DMG financials show cash in the kitty for licence bidding

As the licence auctions approach for the new FM stations in Sydney and Brisbane soon, and Melbourne later this year, radioinfo takes a look at the financials of DMG Radio Australia and its parent company in the UK. The figures show the company should still have some cash in the kitty to make the next round of bidding interesting.

Financial figures for DMG Radio Australia show the Australian subsidiary of Daily Mail and General Trust plc (DMGT), which is still in its expansion and consolidation phase, lost $15.32 million for the year to September 30 2003. The company has invested about $500 million to date on new licence purchases, acquisitions and growth. If the cost of its long term licence investments is removed, DMG Radio Australia would record an operating profit in the 2003 financial year.

Australian revenue was up 13% to $101.7 million on the previous year and, like other radio companies recently, DMG is “trading ahead of expectations” in recent months. Analysts expect DMG Australia to grab about 12% of the estimated $350 million in the Sydney and Melbourne markets this year.

In Britain, parent company DMGT reported a 2% before tax profit increase on all its activities for the difficult 2003 financial year (which ends in September in the UK). After tax the company’s overall result was down 2% from last year on a turnover of ₤1.93 million.

Chairman Viscount Rothermere said: “This is a good result given the tough trading conditions that many of our businesses faced, as well as the effects of the Iraq war and SARS.”

DMGT’s business strategy is led by its newspaper division, but the company says its strategy “of investing also in non-newspaper media businesses has provided diversity and some stability during the last three years of harsh advertising markets.”

Commenting on the group’s Australian Radio operation Rothermere said: “DMG Radio has achieved outstanding operational success in Australia. An excellent team, headed by Paul Thompson, has taken our Sydney station, Nova 969, to the number one FM rating less than three years after launch. We paid a high price for our metropolitan licences, but now we have the base to generate a good return on our investment.”

According to the annual report DMG Radio Australia returned to operational profitability as a group this year, following its heavy investment in its new Nova stations.

During the reporting year the group summarised the following Australian Radio activities:

“In October 2002, DMG Radio acquired a new FM licence inthe fast growing Sunshine Coast region of Queensland. The new station, branded Hot 91 began broadcasting on 25th October, 2003 in one of the group’s most successful launches to date. To comply with broadcasting regulations, DMG Radio’s Brisbane AM station 4BH was sold at the end of March, achieving a profit of Aus$5 million. In December 2002, the Group launched Nova 937, the Perth FM station it won at auction earlier in the year in a 50% joint venture with Australian Radio Network.

“Nova 969 in Sydney and Nova 100 in Melbourne continued to increase revenues and moved into profit, each setting station records throughout 2003. Both are the most listened to stations by all people under the age of 40 in their respective markets, with Nova 969 also becoming the number one FM station in the all-important breakfast timeslot.

“Nova’s revolutionary programming and inventory policies continued to command the attention of both listeners and advertisers. As Sydney and Melbourne moved beyond their establishment phase, DMG Radio returned to operational profitability.

“DMG Radio’s only metropolitan AM station, Adelaide’s Five AA, continued to be the highest rating commercial AM station in metropolitan Australia, while again setting another annual record in both revenue and profit.

“The regional stations won the competitive listening surveys in all but one market during the year, and saw improving economic conditions as the year progressed…”

DMG Radio Australia has 722 employees.

DMGT’s Radio Division as a whole contributes 6% of the company’s annual turnover and was responsible for ₤20 million in profit. The radio division includes the Australian operation and radio assets in the UK.

In the UK, according to the annual report, the GWR Group, which is 29.9% owned by DMGT, achieved “significant progress in restructuring to concentrate on its core UK business. Overseas operations have been sold and debt reduced significantly.”

GWR has been one of the pioneers of digital radio in the UK and is “well positioned to benefit” from what the company believes will be an “inevitable transfer of listening from analogue to digital” as the uptake of digital radios increases.

Earnings per share for DMGT UK were 33.2 pence, up 7% on the previous year. The company paid a dividend of 10 pence per share (up 9%).

DMG Australia is expected to be a strong bidder for the upcoming Australian capital city FM licences.