nine Entertainment. The Australian claims any deal will likely see Gordon own enough shares to be elevated to the board. If this were the case, it would be yet another change to the revolving door of the Nine board.

If Nine were to purchase WIN, it would likely end its affiliation deal with Southern Cross Media Group Ltd (ASX: SXL).

Other news

As previously reported, Nine is in the process of replacing long-time CEO Hugh Marks. Marks, whose tenure ends at the end of the month, is being replaced by Mike Sneesby. Sneesby is the soon-to-be-former head of Stan Australia.

Nine has been delivering results to its investors. Channel Nine show Married at First Sight is currently the highest-rated program on Australian TV. On top of this, a Nielsen report from January, as reported by Mediaweek, listed nine.com.au, the Sydney Morning Herald, and The Age as the number 2, 5, and 8 most viewed news websites in Australia, respectively.

Nine Entertainment share price snapshot

Since its merger with Fairfax Holdings, the Nine company has been in its strongest position yet. The share price has increased 114.5% on this time last year. Just last week, the media conglomerate broke its 52-week share price record, twice!

Given its current valuation, Nine Entertainment has a market capitalisation of $5.1 billion.

The post Is Nine Entertainment (ASX:NEC) eyeing up regional broadcaster WIN? appeared first on The Motley Fool Australia.

Here's a short recap of the Australian market:

• S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) lower 0.40% to 6.824.00
• ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) lower 0.34% to 6,933.60
• AUD/USD at US 69 cents
• Gold at US$1,477.81 an ounce
• Brent Oil at US$66.15 a barrel

One of the best-performing ASX 200 shares today was the Service Stream Limited (ASX: SSM) share price which increased over 11% after a contract win was announced.

Gold miners were some of today's top performers, the Northern Star Resources Ltd (ASX: NST) share price increased over 5% and the Saracen Mineral Holdings Limited (ASX: SAR) share price went up 3%.

The share price of Lynas Corporation Ltd (ASX: LYC) fell over 1% today despite the new plant being awarded lead agency status by the WA Government.

The Zip Co Ltd (ASX: Z1P) share price fell 0.3% today after the buy now, pay later business made an announcement regarding a code of practice for the industry.

A takeover offer sent the share price of CML Group Ltd (ASX: CGR) higher by 15.8% after confirming it had received a confidential, unsolicited, non-binding indicative and conditional offer.

The share price of Prime Media Group Limited (ASX: PRT) dropped 5% today after it failed to receive shareholder backing for the takeover.

Finally, the share price of Village Roadshow Ltd (ASX: VRL) rose by nearly 20% on takeover talks.

Here are some of today's top stories:    

• Aussies have never been this rich and we are about to get richer
• Replace your entire wage with dividends from ASX shares
• What size share portfolio do you need to be considered wealthy?
• Why Australia's strengthening economy could mean no RBA cuts in 2020

The post ALL ORDINARIES finishes lower Thursday: 8 ASX shares you missed appeared first on The Motley Fool Australia.

The Seven West share price rallied 10.4% to 42 cents during lunch time trade as the media group announced the sale of its magazines business this morning.

The divestment comes hot off the back of Friday's announcement that the group was acquiring Prime Media Group Limited (ASX: PRT) and selling its Redwave radio division to Southern Cross Media Group Ltd (ASX: SXL) for $28 million.

An extra $70m to play with

Seven West said it would sell its Pacific Magazines business to Bauer Media for $40 million in cash. This represents a respectable 4.9 times enterprise value-to-earnings before interest, tax, depreciation and amortisation (EV/EBITDA ) multiple based on the 2019 financial year.

Seven West will also receive $6.6 million in advertising credits to use on Bauer Media's publications over three years. Both parties have entered into agreements that include the ongoing production of Better Homes and Gardens television programme and sharing lifestyle content under a long-term agreement.

The proceeds from the sale of Pacific Magazines will be used to further pay down debt and improve the group's balance sheet.

JP Morgan estimated that the deal to sell Rewave and merge with Prime Media will lower Seven West's leverage to 1.7 times by the end of the current financial year compared with 2.3 times in FY19.

"The deal [to buy Prime] is expected to be immediately accretive and we estimate 13% earnings accretion in FY20," said the broker.

