APN News & Media is set to take full control of its radio businesses from America’s Clear Channel and launch a capital raising of between $100 million and $150 million to fund the deal.
It could mark a transformational deal for the trans-Tasman media group under former News Corp executive Michael Miller, who has moved to tidy up the company’s complex asset base and pay down debt since he took over as CEO in June.
Mr Miller’s predecessor, Brett Chenoweth, was ousted by major shareholders after they rejected his push for a $150 million capital raising.
The Australian Radio Network owns the KIIS station in Sydney – with Sydney breakfast duo Kyle and Jackie O – as well as the Classic Hits network.
The deal, which also includes New Zealand’s The Radio Network, values APN’s radio assets at around seven times earnings before interest, tax, depreciation and amortisation.
The deal is understood to have the backing of major shareholders, which include Independent News & Media, controlled by Irish billionaires Tony O’Reilly and Denis O’Brien, which has a 29 per cent stake, and Allan Gray, which has 19.8 per cent.
Allan Gray chief executive Simon Marais told The Australian Financial Review in October that he would back APN to buy out the 50 per cent of the business it does not own for seven times EBITDA.
Clear Channel will offset declines elsewhere
The move to acquire Clear Channel’s shareholding will give APN 100 per cent ownership of a fast-growing national metropolitan radio asset, helping to offset the declines at its newspaper publishing arm, which has been hit by structural declines in print circulation and advertising revenues.
ARN owns 12 radio station brands across Sydney, Melbourne, Brisbane, Adelaide, Canberra and Perth, broadcasting to over 4 million listeners per week.
The Radio Network has seven radio brands in the New Zealand market with approximately 1.7 million listeners per week.
The deal, which follows interest in ARN from Seven West Media, will mean there are three clear owners for Australia’s main FM stations, along with Southern Cross Media’s Austereo, owner of the Today and Triple M networks, and Lachlan Murdoch’s dmg, owner of the Nova and Smooth networks.
Under Mr Miller’s watch, APN has already sold its 50 per cent share in the struggling APN Outdoor for $69 million to Quadrant Private Equity.
Last week it offloaded the loss-making online shopping site brands Exclusive to Aussie Commerce for $2 million and 8 per cent of the e-commerce group’s stock, after previously booking $20 million in impairment charges.
Citi media analyst Justin Diddams expects APN to continue to be affected by the subdued print advertising market when it reports half-year results on Wednesday, “partly offset by strength in the radio broadcasting division”.
APN shares have risen from 24¢ since Mr Miller started in June to close at 44¢ last night.
The Financial Review revealed in October that he was reviewing APN’s diverse media assets amid expectations he could sell assets to help reduce its then-$450 million debt pile.
The Australian Financial Review