What's New February 18, 2014

APN confirms ARN & TRN buyout

APN has confirmed this morning that it will pay $246.5m to acquire the 50% of the Australian Radio Network (ARN), and The Radio Network (TRN) presently owned by the US giant Clear Channel.

The consideration values the radio business at $493m, at a multiple of 6.9x EBITDA.

The acquisition will be funded through existing debt facilities, a capital raising of around $130m and the sale of APN Outdoor.

In a statement today, APN has said:

APN News & Media today announced that it will acquire full ownership of Australian Radio Network Pty Limited (‘ARN’) and The Radio Network Limited (‘TRN’) from US joint venture partner Clear Channel Communications Inc (‘Clear Channel’) for $246.5 million (the ‘Acquisition’).

The purchase price represents an EV/FY13 EBITDA multiple of approximately 6.9 times and is expected to complete today, 19 February 2014.

As a result of the Acquisition, APN will own 100% of the largest network of radio stations in Australia and New Zealand.

ARN owns or has investments in 12 radio stations in Sydney, Melbourne, Brisbane, Adelaide, Canberra and Perth. It broadcasts to over four million listeners each week. TRN operates seven core radio brands across New Zealand and broadcasts to approximately 1.7 million listeners each week.

APN CEO Michael Miller commented:

“ARN and TRN are businesses that we know extremely well, having run them for almost twenty years. They are managed by highly competent teams and continue to deliver growth in both audience numbers and advertising revenues.

We are confident that radio will continue to grow as a medium and that ARN and TRN will continue to capture a greater share of the market.”

APN has had a troubled few years with the board being virtually replaced last year and the then CEO, Brett Chenoweth, being sacked after he proposed a capital raising at that time, although not for the purpose of acquiring the remaining share of the radio assets.

Last week the company sold it's bolt-on investment, Brands Exclusive, for $2m + shares. It had acquired the company in 2012 for $36m.

However, the radio business of APN has been the company's 'shining light'.

ARN has been consistently profitable, delivering strong earnings growth and with the move to rebrand Mix Sydney to KIIS, and the signing of the Kyle & Jackie show will be expecting growth in Sydney revenue in 2014.

TRN, after a tough few years, is showing earnings growth in recent times under newly appointed CEO Jane Hastings.

In the radio division, there are a number of major radio stations in Australia;