The Australian Competition and Consumer Commission (ACCC) will not stop Macquarie Bank’s acquisition of RG Capital Radio and 57 DMG regional stations.

ACCC Chairman, Graeme Samuel, says competition concerns have been appeased after Macquarie offered court enforceable undertakings, which include selling seven stations, as anticipated.

“The ACCC was concerned that the acquisitions would result in a substantial lessening of competition in the local markets for advertising on commercial broadcast radio within the Albury, Cairns, Mackay, Rockhampton and Townsville radio licence areas.

“In particular, the ACCC was concerned the acquisitions would result in Macquarie owning 100% of the commercial stations in Albury, Rockhampton and Townsville and 75% in Cairns and Mackay.

“In response to the concern about the local markets in Albury, Cairns, Mackay, Rockhampton and Townsville, the ACCC was offered undertakings from Macquarie Bank, which require the divestiture of one radio station in Albury, Cairns and Mackay and two in each of Rockhampton and Townsville.”

The watchdog will check on the divestitures in about three months.

With the RG Capital and DMG deals, MacBank owns 93 predominantly music stations in 29 regional markets across Australia, and has emerged as a major radio player.

A new name for the the merged entity, whict will include the former RG Capital network, is expected to be announced next week by Executive Chairman, Tim Hughes.

DMG stations on the Sunshine Coast and Central Coast are not included in the share sale agreement, leaving those stations to team up with DMG’s Nova network and its new Sydney and Melbourne over 40s stations.

DMG Chief Executive, Paul Thompson, (pictured) spoke to radioinfo about the sale:

radioinfo: Congratulations on the sale. How do you feel?

Thompson: I’m very happy with the price, but sad to lose something we have been so committed to for so many years.

radioinfo: After spending so much money on new licences recently I guess this makes the books look better.

Thompson: There’s no doubt it is a good deal. There was no pressure to sell, but so many attractive offers were flowing in and this one was so attractive we couldn’t really refuse.

radioinfo: How many offers were there?

Thompson: We didn’t solicit offers, but we had about eight substantial offers and a few minor ones, so obviously these stations are an attractive asset.

radioinfo: You always said the regional stations were a means to an end, which you have now completed.

Thompson: Yes. In a strategic sense, when we started we wanted to develop a network around the new metro licences that were going to become available from the ABA.

Regional stations were never part of the original plan, but the capital city stations were a lot slower than we expected, so we acquired the regional stations almost by default in 1996.

radioinfo: What did you pay for the regional stations?

Thompson: We acquired them for $169 million over several years and have sold them for $193.5 million.

radioinfo: You reinvested money into those stations over time though.

Thompson: Yes, but if you want to make those calculations you have to also take into account how much profit we have taken out of the stations since then. Over all we have made a handsome profit from these stations during the time we have owned them. We are a long way in front.

radioinfo: Have you spoken to your staff around the country about the sale today?

Thompson: Since we signed around lunchtime I have been talking to our senior managers and they have in turn let their staff know.

radioinfo: Will you be making a farewell tour of the stations now?

Thompson: I’m going to the UK on Saturday and won’t be back until after the settlement date, so I guess that’s off the agenda.

radioinfo: You’re keeping Hot 91 on the Sunshine Coast and Star 104.5 on the Central Coast. What will you do with them?

Thompson: We’re going to link them to one of our two networks for advertising purposes, but they have independent programming. We will obviously link them with Nova in the short term as our other stations are not up and running yet. Rob Gamble will look after them.

radioinfo: And what about 5AA, that is really the odd station out now. Are you open to offers for that?

Thompson: No. 5AA has always been out on its own, but we have a particular attachment to that station. It was one of our first stations and it’s in DMG’s home town. We see it staying with us for a long time.

It is extremely profitable and well run and there are synergy advantages with Nova Adelaide.

We are setting up new offices in Hindmarsh Square and we have bought three floors. One floor is for Nova, the second is for our corporate offices and the third is for 5AA, so we wouldn’t be making such a commitment if we did not want to keep it.

radioinfo: There are seven stations that need to be sold because Macquarie owns more than two stations in the market. Will those be sold to the AMI group which you have traditionally worked closely with?

Thompson: That’s really a matter for Macquarie Bank now.

radioinfo: What legacy are you leaving to these stations and their communities?

Thompson: Facilities and infrastructure are, in many cases, now at metropolitan radio levels. Program standards for regional listeners are higher than they have ever been, and access to the sector for national advertisers has been greatly facilitated.

DMG has also been able to offer regional radio employees unprecedented opportunities for career growth within both regional and metropolitan broadcasting.

We are confident the development of the regional radio sector will continue under Regional Media…”

Regional Media will incorporate its newly acquired DMG stations into the same unlisted media investment vehicle as the RG Capital stations. The fund has also signalled it will go hunting for acquisitions in regional tv and print media.

Tim Hughes says: “Regional Media will be a new and vibrant player in regional media in Australia.

“Importantly, the transition into a new radio group requires little day to day interruption and all stations in the group will continue under the same local management and formats.

“The merged entity will be able to produce even better product for the local communities we operate within. We also believe we will be in a stronger position to compete for national sales against other media such as television and newspapers.

“We intend to expand our business to provide an exciting and rewarding environment for our listeners, clients and importantly our staff throughout regional Australia.”

The seven stations, which MacBank will need to sell off, have already been earmarked by Rural Press, which declared recently it is on the expansion trail.

The ABA has allowed Regional Media up to 12 months to manage the transition and sale of those licences.

Macquarie Bank’s Chief Financial Officer, Greg Ward, says the annualised impact on Macquarie Bank’s profit, as a result of consolidating both groups (after depreciation, amortisation and funding costs), will be marginally positive.

In the first casualty of the MacBank acquisition, DMG’s Group Program Director, Mike Perso, has resigned from the network.

The move has been announced in a memo from regional boss, Rob Gamble:

“It is with regret that I announce the departure of Mike Perso from DMG Radio. With the sale of the Regional Group to Macquarie Bank, Mike has decided to hang up the boots on radio for a while and devote some much needed time to his family.

“Mike has done a fantastic job in lifting the programming standard of our Group over the past two years and his skills and experience are a big loss for our stations going forward.

“We wish Mike all the best for wherever he lands in the future.

“Mike’s last day will be Friday 10th September.”