09/03/2016

ARN versus Austereo – Is It a Zero-Sum Game?

 

The impending enactment of the Government’s media reforms, and in particular the removal of the current two-out-of-three to a market limit, is likely to result in the eventual pairing of each of the three largest commercial radio networks with one of the three commercial television networks.

In view of that likely development, it is timely to examine the recent ratings and financial performance of the two largest commercial radio networks, those being the Australian Radio Network (ARN) and Austereo.  An examination of that performance for the two leading networks over the past five calendar years reveals two major trends.

The first trend is that the combined ratings and revenue generating performance of the two networks has been largely unchanged over the past half decade, with their aggregate shares of commercial metropolitan ratings and metro radio advertising revenues remaining relatively steady and averaging about 48% and an estimated 55% respectively.

The second, and perhaps more interesting, trend is the major shift in the allocation of the combined ratings, revenues and profits between the two industry’s two largest players, which has resulted in ARN displacing Austereo, the industry’s traditional leader, as the highest rating and most profitable network over the past two years.

However, Austereo and its supporters might reasonably argue that there are some indications that ratings momentum might recently have been swinging back in their favour, as evidenced by their 3.6% increase in 10+ audiences in 2015, while ARN’s stations, excluding the newly purchased 96FM in Perth, saw their total audiences decline by 2.4% over the same period.

Would-be acquirers of either of the two networks therefore would be well advised to carefully scrutinise the current year ratings and revenue generating performance of each network before the finalisation of any takeover offers which will probably be need to be valued in excess of $500 million for either of the networks in order to be successful.


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Report date: 09/03/2016
Industry: Radio
Country: Australia
Topic: Finance
Document Number: GMA2016-02

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