Austereo eyes Canwest radio assets

By NZPA

Monday 24th June 2002

Australian media company Austereo Group Ltd is thought to have lodged an indicative bid for CanWest Global Communication's Kiwi radio assets, according to media reports.

Austereo, Australia's biggest radio operator, is hungry for offshore assets as it tries to offset a sharp advertising downturn and increased competition in its home market, the Australian Financial Review reported.

Heightened competition from operators like the Daily Mail Group's Nova appeared to have ended Austereo's five-year run of double-digit earnings growth and could deprive the group of more than $A7 million ($NZ8 million) in revenue over the next three years, the AFR said.

Austereo has already warned it will not achieve the $A52.6 million after-tax profit forecast in its prospectus.

The group is continuing to size up opportunities overseas and has cracked the British, Malaysian and Indian markets .

Austereo owns 2Day FM in Sydney, Fox FM in Melbourne and the Triple M network. It has a potential war chest of up to $A300 million and has been scouting for acquisitions since early this year .

Industry sources told the AFR that the group had held talks about acquiring CanWest's two New Zealand radio stations, More FM and RadioWorks, which are expected to fetch $NZ200 million .

The radio operations had improved earnings before interest, tax, depreciation and amortisation of $NZ22 million last year. They compete with Radio New Zealand and The Radio Network, owned by APN News & Media and Clear Channel.

Rival Australian radio operator RG Capital is also rumoured to be considering a play for the assets. RG Capital chairman Tim Hughes told the New Zealand Herald last week his company had expressed an interest but would not comment further, citing a confidentiality agreement.

RG Capital, which is listed on the Australian Stock Exchange, is the largest commercial radio operator in Queensland and Tasmania, with 32 stations.

JB Were analyst Lou Capparelli said Austereo would be a "logical bidder" for the radio business.

Austereo's executive chairman Peter Harvie declined to comment on the possible bid.

He said Austereo's overseas operations would become key profit drivers over the next three years, when another five commercial radio licences would be awarded in Australia.

"Those businesses will absolutely become more important moving forward," Mr Harvie said.

"What we would like to think we can do is export Austereo's intellectual capital and provide great radio products offshore and enjoy a return."

CanWest's New Zealand chief executive, Brent Impey, has refused to comment on the sale process since confirming in April that JBWere was advising the company on ownership options, which included a public float and a private equity sale.

CanWest is selling the assets to help repay about $C3.9 billion ($NZ5.2 billion) in debt.

Prime New Zealand and Australia's Ten Network are understood to be in the running to buy CanWest's TV3 and TV4 television stations, valued at between $NZ100 million and $NZ150 million.

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