UPDATE 1-Australia's Seven West Media to buy Prime Media Group for $43 mln

(Adds background, details on deal; paragraphs 2,4-11)

Oct 18 (Reuters) - Australian free-to-air television broadcaster Seven West Media said on Friday it planned to buy smaller Prime Media Group for A$63.8 million ($43.55 million), giving it more viewers and a larger share of the advertising market.

The Australian media sector is consolidating after the government loosened regulatory curbs, as companies merge to tackle growing threats from online giants, such as Netflix and Alphabet Inc’s Google.

The deal offers Prime shareholders 0.4582 Seven West shares for each share held. That values each Prime share at about A$0.174, or a discount of 3.3% to its last closing price.

Prime’s board said it was backing the offer, in the absence of a superior bid.

“Only scaled media companies have the capacity to compete with the international tech giants now changing the game in Australian media,” Prime Chief Executive Ian Audsley said in a statement.

“Small regional media companies like Prime are unable to achieve scale independently.”

Prime Media also provides free-to-air commercial television broadcasting services, but on a much smaller scale than Seven.

Both companies have entered a binding preliminary pact that is not subject to due diligence. If successful, existing Seven West shareholders will own 90% of the combined company, while Prime shareholders will hold the rest, they said.

The wave of consolidations comes after government reforms in 2017 that scrapped rules barring a single organization from owning all three media - television, newspaper and radio - in any given city.

The Prime acquisition would give Seven the potential to reach more than 90% of Australia’s population each month, it said.

That would previously have been impossible under the old laws that prohibited a television network from reaching more than 75% of the population.

In August, larger rival Nine Entertainment offered to buy the remaining stake in Macquarie Media for A$275.4 million, in a deal that boosted the broadcaster’s position in radio. ($1=A$1.4650) (Reporting by Rashmi Ashok in Bengaluru; Editing by Jane Wardell and Clarence Fernandez)