The price to be paid by Denis O'Brien's Communicorp for the three radio stations being sold by British plc Emap will be the highest multiple of profits paid to date for Irish radio assets, writes Colm Keena, Public Affairs Correspondent.
Today FM, FM 104 and Highland Radio are between them expected to post earnings before interest, tax, depreciation and amortisation of €14.6 million in the year to March 2008.
Turnover is expected to be €34.5 million. The price to be paid, €200 million, represents a multiple of 13.8, meaning it will be some time before Communicorp gets its money back.
National station Today FM, RTÉ radio's biggest rival, is understood to account for approximately half the value of the three radio stations to be purchased by Communicorp.
Communicorp already has a national station, Newstalk, which is loss-making but growing.
The Competition Authority will now investigate whether it should allow Communicorp to retain Newstalk if it wishes to acquire Today FM.
Communicorp and Today FM have also put bids in for a new national licence to be issued by the Broadcasting Commission (BCI) aimed at the over 45-year- old market. The effect of Communicorp acquiring the Emap stations on these bids is not clear at this stage.
The BCI rules stipulate that a single entity cannot own more than 25 per cent of the radio licences at issue at any time. The Emap deal, if it went ahead with Communicorp retaining all its Irish licences, would not breach that rule.
Today FM was formerly owned by Scottish Radio Holdings (SRH). It bought 24 per cent of the station in 1997 for €3.6 million, and the rest in 2001 for €60 million. Denis Desmond, Moya Doherty, John McColgan and Dermot Desmond were among those who benefited from the sale.
SRH bought FM 104 in 2003 for €26 million plus €4 million in debt. Among the sellers at that time were Ulick McEvaddy, Jim Aiken and Dermot Hanrahan.
Highland Radio was bought for €7 million by SRH from a group of local business people in 2005. SRH was subsequently acquired by Emap. The current management at Today FM, led by chief executive Willie O'Reilly, are to remain at the station under the new ownership.
Emap is expected to announce the deal to the London stock exchange today. It was advised by Cathal Friel of Merrion Capital and William Fry solicitors, in whose offices the deal was done on Saturday.
Mr O'Brien's Communicorp group was formed in 1989 and is now one of the fastest growing commercial radio groups in Europe. As well as the Republic, it has operations in the Czech Republic, Bulgaria, Estonia, Finland, Hungary and Ukraine.
The latest accounts available for Communicorp are for the year to end December 2004, when it had a turnover of €28 million and pretax losses of €4.3 million. Turnover in the Republic was €16 million.
