It is a big week for radio company results. Along with Austereo, Macquarie Radio network has also released its half year results today. Revenue was down by 1% to $23.6 million, but normalised net profit after tax (NPAT) increased by 57% over the previous corresponding period, to $3 million.
Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 35%, to $5.4 million, the best first half result since 2005. These figures exclude the impact of a one-off cash payment of $4.5 million in the prior corresponding period to secure the long term services of Alan Jones.
Macquarie reports ‘core radio revenue’ increased by 7% over the previous corresponding period, or 12% after adjusting for Olympics revenue in the previous period.
The Directors of MRN have declared a fully franked interim dividend of 4 cents, the highest first half dividend since the company was listed in 2005. The dividend will be payable on 19 March 2010 to all shareholders registered at 26 February 2010.
MRN Chairman Russell Tate says that the Board is delighted with the results:
“Given the general state of the economy and the media industry in particular during the period this is an outstanding result. In revenue terms we have outperformed the rest of the Sydney radio market over the six months by 13%. At the same time we have made significant cost savings by re-focusing on our core radio businesses, with the combined effect being the best July to December half year EBITDA result since 2005.”
Continued ratings success contributed to the strong revenue results. 2GB has won 46 consecutive Sydney ratings victories and its average ratings share across calendar year 2009 was 14.2%. 2CH also “performed solidly in ratings terms,” averaging a 5.5% share across calendar year 2009, and maintaining its revenue at 2008 levels in the December half year.
Tate says: “The success of the new programming initiatives which we began working on in mid 2009, and a major focus on broader syndication of both new and existing programming, have had a significant impact on our first half results. We introduced 19 hours per week of new off-peak programming to 2GB during the September-December quarter. In this three month period alone, whilst still in the their development stage, these programs contributed $800,000 in incremental revenue.
“At the same time, in the September-December quarter, over 12,000 hours of 2GB content was broadcast across more than 50 stations in N.S.W. and Queensland. No content was syndicated in the prior corresponding period. Again we expect both syndicated hours and their revenue contribution to increase substantially throughout 2010.”
The second half of the year has “started very strongly” and the company is confident that the first half revenue and earnings momentum will be maintained. January and February revenues are “very strong,” around 30% higher than the same period last year.
According to Tate, everything is on track to have the new Melbourne station on air during the April-June quarter.
“This is one of the most exciting and important initiatives MRN has undertaken for many years. The Melbourne radio market is now the same size as Sydney and has only one commercial general news talk station. We and our Melbourne based partners believe there is room for a second station and a fresh listening alternative for the Melbourne audience. We are under no illusions as to how difficult it will be to attract the established audiences of 3AW and the ABC in particular. However we are confident that a very experienced, professional and high profile Melbourne on-air team will quickly establish a point of difference for the new station and in doing so set a solid platform for steady growth and profitability.”
The Melbourne start-up is expected to incur a trading loss in the current financial year but, after taking that into account, the company remains “very confident of exceeding the full year EBITDA guidance of $8 million” it gave at its November AGM.