"We view the deals as a positive for the company as it helps reduce net leverage while expanding its audience reach to 90% of Australians and leveraging its core TV content assets."

Expect more M&A in the sector

The nearly $70 million in cash from the sale of Redwave and Pacific Magazines also gives management a war chest to hunt for more acquisitions as the industry consolidates in the face of the disruption caused by the internet.

JP Morgan has an "overweight" (equivalent to "buy") recommendation on the stock with a target price of 65 cents a share, although the valuation doesn't account for the Pacific Magazines transaction.

Seven West isn't the only media company that's active in mergers and acquisitions (M&As). Nine Entertainment Co Holdings Ltd (ASX: NEC) bought Fairfax Media in a $4 billion deal last year to create the country's biggest media organisation.

The post What you need to know about the Seven West Media share price surge appeared first on The Motley Fool Australia.

What did Seven West Media announce?

According to the release, the media company believes these initiatives will transform Seven West Media and position the network as the leading wholly-owned commercial premium broadcast, video and news network across Australia, reaching over 18 million people each month.

These initiatives include a merger with Prime Media Group Limited (ASX: PRT) and the divestment of its Redwave business to Southern Cross Media Group Ltd (ASX: SXL).

In respect to the merger, Seven West Media will acquire all of Prime Media's issued shares through a Scheme of Arrangement. This scheme will see Prime shareholders receive 0.4582 Seven West Media shares for each Prime share that they hold.

Management believes the merger will deliver significant value creation. This is by providing advertisers with a single platform that will deliver superior audience reach across metropolitan and regional markets.

It also expects it to unlock the revenue potential of regional audiences, enhance the audience proposition, and generate expected cost synergies of $11 million on an annualised basis and potential revenue upside. These costs savings are expected to be fully realised within 12-18 months from completion.

Divestment.

Seven West Media and Southern Cross Media have agreed a cash consideration of $28 million for the Redwave business. This represents an FY 2019 Enterprise Value/EBITDA multiple of 8x.

Seven West Media's chairman, Kerry Stokes AC, said: "SWM and Prime have had a longstanding relationship and are key partners in the industry. The combined group will cement our position as Australia's leading content provider and presents excellent value to shareholders."

Prime Media's chairman, John Hartigan, has recommended the transaction.

He commented: "The Prime Board has carefully considered the Proposed Transaction and believes it is in the best interests of Prime shareholders. It represents an exciting opportunity for Prime shareholders to maintain their exposure to the broadcast television industry in a stronger and larger combined group that is more relevant and resilient."

The merger remains subject to an independent expert's report, and shareholder, court, and regulatory approval. All being well, management is aiming to complete the deal early next year.

The post Seven West Media announces merger with Prime Media Group appeared first on The Motley Fool Australia.

While Seven West Media's return to profit-making territory can been seen as a positive, it should be noted that the profit comes as revenue declines. Seven West recorded revenue of $1.62 billion for FY 2018, down 3.2% on the previous year's figure of $1.67 billion. As such, Seven West's latest results should be viewed in context. Part of that context involves taking into consideration Seven West's $1 billion in write-downs last year. With that in mind, Seven West's FY 2018 profit represents a drop from the company's FY 2017 result of about 14%. And, with the company's revenue continuing to fall, as it has done for years, it seems there is little to celebrate with Seven West's results. But it's not all doom and gloom.

With talk of mergers in the wake of relaxed media laws, media companies have become interesting again. The Nine Entertainment Co Holdings Ltd (ASX: NEC) and Fairfax Media Limited (ASX: FXJ) merger plans have triggered interest from investors and arguably benefitted Fairfax shareholders who have enjoyed steady gains since the announcement. Now it seems that a Seven West merger or acquisition may be back on the cards as the company withholds its dividend payments.

"The dividend has been temporarily suspended with a focus on prudent capital management and balance sheet flexibility post relaxation in media ownership legislation," Seven West stated.

Seven West last year played down talk of a merger with Prime Media Group Limited (ASX: PRT) . But that could now be an option.

The post Results in: Seven West Media back to black amid hints of merger appeared first on The Motley Fool Australia.

Brokers have made recommendations on these under-the-radar small caps for a variety of reasons, find out more below.

Zip Co Ltd (ASX: Z1P)

Digital retail finance company and $233 million market cap company Zip Co Ltd offers point-of-sale payment services to the retail, education, health and travel industries and according to Ord Minnett is currently "delivering against expectations".

