What's New October 6, 2013

Could Fairfax & Macquarie merge ?

A 'friendly merger' between Fairfax Radio and the Macquarie Radio Network (MRN) could be back on, according to The Australian.

If the merger was to go ahead, this would mean change in the Sydney market, with a station needing to be sold unless media regulation rules are changed before the merger occurs. MRN own 2GB and 2CH in the Sydney market, with Fairfax operating 2UE.

The other Fairfax Radio assets include 3AW / Magic in Melbourne, 4BC / 4BH in Brisbane, and 96FM / 6PR in Perth.

The merger would look attractive as they would have the #1 rating radio stations in each of the key markets of Sydney (2GB) and Melbourne (3AW), a strong sales proposition for national advertisers.

Two years ago, Fairfax pulled out of a planned $220m sale of Fairfax Radio, even though they had an offer from MRN which they believed did not value the business suitably.

In late December we reported that Gutenberg Investments, backed by John Singleton, and investment banker Mark Carnegie, had purchased a small stake in Fairfax Media, said to be around 1%. They were said to have spoken with Gina Rinehart and had agreed to consult with her on key matters involving Fairfax Media.

At that time, Singleton said:

"For the amount of money I was prepared to pay for the radio assets of Fairfax, I could buy a significant amount of all the assets of Fairfax at a far lower price to earnings multiple. Hence, with my preferred direct route closed, I have decided to pursue another path."

The value of Fairfax Radio on a stand-alone basis is in the range of $167m – $297m, according to analysts Morgan Stanley.