SCA, ARN & Nova: How much are the FM radio networks really worth?

Staff Writer

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 thetwo-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.

NOVA Entertainment

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.

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27 Sep 2017 - 7:09 am

Taking into account the numbers of FM stations SCA, ARN and NE have each on a like for like basis Nova Entertainment would be out performing the other networks by a good margin. The Nova and Smooth brands are at the top or near the top of the ratings in each market. They haven’t had a station collapse like 2dayfm, 96fm or under performers like Kiss Melb or Triple M Sydney.
And they do have two distinct networks Nova and Smooth. Whilst Smooth doesn’t operate in Adel, Perth and Bris, having Syd and Mel is more than enough to constitute national given more than 70% of the national buys would be out of those two biggest markets. The Mel/Syd combined population of over 10 million compares to A/B/P population of approximately 5 million so Smooth have it well and truly covered. The government should release more FM licences so Smooth can be on FM in those markets. They have shown that there is a demand for that style of music that is not catered for in some markets presently.


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