The broker has an accumulate recommendation on the stock after Zip's March quarterly report delivered well above expectations, with its cash flow for the period improving by $2.8 million.

Zip's share price has plateaued for the best part of the last 12-months, but spiked up on the release of half-year results in February, which saw Zip report a revenue rise of 139% to $16 million with its bad debt level percentage now lower than the industry benchmarks.

According to Ord Minnett, Zip is on track to book some pleasing full year results, and while Ord Minnett name credit risk and regulatory risks as notable, Zip's ability to grow its customer base by 216% in the last year cannot be ignored.

Ord Minnett has a 90c price target on the stock – Zip closed on May 18 at 81c per share – up from 67c per share this time last year.

While the broker concedes the company is still relatively high risk, it cannot deny its future looks promising and its strong underlying sales results for the March quarter indicates good things are to come.

Apollo Tourism & Leisure Ltd (ASX: ATL)

Manufacturer and RV retailer Apollo Tourism & Leisure Ltd is a family-owned company operating globally and leveraging on the "grey nomad" trends of the ageing population.

Apollo has caught the eye of investment advisory firm Taylor Collison who have placed an outperform rating on the stock which is up 2.6% at the time of writing to $1.55.

According to the broker Apollo is well-positioned for near term earnings growth with a positive FY19 outlook given industry strength and the company's current business operations.

The broker suggests Apollo is on track to achieve EPS growth of 21.9% for FY19 and 9.2% on FY20 due to a mixture of fleet expansion activities across Canada and the US and a greenfields site expansion in the US.

Its target price on the stock has increased by 4% to $1.78 based on an EPS multiple of 13.5x FY19 estimates, which led to the upgrade to outperform and a bullish approach to the stock going forward.

Apollo recently acquired UK & Ireland RV rental business Camperco for $8.2 million in cash and shares which supports Apollo's strategy to become a "global RV solution".

One to watch as its UK and US expansions pick up pace.

Prime Media Group Limited (ASX: PRT)

Equities research group CCZ Equities has zoomed in on media sector small cap Prime Media Group Limited – a regional broadcasting company.

Prime may only be a $115 million market cap company at present, but it appears to have big plans on the horizon for its expansion, which have led to CCZ placing a buy/hold rating on the stock.

Prime's May trading update reported an 8.9% fall in FY18 year-to-date revenues on the previous corresponding period – but the previous period did include the Rio Olympics, so a drop was expected.

The revenue drop led Prime to drop its NPAT forecast to between $24.3 million and $25.3 million and the broker has speculated Prime could be a takeover or merger target for Seven West Media Ltd (ASX: SWM) or Fairfax Media Ltd (ASX: FXJ), as the current affiliation agreement between Prime and Seven West ends in mid-2019.

The broker labelled Prime as having been "superbly run" by CEO Ian Audsley, with its local news at number one ratings in all areas except Newcastle. It suggests investors who hold at this point should accept a possible Seven West takeover at around 44c per share.

Prime shares closed at 32c on May 18 and have experienced a fairly volatile 12 months in terms of pricing.

The post 3 under-the-radar small caps liked by brokers appeared first on The Motley Fool Australia.

You only need to look at the underperformance in the share prices of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd. (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ) to see what I mean.

These stocks are lagging the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) and I don't think they can make a meaningful rebound as long as the Royal Commission continues to paint the big banks as predators.

It isn't only the banks that are affected. Wealth advisors, mortgage brokers and insurers are also in the firing line.

But there may be a surprising winner from the Royal Commission spotlight on bad practices in the financial industry. Morgan Stanley thinks media companies will benefit from all the negative publicity on the sector.

"We have a cautious outlook for traditional media stocks. But identify a surprise catalyst which could add A$150-$250m in ad revenue, and prima facie, lift EPS by say +5% to +15% for Internet, Outdoor and TV companies," said the broker.

"Anecdotally we can observe a spike in bank brand building ad campaigns, which appear to be running in conjunction with the Royal Commission, e.g., highlighting Banks' positive community involvement. And it's more than a hunch, the numbers support our conclusion."

Ad spend is up 5% in the first two months of this calendar year compared with the same time in 2017 and is running ahead of the broker's forecast of 2%-3% for 2018.

