Australia’s largest radio network, Austereo Group Ltd, may have reported a reasonable result for the June 30 year (compared to Fairfax Media for example) but the real attention yesterday was on its parent, Village Roadshow, where the controlling Kirby family and other interests have once again bailed out of a privatisation attempt.
Village Roadshow controls more than 50% of Austero.
Two weeks ago the Village Roadshow revealed it has received an incomplete proposal to take it private from the Kirby family and others in Village Roadshow Corporation.
Now the deal is off because, it seems, no one would fund the net $70 million or so that the deal might have cost.
The company released a statement yesterday saying VRC had called the proposed buy-out off "for various reasons including its inability to arrange finance on terms acceptable to VRC".
Those reasons were not elaborated on, but to be knocked back for $70 million indicates that the Kirbys and others were not prepared to risk their own money in financing the deal, nor was anyone else.
A buyout would have valued the entire company at close to $180 million.
Village Roadshow’s shares went south as a result, shedding 16 cents to $1.20, a fall of 11.7%.
The shares ended around where they were when the proposal was revealed. (But they had lifted from around $1 to about yesterday’s close over the two weeks before the proposed buyout announcement was made.)
"The board of Village will consider alternative capital management strategies in due course," Village said at the end of the statement. (Does that mean the buyout was a ‘capital management strategy’ ?)
As a result, Austereo’s results were overshadowed in afternoon trading and the shares eased 1 cent to $1.50 on a day the overall market bounced almost 3% in a solid day of dealing.
The radio operator said annual profit fell 15.2% and it is bracing for a challenging 2010.
In a statement to the ASX it said its full year profit was $41.411 million, down 2008’s figure of $48.824 million.
The company said underlying revenues from continuing activities was $258.924 million, down 2.9%.
Austero said sales at its Today Network "clearly exceeded those of the previous financial year, but total results were dampened by market conditions and ratings underperformance of Triple M Sydney and Melbourne.
"Sales revenue from continuing operations decreased 2.2% to $254.8 million.
"Ongoing focus on cost management resulted in an overall cost decrease (excluding revenue related & depreciation) of 0.9%," the company said.
Company chairman Peter Harvie said in the statement he was expecting a tough 2010.
"Austereo’s positive set of audience and sales figures would provide a powerful springboard to deal with expected challenging media conditions for the first half 2010," Mr Harvie said.
"Our focus is on costs, and our continued leadership in audience and sales shares.
"There are some early indications of marginal improvement in some client sectors but we would certainly not call an end, in the immediate future, to the current complexities.
"We estimate that the capital city radio market will be less than -5% for the first six months to December 2009," Mr Harvie said.
Austereo chief executive officer Michael Anderson said he was cautiously optimistic on future advertising.
"While some advertising categories came under pressure, Austereo saw growth in the food, services, entertainment, medical and media categories," Mr Anderson said in yesterday’s statement.
"The ongoing renewal of many of the major client contacts provides grounds for guarded optimism, while the retention rate for the Group’s top 40 clients was an exceptional 97.5 per cent," he said.
Dividend for the year was trimmed to 9.1 cents a share from 10 cents in 2008, with a final of 5.1c.
