APN’s Radio Buy-Out a Likely Winner


There is much that can be said about APN News and Media’s recent acquisition of full ownership and control of its radio operations and all of it is positive.

The attractively priced $A 247 million purchase of Clear Channel Communications’ half interest in the Australian Radio Network (ARN) and The Radio Network (TRN) in New Zealand will give APN full control of a long-established operation with good growth prospects which is both highly profitable and well managed and which has the potential for further financial improvement. Gaining access to the cash flows of ARN and TRN should also provide APN with a valuable strategic buffer against any further financial deterioration in its substantial Trans-Tasman print operations, whose future growth prospects are less certain.

This report highlights some of the key financial aspects of APN’s radio operations in both Australia and New Zealand over the past decade. It demonstrates why Global Media Analysis (GMA) considers this recent transaction to be highly significant as it will not only stabilise APN’s recent financial performance but also position the multi-media group for renewed future growth. GMA’s positive assessment of the recent radio transaction appears to be in line with the views of the majority of APN’s institutional investors who have given their strong support to the equity raising which will partially finance the radio division buyout.

Impressive Growth in 2013
The financial performance of APN’s radio operations in calendar year 2013 (CY 2013), on a fully consolidated basis and expressed in $A terms, was impressive. In the year, total revenues increased by an above average 10.8% to $A 251 million; while operating expenses (Opex) were held to a 7.7% rise to $A 173million. Strong revenue growth and good cost control resulted in earnings before interest, tax, depreciation and amortisation (EBITDA) growing by a significant 18.4% to reach $A 78 million, the radio division’s best profit result since 2007,when it recorded an all time high EBITDA of $A 92 million.

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Report date: 23/02/2014
Industry: Radio
Country: Australia
Topic: Finance
Document Number: GMA2014-01

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