Furthermore, ad spending by banks is up a whopping 32% in January and February as the wider financial industry increased their ad spend by 21% or $25 million over the same period.

If you strip out ad spend growth by banks and other financial companies, Morgan Stanley estimates that ad spend would have only inched up 2.3%.

It's too early to say that the growth in ad spending will be sustained and the broker isn't rushing to upgrade the stocks in the sector.

However, the broker notes that the stocks best placed to benefit from this potential trend include outdoor advertising companies APN Outdoor Group Ltd (ASX: APO) and HT&E Ltd (ASX: HT1), as well as free-to-air television broadcasters Nine Entertainment Co Holdings Ltd (ASX: NEC), Seven West Media Ltd (ASX: SWM), Southern Cross Media Group Ltd (ASX: SXL) and Prime Media Group Limited (ASX: PRT).

There is another sector that is also well primed to race ahead. The experts at the Motley Fool have identified a niche sector that is set to make a big impact on markets and they have produced a free report for you to download.

Follow the link below to get your free copy and to find out what stocks are best placed to ride this wave.

The post This sector is a winner from the Banking Royal Commission with a $150m-$250m windfall appeared first on The Motley Fool Australia.

Back then, in the 1980's before the internet revolutionised the media landscape, the Labor government's cross-media ownership regulations sought to prevent companies from gaining a stranglehold on particular markets.

The media regulations spoke of the core of fundamental laws which were aimed at upholding constitutional pillars such as Australia's implied freedom of political communication and the overarching democratic process.

The rationale was that media monopolies can threaten the diversity of opinions and that's not good for a democracy.

But times have changed.

The internet has hurt the dominance once enjoyed by Australia's major media players, which include News Corp (ASX: NWS), Fairfax Media Limited (ASX: FXJ) and Seven West Media Ltd (ASX: SWM).

As a result, the government recently relaxed Australia's media ownership laws.

Communications Minister Mitch Fifield said the reforms will "strengthen Australian media organisations" and "help ensure their future viability".

"Measures include the abolition of redundant ownership rules that shackle local media companies and inhibit their ability to achieve the scale necessary to compete with foreign tech giants," according to the Communications Minister's website.

The competition watchdog, the ACCC has since softened its stance on its approach to proposed mergers.

Now a series of mergers, some previously considered near impossibilities under the previous regulations, could realistically be achieved.

One of particular interest concerns a possible merger between Fairfax and Nine Entertainment Co Holdings Ltd (ASX: NEC).

And the chances of Prime Media Group Limited (ASX: PRT) being taken over by Seven West have also increased.

As the princes of print and the queens of screen come together we may see the rise of the kings of media.

This means the media sector is certainly going to provide some opportunities and entertainment for investors in the times ahead.

The post Are Fairfax Media Limited and Nine Entertainment Co Holdings Ltd eyeing a merger? appeared first on The Motley Fool Australia.

The free-to-air (FTA) commercial broadcaster has seen its share price rise thanks to several factors. The federal government is expected to substantially lower the annual licence fees the broadcaster must pay, and will also allow companies and individuals to own media companies with exposure to more than one or two sectors.

Broadcasters will also be allowed to reach more than 75% of the Australian population, which could see the Metro TV networks take over or merge with the regional broadcasters, which include Prime Media Group Limited (ASX: PRT), Southern Cross Media Group Ltd (ASX: SXL) and Bruce Gordon's WIN Television.

The collapse into administration by Ten Network Holdings Limited (ASX: TEN) has also gifted Nine and rival Seven West Media Ltd (ASX: SWM) benefits. We could see the beleaguered network disappear leaving just Nine and Seven to divide up the broadcasting pie.

Of course, investors should remember that the FTA sector faces structural decline as newspapers did before them, with the arrival of subscription video on demand (SVOD) services Netflix and Stan. Stan is half-owned by Nine in a joint venture with Fairfax Media Limited (ASX: FXJ).

Personally, I'd be avoiding the whole sector given the challenges it faces.

The post Nine Entertainment Holdings Co Ltd hits 52-week high appeared first on The Motley Fool Australia.

As a regional television broadcaster affiliated with Seven West Media Ltd (ASX: SWM), Prime carries the Channel 7 programming into regional areas on the East Coast of Australia, as well as the Ten Network Holdings Limited (ASX: TEN) into regional Western Australia.

