Nine Entertainment has declined to comment on a newspaper report that it will sell its radio network, but analysts believe it makes sense.
“We don’t comment on speculation,” a Nine spokesperson told Azzet.
The latest speculation fuse was lit by a report in The Australian newspaper that the sale raising between $40 million and $60 million could be completed before Christmas.
This would be on top of the $1.4 billion after-tax Nine will receive from American property giant CoStar for its 60% stake in real estate business Domain Holdings under an agreed takeover offer if approved by Domain shareholders on 4 August.
Claiming that several interested high-profile bidders were set to make formal offers for the media group’s radio assets in the coming weeks, the newspaper named the following as potential buyers:
- Radio group ARN Media (ASX: A1N)
- Privately-owned Australian Digital Holdings, backed by billionaire James Packer
- Advertising and media investor John Singleton
- Former Nine CEO Mike Sneesby, with backing from United States investors
- Media billionaire Kerry Stokes
- Talent agent Nick Fordham
- Rode microphones' chief Peter Freedman.
Morningstar Director of Equity Research Brian Han said it made sense for Nine to sell the radio network, which he valued at three to four times last reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $8.4 million.
He said Nine was balancing the “hassle” of continuing to operate the network with the risk of “gifting” it to opportunistic buyers who may operate it more successfully by focusing on the older demographic who continued to listen to radio.
The radio stations were “just a distraction” from the rest of Nine which, after the Domain sale, would be purely an audiovisual and digital company.
“Look the way I see it is it's not a big deal in the grand scheme of things,” Han said.
The Nine stations, formerly part of the Macquarie network, include Sydney’s 2GB, Melbourne’s 3AW, Brisbane’s 4BC and Perth’s 6PR.
Nine (ASX: NEC) shares closed 0.1 cents (0.59%) higher at $1.70 on Monday, capitalising the company at $2.70 billion.
