Tough Year at Macquarie Media Group: $84 million loss

It has been a “tough year” for Macquarie Media Group (MMG), but it is “doing better than its metro peers” according to CEO Mark Dorney who reported the company’s annual results today. MMG made a net loss from ordinary activities of $84.6m with a final distribution per security is 3.2 cents and proportionate earnings per share of 30.2 cents.

The Australian combined regional tv and radio business, Macquarie Southern Cross Media makes up 83% of MMG’s media operations, while US regional publishing operation American Consolidated Media is 17% of MMG’s business.


MMG Results overall.

MMG’s Total revenue increased to $594.1 million, but was hit by significant writedowns of goodwill, foreign exchange losses, and share-buyback activity, generating a loss across the whole group of $84 million, compared with $273 million profit in the previous financial year.

Mac Southern Cross saw a decline in operating revenues of 6.1% overall, and EBITDA down 9.3% compared with the previous corresponding period. Revenue from the American publishing business fell 8.6% and EBITDA was down 24.8%.

Macquarie Southern Cross Radio & TV.

Mac Southern Cross Radio made $58.1 million in pre-tax profit (EBITDA) this financial year, compared with $63.2 million last financial.

The company’s regional television operation did only slightly better than radio, with EBITDA of $63 million, down from $70 million in the previous year.

Radio revenue was $152.9 million (down 4.8% on last year), giving the company’s Radio Division the distinction of having the highest profit margin in the company, 38%.

The more costly Television Division earned $247.5 million revenue (down 7% on last year), but spent more on operating costs, delivering a 25.%% profit margin of $63 million.

Total profit for the Australian media operations of MMG was $123.4 million on total revenue of $400.4 million.

Dorney told analysts these are the “toughest advertising conditions experienced in MSCM’s history.”

TYv is suffering “challenged national sales environment,” but “local and total ad revenues outperform metro TV and Radio.” Weak retail spending in the current environment impacted local radio revenues badly in the second half of the financial year.

Mac Southern Cross Radio gets 67.5% of its revenue from local advertising and 23.2% from National Agencies. TV has a higher proportion (53%) of national advertising.

Dorney says the company has “defended the revenue line and engaged in very active cost management.” Speaking about MMG’s Radio Division, Dorney told the analysts’ briefing:

“In radio we have had a long history of strong local franchises. 95% of radio earnings come from solo or two competitor markets. We consistently rate highly in our markets with a successful strategy of strong local breakfast personalities and superior network shows across the group… We can provide total integrated solutions for clients across radio, tv and online.”

The company has reduced debt and bought back shares over the past financial year in its efforts to manage the capital side of its balance sheet tightly during the financial crisis. The company has no plans to borrow more money at the moment and all cash earnings are being used to lower debt in the current climate, with discussions about refinancing currently underway.

Macquarie Southern Cross is carrying $860 million in net debt, with total net debt across the whole MMG group at $699 million.

“Management believes the operational initiatives and prudent capital management position MMG well to benefit as the economy improves,” says Dorney.

Shares in the company traded fractionally higher after the profit announcement, at $1.40.