What's New November 12, 2021

ARN acquires Grant Broadcasters for $307 million

ARN has just moved beyond being a capital city broadcaster with its acquisition of Grant Broadcasters, announced this morning.

The acquisition now gives ARN’s parent company HT&E greater coverage across Australia by adding smaller state capitals and regional stations.

ARN will need to sell 4KQ to comply with ownership requirements.

This news will mark the coming together of Australia’s #1 metro radio network, ARN, and Australia’s oldest, family-run regional radio company, Grant Broadcasters, giving advertisers the potential to reach over 90% of Australians nation-wide.

With an acquisition that includes radio and digital operations across 46 Grant’s stations, the partnership will significantly scale up ARN’s already robust business. When combined with ARN’s existing 13 stations, ARN will now own 58 stations across 33 markets plus 46 DAB+ stations – resulting in a presence in every state and territory in Australia and an accelerated rollout of ARN’s established iHeartRadio digital audio platform into regional areas.

Strategically, this transaction fits very well for the growth ambitions of both businesses, allowing expansion of audience bases and fast-tracking the delivery of digital audio content and advertising opportunities across the whole of Australia. The combined network will deliver innovative, digitally enabled commercial solutions at scale and will enable the provision of nationally integrated commercial partnerships for clients, giving them the ability to access more than a third of Australian consumers in one transaction.

HT&E MD and ARN CEO Ciaran Davis said; “It is rare that an asset of this quality and strategic fit to our existing portfolio becomes available and we are excited by the opportunities presented by the coming together of these two great businesses.

“The station brands Grant Broadcasters have created have served their local communities with great commitment for decades, playing a pivotal role in the lives of their audiences, and we look forward to continuing that tradition.

“As the leading metropolitan audio network and leading regional radio network come together, our commitment to live and local content is completely unwavering. It means that through the voices of talent that local markets know and love, ARN will connect via multi- platform content across a broadcast and digital distribution network reaching more than 8 million people. It presents an appealing proposition for our clients,
listeners, staff and shareholders alike.

“The recent successful resolution of HT&E’s tax matter with the ATO for $71m, and the gain of $31m on the divestment of our OML stake, significantly strengthened our balance sheet as we prepared for this transaction. Our disciplined approach to capital management and creation of shareholder value is further demonstrated by the accretive nature of this transaction that is being funded through existing cash reserves, financing facilities and the issuance of new shares to Grant Broadcasters.”

Alison Cameron, CEO of Grant Broadcasters said: “For 80 years Walter Grant, his daughter Janet Cameron and her family have been operating regional radio stations that serve local communities in regional Australia. We are so very proud of the connection the stations have with those communities and of our staff for continuing that commitment.

“Both our companies are profitable enterprises in their own right but this partnership will deliver scale, digital acceleration, and ensures our future profitability.”

Ciaran Davis explains; “4KQ is a station rich in history and a hugely important part of the ARN story and we are sorry to see it leave the network. Laurel, Gary & Mark, Brent and the rest of the 4KQ team have been an incredible asset for the business and it is regrettable that to achieve growth for ARN, we are required to divest the station.”

The sale is worth $307.5m. Of that, 22.5% of the purchase consideration will be delivered to Grant Broadcasters in HT&E shares, equating to an ~11% holding in HT&E, with Grant’s current CEO Alison Cameron joining the HT&E Board and current COO Rick Lenarcic joining ARN’s Executive Leadership Team.

Alison Cameron has told Radiotoday that jobs will be safe in the former Grant Broadcaster stations. “We had discussions about that with Ciaran during the merger and I know that ARN is not looking at sackings… Their philosophy is that our family will become part of their family.”

Regulator ACMA will consider this acquisition a ‘trigger event’ which will require the new owner of the stations to keep staffing at the same levels as it is today for two years.

Ciaran Davis says the stations are run well with a good profit margin of about 35%, so this is not an acquisition process where there is fat to trim. “They have a live and local strategy like us, we have a similar philosophy, so we think this will work well for everyone… we are not looking to cut costs, we are looking to expand revenue by increasing advertising to national advertisers.”

The Radio Sales Network (TRSN) has also been acquired by ARN as part of the deal, as has the land, buildings and transmission equipment associated with each station. Alison Cameron will join the board of HT & E, while other members of the family will continue to be involved in radio through the Geelong station’s company Geelong Broadcasters and some remaining stations, held jointly with Kevin Blyton’s company Capital Radio.

The acquisition is funded by $238 million from HT&E’s cash reserves, the recent sale of HT&E’s stake in oOH Media and the company’s existing debt facility. Grant Broadcasters will also gain shares in HT&E with a value of $1.93 per share.

The deal is expected to complete on 30 November.