Radio stations may fetch €190m

Merrion Capital is set to handle the sale of Emap's Irish radio assets, which comprises national station Today FM, Highland Radio in Donegal and Dublin station FM104.

Merrion will be mandated to seek bids from interested parties, following Emap's announcement yesterday that the Irish stations were under review.

In a statement to the stock market, Emap said: "We regularly review assets within our portfolio and against this background we are considering our options in relation to our Republic of Ireland radio stations. We intend to provide an update on this at our final results in May."

The three Irish stations are thought to have combined profits of about €12 million. With radio assets valued at 15 or 16 times profit, this would indicate a price tag of up to €190 million.

Emap paid about €120 million to acquire these assets in recent years. This included more than €80 million for Today FM; €7 million for Highland Radio; and €26 million in equity and €4 million in debt for FM104.

About 150 staff are employed across the three stations. A number of synergies have been achieved by combining certain administrative, back office and other costs. Today FM and FM104 are set to share new studios in Dublin. It is understood that both Belfast-based broadcaster UTV and Doughty Hanson, owners of TV3 in Dublin, will run the rule over Emap's radio stations here.

UTV already owns Q102 in Dublin, LMFM in Louth, two licences in Cork and one in Limerick. It also runs a radio station in Belfast.

Denis O'Brien might also seek the sale prospectus although the wealthy telecoms executive does not have a track record of acquiring radio stations in Ireland. Mr O'Brien controls Newstalk 106, a national station; and 98 FM and Spin FM in Dublin.

He is also a large shareholder in East Coast Radio in Bray and his Spin FM consortium was awarded a regional youth licence for the southwest.

A management-led buyout, led by Willie O'Reilly, Today FM's chief executive, is not thought likely.

Ownership rules allow a company or individual to own up to 25 per cent of the 32 commercial radio licences with the permission of the Broadcasting Commission of Ireland. This means that O'Brien and UTV could acquire the three stations.

UK buyers are likely to be thin on the ground. GCap, Chrysalis and SMG have all experienced difficult trading with advertising revenues in the sector down 5 per cent in 2006.