February may bring bad news as radio companies report results

This month will be an interesting one for public companies in the media industry. The advertising downturn is just beginning to bite and half year results announcements during February are expected to be cautious. This week, the latest company to give a warning is Prime Media, which has issued a warning to expect lower profits about $5 million less than the corresponding period last year.

Prime Media Group, owner of regional tv and radio stations, has just issued an earnings downgrade notice, expecting tv earnings to be 8% down on last year. Half year overall earnings are expected to be $27 million, compared with $32.2 million in the previous corresponding period.

Interest rate cuts have also hurt Prime, which was earning $10 million from interest rate swaps, but will now be hit hard in this area. The sale of the troubled Destra corporation will also be included in this reporting period. No comment was made on the earnings form the company’s regional radio stations.

Prime will officially announced its half year results on February 20.

Austereo, which saw its shares drop to a low of $1.15 this week, is also set to report this month. In the past 12 months Austereo shares have traded as high as $2.25, and as low as $1.02. While the price to earnings ratio of 8.2% is good news for new investors buying into the company now, the prospect of decreased dividends to established shareholders after a negative growth in the first half of the year may continue to depress the share price.

In Austereo’s first half market statement, the company said: “the market is becoming shorter and more demanding, with the October
industry revenue figures revealing a rolling four month negative 2.18%. Based on the
market year-to-date figures, it is our belief that the July-December 08 half capital city
revenue will be around minus 3.5%. This is a decline against the industry estimates we
provided in August 2008.”

Austereo reports on 16 February.

Also this week, Fairfax Media has been forced to deny that it was planning a capital raising after an inquiry from the ASX about an unexpected share sell-off. The company says it has “no present need to raise equity” because it does not need to refinance any debt before 2011. Fairfax expects a fall of about 15% in operating earnings. Fairfax reports to the market on 23 February.

APN, which saw its shares drop below the $1.70 mark this week, will announce its annual results on 25 February.

Meantime, Macquarie Bank will write down $900 million worth of assets and suffer a 15% decline in revenue, which will affect both the Macquarie Southern Cross Media and the Infrastructure Fund which owns Broadcast Australia.