SCA, ARN & Nova: How much are the FM radio networks really worth?
Unlike some other media outlets, radio continues to make steady growth year-on-year.
Last year, the average FM group realised $226 million in total revenues – which translates to $73 million in operating profits for 2016.
For this reason, Bob Peters from Global Media Analysis believes that when government legislation revoking the “two-out-of-three” cross media ownership limit finally passes, the three major metro FM groups will each be highly sought-after assets for anyone looking to make some money in media.
While radio results usually focus on surveys and listenership, how are SCA, ARN and NOVA Entertainment performing financially?
Well Global Media Analysis crunched those numbers too, and here’s what they came up with.
Southern Cross Austereo (SCA)
Due to loss of audience share, total revenues and profits over the past six years, the report indicates that SCA will probably be the lowest valued of the three metro FM radio broadcasters.
Nevertheless, it also highlights the fact that SCA may have the greatest potential for future ratings and earnings potential, not ruling out the possibility of a higher-than-expected valuation.
This is due, in part, to a recent upturn of listener numbers and earnings, the existence of two established FM networks (Hit & Triple M), and the idle potential in once-flagship station 2Day FM.
VALUE: SCA may attract offers of up to between $650 and $700 million for its metro radio operations on a stand-alone basis.
Australian Radio Network (ARN)
It looks as though ARN has the biggest chance of attracting the highest valuation “by virtue of it being the most profitable”. Recent results show that ARN has seen unmatched numbers in profit margins, total revenues and operating profits growth.
However, ARN is the only network of the three that does not currently have a metro radio network with commonly branded stations in all, or even most, metro markets. It’s also seen a decline in group average 10+ listener numbers over the past year and a small revenue drop in the last financial year. It remains to be seen if this will affect the group’s overall valuation.
VALUE: An acquisition valuation of up to between $750 and $800 million may be attributed to ARN in any forthcoming industry consolidation process.
Referred to as “the quiet achiever”, NOVA is arguably the fastest growing operator of the past five years. Under the watchful eye of business mogul Lachlan Murdoch, NOVA has been the second most-profitable metro FM group over the past two years.
With the strength of results posted in recent years, prospective purchasers or merger partners may “question whether the group is now operating at, or near, its full potential and is without any obvious untapped avenues for substantial future ratings and earnings improvements.”
VALUE: Global Media Analysis anticipates a valuation of between $680 and $730 million for NOVA Entertainment.