Revenues up at O'Brien's Communicorp

Revenues climbed by 20 per cent at Denis O'Brien's radio group Communicorp in the year to the end of 2006, but continued investment led to a slight increase in operating losses, writes Una McCaffrey.

The latest accounts for Communicorp show the company had sales of €47.3 million in 2006, up from €39.4 million in the previous year.

Operating losses increased by 3 per cent to €6.8 million in the same period, but pretax losses declined by 24 per cent to €5.5 million. The fall was in part facilitated by income from the sale of Finnish radio assets.

The figures include an amortisation entry of €5.1 million, reflecting ongoing investment at the company.

Since the end of 2006, Communicorp paid €200 million for the Irish assets of Emap: Today FM, Dublin's FM 104 and Donegal's Highland Radio. It has since sold on FM104 to UTV for €52 million to satisfy competition requirements and is also considering the sale of Highland. The FM104 sale was approved by the Broadcasting Commission of Ireland yesterday, having already been sanctioned by the Competition Authority. It remains subject to the approval of UTV's shareholders.

Communicorp manages 45 radio stations in eight European countries. It is particularly active in eastern Europe and, since 2006 ended, it has widened its asset base in Estonia and Bulgaria.

In the Republic, the group owns Newstalk 106, Dublin's 98FM and Spin FM, as well as Today FM and Highland. It also backs East Coast FM.

In a report accompanying the numbers, Communicorp's directors say they believe the award of a quasi-national radio station to Newstalk 106 in 2006 will have a "significant positive impact" on the commercial performance of the group as a whole.

They also assign the radio assets a "carrying value" of €30 million but add that in their opinion, "the realisable value of the radio stations is significantly in excess" of this.

"This view is supported by recent media transactions and third-party independent valuations received," the directors say.

The accounts show that the group had available finance of €62 million, including a €5.4 million director's loan provided by Mr O'Brien. The group is completely owned by the entrepreneur, who is also active in telecoms and has a 17 per cent stake in Independent News & Media.

A breakdown of Communicorp's turnover figures shows that it generated almost half of its sales in the Republic in 2006.