With expectations that existing media rules will be relaxed fairly soon, Prime Media is a prime (excuse the pun) takeover target by one of the metropolitan networks like Seven and Ten.

That's the most likely reason why the share price has soared so much. Additionally, media companies are expected to see their licence fees slashed, which is obviously a positive for their earnings.

Peer Southern Cross Media Group Ltd (ASX: SXL) hasn't enjoyed the same sort of rise as Prime Media, up just 8.9% over the past month, although the company has substantial commercial radio assets as well as regional television broadcasting.

At the current price of 40 cents, Prime boasts a trailing, fully franked dividend yield of more than 9.5%, which may also make it very attractive to investors.

The post Why the Prime Media Group Limited share price is at a 52-week high appeared first on The Motley Fool Australia.

Investors aren't just looking for yield – but for those companies that can deliver it consistently going forward too. That is pushing up the prices of the largest income stocks to where now their dividend yields are unappealing.

Take Sydney Airport Holdings Ltd (ASX: SYD) as an example. The owner of Sydney Airport has seen its share price soar to $7.34 – up 27% in the past year, and the dividend yield sink to 3.9% and that's unfranked.

Toll road owner and operator Transurban Group (ASX: TCL) is another. The share price is up 22% in the past 12 months, pushing down the dividend yield to 3.93%, and that's only partly franked.

Here are 9 companies currently paying dividend yields of 10% or more…

Source: S&P Global Market Intelligence

The problem with a number of the companies in the table above is that they are unlikely to be able to continue paying out dividends at their current levels because their earnings are declining. That includes the three free-to-air broadcasters Prime Media, Nine Entertainment and Seven West.

IPE Limited is an interesting company, investing in a number of private equity funds and actually paying out 11 cents in dividends and capital returns to shareholders in the 2016 financial year. At the current price of 23 cents – that's the equivalent of an astonishing yield of 48.9%. The company says it expects to continue paying out capital returns in the 2017 financial year too.

PTB Group specialises in aircraft engine services in Brisbane. The share price appears cheap and the company paid a fully franked dividend of 5 cents last financial year. However, investors should note that there is a fair degree of risk involved with PTB – thanks to its $13.7 million of debt – and the company issued $700,000 worth of shares to pay the cash portion of the June 2016 dividend.

One thing to note too is that many of the companies in the table pay fully franked dividends – taking the post-tax yield to more than 14%. Considering the long-term average annual return from the share market is around 10%, owning a basket of big dividend payers could easily see investors thrash the market.

Foolish takeaway

For those investors willing to do further research, the 9 companies listed above could be worthy of adding to a diversified portfolio for their income generating ability.

The post 9 dividend stocks with yields of more than 10% appeared first on The Motley Fool Australia.

What are the changes?

The measures announced by the Turnbull government seek to abolish the "75% reach rule" and the "two out of three" rule.

The 75% reach rule

The 75% reach rule restricts a company's ability to broadcast to more than 75% of the national population of Australia. The practical effect of these rules gave rise to a delineation of commercial metropolitan networks, such as Nine Entertainment Co Holdings Ltd (ASX: NEC), Ten Network Holdings Limited (ASX: TEN) and Seven West Media Ltd (ASX: SWM) from regional network providers such as Prime Media Group Limited (ASX: PRT) and Southern Cross Media Group Ltd (ASX: SXL).

Two out of three rule

The two out of three rule was introduced to prevent a single company from controlling no more than two media platforms out of the three media platforms: commercial radio, commercial television and print (within the same licence area). This rule effectively meant companies like News CDIS (ASX: NWS) and Fairfax Media Limited (ASX: FXJ) were restricted in the media platforms they could control in a given region.

Why does it matter?

The proposed changes imply that merger and acquisition (M&A) activity will ramp up within the media sector, as industry-wide consolidation becomes inevitable.

Natural synergies mean a marriage between regional and metropolitan networks is an obvious outcome. Nine Entertainment Co already appears attuned to these benefits, given its acquisition of a 9.99% stake in Southern Cross Media two weeks after the government's announcement. Accordingly, regional media stocks like Prime Media and Southern Cross Media appear key takeover targets.

