Interest rate rises and foreign currency fluctuations have hit Macquarie Media Group’s first half accounts hard. Despite an increase in revenue for the newly converged media business, net profit was down 110% on the previous corresponding period.
The company recorded $4.17 million profit for the 2008 first half, compared to $21.8 million in the previous period. $29.6 million was lost on interest rate and foreign currency hedging instruments and $20.9 million in amortisation. Despite the net valuation loses, the company’s fundamentals remain sound, with a 40% rise in revenue to $291.82 million.
Both the radio and television operations performed strongly over the period. Strong advertising growth “was further boosted by the Federal Government information campaigns and the 2007 federal election.”
The strong radio advertising environment resulted in an 11.8% increase in revenue for the Radio Division, which improved the earnings before
interest, tax and depreciation (EBITDA) margin from 37.6% in the prior period to 39.4% for the six month
period ended 31 December 2007.
MMG is currently seeking regulatory approval for the divestment of certain radio licences as required by the regulatory
undertakings given upon the acquisition of Southern Cross.
MMG Chief Executive Mark Dorney reported on radio sales at the half yearly briefing, saying: “National advertising sales were boosted by the Federal Government information campaigns and 2007 Federal election whilst targeted sales strategies continued to deliver strong growth in sponsorship income. Local advertising sales showed good growth through the period benefiting from the diversity of economic drivers in MSC-Radio’s underlying markets. Continued population growth in Queensland underpinned MSC-Radio’s two largest markets
whilst a slight easing of drought conditions in some of its rural markets also assisted with the positive result.”
Macquarie Southern Cross Media’s new Television Division “has continued its strong performance since the acquisition by
MMG on 26 October 2007,” with EBITDA up 10.4% to $16.0 million. TV revenue growth of 9.4% to $51.9 million for the 9 week period was a pleasing result given the business was being integrated
into MMG during the time and the spending associated with the Federal Government information campaigns and the 2007
Election had largely passed.
Integration into MSC has begun with SBC’s head office rationalised and the co-location of national sales teams underway.
The Australian businesses derive 52% of revenues from 37,000 local radio and tv advertisers.
The total EBITDA for the six months to 31 December 2007 was $35.8m representing an increase of 17.3% on prior
corresponding period. “Management’s continued focus to leverage the best practice sales initiatives across the
operations continued to deliver improvement in the radio operations financial results.”
This is the first time the company has reported on its new acquisitions since forming Macquarie Southern Cross Media (MSCM).
MSCM was formed in November 2007 through the combination of MMG’s regional radio operations and the free to air
television operations acquired through MMG’s successful acquisition of Southern Cross Broadcasting in October 2007.
The regional broadcaster reaches a potential audience of approximately 7.5
million people, or 95% of Australia’s population outside the mainland State capital cities. MSCM is the largest regionally
focused media provider, offering the opportunity to customers to advertise across radio and television. MMG’s other, international media holdings include broadband company Taiwan Broadband Communications and newspaper company American Consolidated Media.
The complex holding structure for Macquarie Southern Cross Media’s parent cpmpany is: MMG was comprised of Macquarie Media Trust (MMT), Macquarie Media Holdings Limited (MMHL) and its subsidiaries and
Macquarie Media International Limited (MMIL) and its subsidiaries. These three stapled entities trade as one listed security on the Australian Securities Exchange. EBITDA was calculated from the date on which control was obtained, namely 26 October
2007. Dividends declared prior to this date have been included in Proportionate Earnings.
An interim dividend of 24.5 cents per share was issued, up 17% on the previous period.