Singo mulls over Prime Media

Following his public falling out with Fairfax Media over a potential merger, Macquarie Radio Network's John Singleton has turned his attention to the Prime Media Group.

Singleton has told Fairfax newspapers that he is "very interested" in Prime Media, who have long been regarded as a takeover target should the 'reach' rules be relaxed. 

Last week Paul Ramsay surprised the market by selling his 30% Prime shareholding in an off-market transaction for close to $100m. In a statement the company flagged that they would be looking to refresh their board following the move, and it would be probable that Ramsay would leave the board.

The Seven Network have long been regarded as a natural acquirer of Prime should the laws be relaxed, however last week CEO Tim Worner said that it was not a priority:

"We just don't see the extent of synergies others do, so [acquiring Prime] is not really a priority for us, regardless of the reach rule".

Prime have a long history with Seven as their regional television affiliate, and operate a highly successful and profitable regional television business. However, Prime's history in the radio sector is poor; the company built their regional radio group in Queensland for $70m across five years, and following continual earnings declines sold it for $24.5m last year to Grant Broadcasters.

Singleton, along with his business partner Mark Carnegie, own 70% of Macquarie which earns the majority of its profits from 2GB. 

This makes the company vulnerable to any downturn in earnings from that station. This is why, in part, a merger with Fairfax Radio was attractive, and why the company is considering other investments to diversify their earnings base.

It would be a big 'bite' for Macquarie to swallow Prime Media whole; Macquarie has a market capitalisation of $92m, whilst Prime's market cap is $337m.