Another likely result is cross-media ownership. Companies like Fairfax Media and APN News and Media Limited (ASX: APN) benefit from the removal of the two out of three rule. As such, it is likely that they will look for potential suitors in the commercial television space to expand their media reach. I believe Seven West Media, Nine Entertainment and Ten Network would be prime candidates for a potential tie-up with conventional print media companies, implying potential benefits to shareholders if a deal ensues.

Foolish takeaway

Long-term investments should not be made on speculation of M&A activity. Instead, investors are better served focussing on the underlying business models of a particular industry and selecting a few stocks to buy for profitable growth.

Whilst reform to media laws could result in some big winners (and losers), the industry remains primed for disruption by other unconventional media sources (like Facebook, Twitter and Google).

Therefore, although the media industry may benefit in the short-term through consolidation, in my opinion, the industry is unlikely to experience the growth and profitability of years gone. Accordingly, I would stay away from the media sector for now.

The post Is it time to sell your media shares? appeared first on The Motley Fool Australia.

Most retirees and SMSF investors typically require a certain level of income to sustain their required standard of living and for many people this just isn't possible with term deposit rates at around 3%.

This has seen more people invest in equities in the search for yield.

This sounds like a reasonable strategy but investors need to remember that yield is only one part of the equation when investing in shares.

For example, what is the point investing in a company offering an 8% yield if the share price falls by 30%?

Or what if the company pays a trailing dividend yield of 8% but then slashes its dividend due to difficult operating conditions? Does BHP Billiton Limited (ASX: BHP) or Woodside Petroleum Limited (ASX: WPL) sound familiar?

And then there is the other situation where the dividend looks so attractive, but it is the result of the share price being hammered for one reason or another. Sometimes the market can get it wrong – for example Retail Food Group Limited (ASX: RFG) when it was recently trading below $4 per share and yielding more than 6.2% – but it can also be because the market thinks the current dividend is unsustainable.

In these situations, investing for yield alone is clearly a recipe for disaster.

With these points in mind, I recently carried out a quick search looking for companies currently yielding more than 7% and looked at whether those above average yields were too good to be true. Here are a few examples of the companies that came up:

• Prime Media Group Limited (ASX: PRT) – Currently yielding 16.7% – fully franked! The media sector is facing a number of headwinds and Prime Media continues to suffer from declining revenues. The company does expect to post a full year profit of around $24 million, which should allow for the payment of a reasonable dividend for the remainder of the year. With that said, the longer term sustainability of the company's business model and dividend is more uncertain and this is sufficiently reflected in the current valuation.
• Finbar Group Limited (ASX: FRI) – Currently yielding 10.5% – The West Australian property developer has suffered from softening conditions recently thanks to the decline in the resources sector. There could be further pain to come for Finbar and I would not be surprised to see the full year dividend cut when the company reports later in the year.
• Select Harvests Limited (ASX: SHV) – Currently yielding 11.2% – Just like commodity companies, Select Harvests' profits are highly dependant on the price it can receive for its almonds. The price of almonds has been declining recently so investors should expect a fall in profits and a complimentary fall in the dividend when the company next reports.
• Australia and New Zealand Banking Group (ASX: ANZ) – Currently yielding 7.5% – There is a lot of ongoing debate as to whether or not ANZ (and the other major banks) will be cutting dividends this year and this uncertainty is weighing on the share price. There is little doubt that profit growth has stalled for ANZ and the current share price reflects the fact that it is the bank at the highest risk of cutting its dividend in the short term.

Foolish takeaway

Investors should always be sceptical when a company is offering a dividend yield well beyond the market average.

There is usually a reason behind this and it is up to the investor to find out why the dividend yield may be too good to be true.

Are you looking for a sustainable and growing dividend yield that offers the possibility of solid capital gains?

The post Are these massive dividend yields too good to be true? appeared first on The Motley Fool Australia.

Today, Nine Entertainment Co Holdings Ltd (ASX: NEC) grabbed hold of 9.99% of Southern Cross Media Group Ltd (ASX: SXL) from Macquarie Group Ltd (ASX: MQG). Macquarie had held around 26% of Southern Cross before the deal.

Nine can't yet go over the 10% mark due to existing rules, but positions the company for a potential takeover of Southern Cross, if and when the new rules come into effect.

