20/09/2017

Metro FM Radio Valuations – Who Is Worth What?

 

20/09/2017

Metro FM Radio Valuations – Who Is Worth What?

 

When the existing two-out-of-three cross media ownership rule is finally revoked, then each of the three highly profitable commercial metropolitan FM radio groups (SCA, ARN and Nova), will be amongst the most highly sought-after assets in any ensuing media match-making frenzy.

Unlike the larger newspaper and television groups which have been struggling financially in recent times, the metro FM radio broadcasters have continued to enjoy reasonable growth in advertising revenues, profits and margins over the past half decade.

Between calendar year (CY) 2011 and CY 2016, the three metro FM radio groups in aggregate managed to generate 4.6% compound annual growth in total revenues and even higher 5.4% per annum increases in operating profits, which led to record profit margins being achieved last year.

In CY 2016, the average FM group realised $226 million in total revenues from which were generated $73 million in operating profits (EBITDA), which represented a 32.3% EBITDA margin and was a staggering result for a traditional media sector.

Given both their impressive recent financial performance and their still attractive future prospects, Global Media Analysis (GMA) believes that a valuation multiple of up to 10.0 times maintainable EBITDA would not be inappropriate for the metro FM radio sector as a whole.

Applying such a multiple to the sector’s aggregate EBITDA in CY 2016, gives the sector a valuation of up to $2.2 billion, or up to $730 million per group on average.

Exactly how that gross sector valuation amount might eventually get divided up between the three metro FM groups, will ultimately depend upon how prospective purchasers or merger partners assess the comparative strengths, weaknesses and future prospects for SCA, ARN and Nova. Some of those factors are considered in the remainder of this report.

When the existing two-out-of-three cross media ownership rule is finally revoked, then each of the three highly profitable commercial metropolitan FM radio groups (SCA, ARN and Nova), will be amongst the most highly sought-after assets in any ensuing media match-making frenzy.

Unlike the larger newspaper and television groups which have been struggling financially in recent times, the metro FM radio broadcasters have continued to enjoy reasonable growth in advertising revenues, profits and margins over the past half decade.

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21/07/2017

Will Sky News Content Help Revive Network Ten?

 

21/07/2017

Will Sky News Content Help Revive Network Ten?

 

Being a very cost-efficient content producer, it will not be surprising if Sky News Australia enters into a mutually beneficial news programming supply arrangement with Network Ten, once some form of recapitalisation occurs at the currently beleaguered free-to-air commercial metropolitan television broadcaster.

Such a content supply agreement reportedly had been under discussion between the two media groups prior to the Ten Network’s appointment of a voluntary administrator in mid-June 2017 and there appears to be potential for each organisation to realise considerable financial benefits from such an association.

In fiscal year 2015 (FY 2015), when Australia’s three commercial metropolitan television networks spent an average $120 million each on local news and current affairs programming, Sky News Australia was able to produce its quartet of 24-hour subscription television news channels for less than $42 million.

Thus, it would not seem unreasonable to believe that tens of millions of dollars of benefits might flow to each organisation if Network Ten were to out-source a large portion of its local news production requirements to Sky in the near future.

Being a very cost-efficient content producer, it will not be surprising if Sky News Australia enters into a mutually beneficial news programming supply arrangement with Network Ten, once some form of recapitalisation occurs at the currently beleaguered free-to-air commercial metropolitan television broadcaster.

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