Fairfax, Macquarie in radio merger talks
Two years after talks between the two companies broke down, Fairfax and Macquarie are believed to be in preliminary discussions about forming a venture in which Fairfax would retain management control and a majority stake.
Fairfax Media, the publisher of BusinessDay, operates seven metropolitan radio licences across Australia, including 3AW in Melbourne and Sydney's 2UE. These assets reported $105.1 million total revenue for 2013, up 8.1 per cent, and were recently valued by investment bank Morgan Stanley at between $167 million and $297 million.
Macquarie Radio operates two Sydney metropolitan AM radio stations, 2GB 873 - home to shock jocks Alan Jones and Ray Hadley - and 2CH 1170. It also owns eight stations based in regional Queensland, and a public relations agency. It reported revenue down 10 per cent to $57 million for the year to June.
Macquarie Radio's shareholders include advertising man John Singleton and prominent investor Mark Carnegie, who together own a small stake in Fairfax.
Fairfax Media's largest shareholder, mining billionaire Gina Rinehart, has previously called for Fairfax to sell its radio assets.
Macquarie Radio is believed to have offered between $200 million and $250 million for Fairfax's radio assets in 2011.
Its recent annual report revealed a suspension of advertisements on Jones' radio program - sparked by offensive comments about the father of former prime minister Julia Gillard - led to a $3 million to $4 million hit in revenue.
"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," Macquarie Radio said in an annual report released last month.
Frequently Asked Questions about this Article…
Fairfax Media and Macquarie Radio Network are in preliminary talks about a potential merger to create a national radio network that would produce more than $150 million in annual revenue. The discussions are early-stage and follow talks that broke down two years earlier.
Fairfax's radio assets include seven metropolitan licences such as Melbourne's 3AW and Sydney's 2UE. Macquarie Radio operates Sydney AM stations 2GB 873 and 2CH 1170, eight regional Queensland stations and a public relations agency. A merger would bring these assets together into a single national network.
Fairfax's radio assets reported $105.1 million in total revenue for 2013, up 8.1% on the prior period. Investment bank Morgan Stanley recently valued those assets in a range between $167 million and $297 million.
Macquarie Radio reported revenue down 10% to $57 million for the year to June. The company said suspension of advertising on one program cost it $3–$4 million, and it was disappointed by revenues from its London Olympic broadcasts and a weak Sydney radio market.
According to the discussions reported, Fairfax would retain management control and hold a majority stake in any venture formed with Macquarie Radio.
Macquarie Radio shareholders include advertising executive John Singleton and investor Mark Carnegie, who together also hold a small stake in Fairfax. Fairfax's largest shareholder is mining billionaire Gina Rinehart, who has previously urged Fairfax to sell its radio assets.
Yes — Macquarie Radio is believed to have offered between $200 million and $250 million for Fairfax's radio assets in 2011.
Investors should watch for official announcements confirming any deal, details on final valuations and ownership stakes, potential regulatory or competition hurdles, and how combined revenue and advertising risks (like sponsorship suspensions or weak market performance) are addressed. The current reports describe only preliminary discussions.
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