Interestingly, Southern Cross is a regional broadcaster for Nine's two major metropolitan competitors, Seven West Media Ltd (ASX: SWM) and Ten Network Holdings Ltd (ASX: TEN). Nine's stake in Southern Cross could also serve another purpose – to block a takeover of the company by either Seven or Ten (or anyone else for that matter).

Billionaire Bruce Gordon — who owns WIN Corporation, Nine's regional affiliate partner — recently entered an arrangement with Deutsche Bank to acquire 4.3% of Nine. He already owns 14.99% of Nine, and has a similar stake in Ten. Nine and WIN recently extended their affiliation agreement to the end of June 2016.

Seven's regional affiliate Prime Media Group Limited (ASX: PRT) appears highly likely to end up in the lap of Seven – with billionaire Kerry Stokes holdings stakes in both companies.

And moves are not just taking place in the free-to-air television space. Fund manager Henderson Global Investors reported today that it had picked up more than 116 million shares or 5.05% of Fairfax Media Limited (ASX: FXJ). The manager appears to think that Fairfax is a potential takeover target. Apart from property portal Domain, Fairfax also owns a number of Australia's most visited websites, including The Age and the Sydney Morning Herald, which might be highly attractive to prospective buyers.

Then yesterday, Telstra Corporation Ltd (ASX: TLS) was reported to be considering listing its 50% share of pay TV operator Foxtel on the ASX. News Corp (ASX: NWS) owns the other 50%, and it too may want a bigger slice of Australia's media sector.

Foolish takeaway

There's no doubt Australia's media sector faces a massive upheaval if the new regulations are released, with some players staking substantial sums that they will definitely go ahead.

The post Media sector hots up as Nine Entertainment buys into Southern Cross appeared first on The Motley Fool Australia.

News that the group's total advertising revenue for the first two months of the current financial year has fallen 6.9% has sent Prime Media plunging 13.9% to 52.5 cents during lunch time trade and its regional peer Southern Cross Media Group Ltd (ASX: SXL) sinking 5.3% to 89 cents in sympathy.

We know the advertising market is under pressure but the extent of the decline is shocking and certainly raises doubts about whether conditions are bottoming after Prime Media managed to deliver a 3.2% improvement in earnings before interest, tax, depreciation and amortisation (EBITDA) to $66.9 million when it released its full-year result last month.

Management tried to put a positive spin on the disappointing update by stating that it is actually winning market share. While Prime Media's key markets of regional Victoria and northern and southern New South Wales shrunk 3.4%, the group's national agency revenue fell a more modest 2.6%, according to data from the Standard Media Index (SMI).

Regardless, the news is hard to swallow particularly given that metropolitan television's national agency revenue is up 2% in July and 0.7% in August.

Prime Media also added that the poor result for September has been exacerbated by the AFL Grand Final being scheduled in October this year.

"There is a general lack of confidence among regional advertisers due to poor consumer sentiment, which in turn has resulted in a very short market with limited visibility," said Prime Media's chief executive officer, Ian Audsley."Markets dependent upon mining activity are the most affected, particularly regional Western Australia."

One has to wonder if regional newspapers owned by Fairfax Media Limited (ASX: FXL) are also feeling the pinch. I have a feeling they are.

But someone's pain could be someone else's gain. Media groups that operate metropolitan broadcasting assets like Nine Entertainment Co Holdings Ltd (ASX: NEC), Seven West Media Ltd (ASX: SVM) and Ten Network Holdings Limited (ASX:TEN)  are probably watching this development with great interest.

These companies are keen on merger opportunities with their regional peers if media ownership restrictions are loosened or removed as the market expects.

I suspect once the dust settles we could be stuck with maybe two listed media groups with significant free-to-air television assets.

History has shown that the best way to make money from this thematic is to try to pick the targets, not the bidders.

But buying stocks just for their takeover value is usually not a sound strategy for retail investors, and as Prime Media's share price crash today shows, investing in the sector is only suited for those with a strong stomach for volatility.

The good news is there are undervalued stocks to buy that are easy on your stomach and the experts at the Motley Fool have uncovered two gems you can add to your portfolio. If you haven't already downloaded your free report, sign up below to get yours now.

The post Will merger fever reignite as regional media stocks get hammered today? appeared first on The Motley Fool Australia.