MRN also impacted by post-election environment

The Macquarie Radio Network have this morning held their AGM.

Just like the Fairfax AGM held this time last week, they too have referenced a tough post-election environment for the lack of "consumer and business confidence."

Russell Tate, Executive Chairman of MRN, recapped the key events of FY13, highlighting the following :-

• Sydney radio market revenue was flat across the reporting period.
• MRN's share of Sydney radio market revenue was down from 25% to 23%.
• Estimated $3 to $4 million full year revenue impact of the Alan Jones’ Breakfast Show temporary suspension.
• 2GB was the official commercial broadcaster of the 2012 London Olympics.
• National Rugby League (“NRL”) radio broadcasting rights were renegotiated and extended for a further five years with 2GB.
• Alan Jones signed a new two year services agreement with 2GB.
• Average Ratings Share for 2GB and 2CH of 13.9% and 5.2% respectively
• 2GB maintains dominant no. 1 position in Sydney market.

FINANCIAL RESULTS SUMMARY – 2012/13

* UNDERLYING NUMBERS EXCLUDE:

• One-off net revenues totalling $3.1m (primarily from royalty income and reversal of a provision relating to the purchase of Smart Radio Network in prior year)
• MTR residual costs ($0.3m)

Tate said, "In what was a flat Sydney radio market across the full year, we suffered a very significant hit to our revenues in the second quarter after comments made at a private function by Alan Jones resulted in a massive social media campaign against Jones and 2GB, and directed specifically at forcing advertisers to withdraw their support for the station. We were forced to suspend all advertising in Alan Jones' Breakfast Show for a short period and estimate the full year revenue impact of this episode to have been between $3 to $4 million."

"We were also disappointed in the first half of the year by the revenues generated from our London Olympic broadcasts, and a Sydney radio market which failed to regain any real momentum in the second half of the year despite strong growth in other markets."

"Through these revenue setbacks, our program quality and integrity, and ratings dominance has been maintained. That ratings strength, and in particular 2GB's dominance in the Sydney market, has us well placed to reverse the revenue setbacks of 2012/13, and to benefit from any lift in consumer and business confidence."

Talking about the current state of FY14 for MRN, Tate said:

"Our expectation at this time is that the underlying earnings (EBITDA) for the 6 months to December 2013 will be over the $6 million mark, roughly a 10% increase on prior year underlying levels. The half year reported result will however decline by $1m (a decrease of 10-15% on prior year) largely due to one-off net royalty revenues and the reversal of a provision relating to the purchase of Smart Radio Network in the prior year."

"At this stage we have not seen a material effect from any change in consumer and business confidence since the election."

"There are some good signs but nothing is really bursting out at the moment. I expect there has been some improvement in confidence but it hasn't translated into an avalanche of sales."

On the subject of the rumoured merger with Fairfax Radio, Tate told The Australian:

"Talks occur from time to time and maybe one day something will happen."

"Suffice to say on the face of it at least there is a commercial case to be doing something together. One day it may happen."

"We're obviously dominant in Sydney and we have no presence in other capital cities."