The Sports Entertainment Group has signed an agreement with HT&E’s subsidiary ARN for the purchase of 4KQ for $12 million.
The former #1 AM music station in Brisbane will take on a 24/7 sports/talk format under the groups SEN brand and become 693 SENQ.
The addition 4KQ enhances SEG’s existing owned platforms in Queensland making it the flagship station of the state, and giving the group 35 stations in operation in all capital cities and states.
The other Queensland stations are:
- SEN Gold Coast 1620AM
- SENTrack Brisbane 1053AM
- SENTrack Atherton 99.1FM
- SENTrack Ingham 96.9FM
- SENTrack Kingaroy 96.3FM
- SENTrack Darling Downs 91.5FM
SEG’s Managing Director, Craig Hutchison, says, “We know Queenslanders love their sport. 693 SENQ will provide a unique offering and constant sporting content like never before as Queensland’s only dedicated sports station.
“We already have great momentum with ‘Breakfast with Pat & Heals’ and I look forward to announcing more Queensland specific content in the coming months. Our business model is sport, and parochial sport is at the heart of that. Queenslanders love their state and its teams and we are excited to play our role in amplifying that passion.”
The purchase price payable for 4KQ is $12.0 million cash before completion adjustments and will be funded as follows:
- $5.0 million via a placement of 25,000,000 new SEG shares to existing shareholder Oceania Capital Partners Limited at a deemed issue price of $0.20 per share subject to approval from the FIRB
- $7.0 million via surplus operating cashflows and existing debt facilities.
The purchase of 4KQ mirrors the acquisition of Sydney’s 2CH in 2019 and will guarantee that the new station will not compete with any of ARN’s Brisbane stations, and is likely to push the current audience onto other stations such as 4BH, or possibly other FM music stations.
4KQ has performed strongly in the Brisbane market in recent years with an older music format and well known local personalities. Since the first survey or 2020, the station has been number one once, second 6 times, and in the most recent survey came in at 4th place.
In share the station finished survey 2 with 9.4%, not far below the top stations, which scored 10%. The interactive chart below shows the ebb and flow of 4KQ’s results since Survey 1 in 2020.
ARN’s Ciaran Davis told radioinfo when the company acquired the Grant Broadcasting stations that 4KQ is a much loved station with a long history, but that the music format on the AM band, despite its high ratings, has not been as commercially successful as the company wanted, with agencies not placing ads with the AM music format.
ARN is required by the regulator ACMA to divest itself of one of its stations due to market limit rules after its acquisition of two Grant Broadcasting stations in the overlapping listening area. It chose 4KQ.
Smart move by HT&E due to compete clause. If another network snapped it up there could be a music war.
I thought that that was what was most likely to happen.
4KQ was an example that an AM music station can top or be near the top of the ratings.
This is a commercial transaction. Emotions and being nostalgic about days of yore don't play into a commercial transaction.
The station was sold and the new owners can use this station in any way that it finds fit. Acquiring 4KQ is to add to a network of sport/talk stations.
Irrespective of the change in format, I cannot understand how SEN can make a profit given SEN stations are low in its ratings and cumes for its respective AM and DAB+ services as reported in the ratings for capital cities.
Paying $12 million for 4KQ and amortising the price paid with expenses against the revenues to arrive at a profit will be interesting.
But I'm not privy to such detailed financial information.
In the end, it is a commercial transaction and emotions and nostalgia don't play.
Thank you,
Anthony, how important are ratings to maximise profits, Belfield in the land of the Wangal and Darug peoples of the Eora Nation.
This is sad news. I was hoping that NE might buy 4KQ, convert it to FM and flip the format and name to Smooth.
Oh well, guess I'll keep dreaming.
How can SEN make a profit? They had a profit of 3 million last year EBITA and after interest, tax and amortisation it was still 2 million. Revenue was over 73 million last year! (2020-21 fin year)
Because the people who listen all day long are very small in number and a niche audience. The people who listen during a sporting event though would be huge, and not all the live sport SEN covers is in daylight hours, and a lot of it would be when ratings aren't monitored.
I'm sure SEN knows through it's app audiences and audience engagement how many listeners they are likely to have.
Dear "jjcoolaus",
Thank you for a partial insight into the SEN's financials.
The $2 million dollar profit by SEN for 30 outlets is quite low compared to Macquarie Media's profit at $16.8 million for four radio stations, 2GB, 3AW, 4BC and 6PR, source https://finance.nine.com.au/business-news/2gb-and-3aw-owner-posts-profit-growth/ed227767-d1c1-4158-b4f2-46851e099fce .
For a return on profit over revenues of 2/73*100 = 2.74%, one can still ask whether $12 million for the acquisition of 4KQ and amortised over time, will be profitable in the Brisbane market alone rather than "mixed" with the other outlets. That is subject to the accounting standards and corporations law (ASIC).
At the same time if SEN does not rely on ratings alone but on other audience metric methods such as app data (I've mentioned the valuable data stream obtained from apps and smart radios on this site before) such information could well be a valuable guide to the sales department in order to charge more for advertising.
Nevertheless, you still have to ask the question that for a vast network of outlets whether a 2.74% return on revenue is good and whether higher returns can be achieved.
Thank you,
Anthony, of the business side of radio and financial management is an interesting topic, Belfield in the land of the Wangal and Darug Peoples of the Eora Nation.