7/10/2013

Grant Broadcasters Consolidates It’s Number Two Position

 

Grant Broadcasters consolidated its position as Australia’s second largest commercial regional radio group with is recent purchase of the regional radio operations of the publicly listed Prime Media Group (PMG), whose principal activity is regional commercial television broadcasting.

Grant Broadcasters (Grant), a private company owned by the Cameron family of New South Wales, purchased PMG’s ten regional radio stations in Queensland (PMG Radio) in August 2013 for a reported price of $24.5 million.

The acquisition increased Grant’s wholly owned regional station numbers to 47, placing it second in terms of station numbers to the 66 regional radio station network of the much larger and publicly listed Southern Cross Austereo group.

PMG had assembled its regional radio network in the Sunshine State via three separate acquisitions which occurred over a two year period between August 2005 and August 2007 and which had a total price tag of $68.8 million.

Unfortunately, a number of largely unforeseen factors including the global financial crisis, severe adverse weather events and the lack of critical mass and/or a complementary regional television operation in Queensland all contributed to a sub-optimal financial performance from PMG’s radio operations over the past five years.

In the year ending 30 June 2013, PMG Radio generated total revenues of $19.8 million and relatively low EBITDA and EBIT of $3.3 million and $2.3 million respectively, all of which were not much greater than the results reported back in fiscal year 2008.

However, given their attractive demographic characteristics and future economic prospects, once they are fully integrated into Grant’s existing regional network of 37 wholly-owned stations, in a process which is likely to take at least a couple of years to complete, the former PMG Radio stations should experience considerable improvements in both revenue growth and profit margins.

Given that Grant generated total revenues of $66.0 million and EBITDA of $19.1 million in the year ending 30 June 2012, that being the last year for which financial results are currently available, the purchase of ten PMG Radio stations represents a reasonably significant development for the family owned company.

Not only will the acquisition boost Grant’s total revenues by about 30%, but it most probably has also required the company to use bank borrowings to fund all, or most, of the purchase price, which would represent a significant change for the private company, which historically has been in the enviable position of usually operating with regular net cash surpluses.

But, as uncomfortable as having a modest amount of financial leverage (i.e. borrowing) might be for a heretofore conservatively structured family company like Grant, the sizeable financial rewards which are likely to be generated by a successful integration of the former PMG Radio operations should eventually more than compensate the family owners for any anxieties which they (and their bank managers) may experience over the next few of years as they work to bed down their most recent acquisition.


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Report date: 07/10/2013
Industry: Radio
Country: Australia
Topic: Finance
Document Number: GMA2013-06

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