Peter Saxon speculates over who will buy MRN’s surplus stations

A fascinating side issue that’s emerged from the merger of Fairfax Radio and Macquarie Radio Network is the announcement that they are going to sell off 2CH in Sydney and a number of stations in North Queensland; 4VL, Triple CCC FM, 4HI, 4ZR, 4LM, 4SB and Hot Country.

The QLD stations were collectively known as The Smart Radio Network before they were acquired by MRN from Brad Smart in 2011 for around $6 million.

There are a number of usual and unusual suspects who could be interested in buying this grab bag of surplus assets – the biggest and brightest of which, Perth’s 96fm has already been snapped up by ARN for $78 million to be rebranded as a ‘KIIS’ in the new year.  ARN already has a half share in Perth’s Nova but this will be its first stand alone outpost on the west coast thus completing a full metropolitan national network. 

Sources tell us that ARN had been sniffing around the station for at least two years and had made their interest known to Fairfax in the event the station, which has been one of Fairfax Radio’s most profitable, became available. For ARN, that day has come.

Who would buy 2CH, as a stand alone AM licence in Sydney is anyone’s guess. 

Bill Caralis bought one, 2SM, in 2000 which then rated so poorly he decided to pull it from the ratings altogether. It is doubtful Mr Caralis will have the appetite to double down on a pigeon pair.

2CH, of course, has fared much better than 2SM with a 4.4 share to show for its efforts in the latest survey. The often maligned 2UE is actually doing even better with a 5.6 share. But 2CH, which runs on the proverbial oily rag is more profitable. 

Given that the newly merged entity will retain Fairfax’s Magic branded stations in Melbourne and Brisbane, which are similarly formatted to CH, it may have been more prudent to keep 2CH and complete an eastern seaboard network of easy listening stations with a defined audience and, instead, sell 2UE which, as of today, is still problematic despite management’s belief in its long term future.

Be that as it may, there is nothing to stop 2CH’s eventual purchaser from retaining the format and and doing a sales deal with the new entity to create a virtual network in the same way that Nova Entertainment’s only AM Talk station, FIVEaa Adelaide, does with Fairfax now.

Interested parties could include Pacific Star which owns Melbourne’s all sport station SEN which enjoys a similar audience share to 2CH, at least in the footy season. However, it is doubtful whether the SEN format which relies on Melbourne’s fanatical love of all things AFL could attract a viable audience in Sydney.

Then there’s Grant Broadcasters, now Australia’s largest family owned network. Although their stations are mainly spread around regional markets, they do jointly own a lone wolf in 6iX Perth in cahoots with Kevin Blyton’s Capital Network with whom they also own 2CA and 2CC in Canberra. They could be amenable to another such partnership in Sydney. Grant Broadcasters has been contacted for comment.

Grant Broadcasters must also be considered buyers for MRN’s Queensland stations but as they have never been accused of paying too much for anything they are likely to be first to pull out of the bidding if the competition hots up. The same probably applies to Bill Caralis’ Super Network. 

The ACE network which has traditionally been content to stay within the highly profitable precinct it has carved out for itself in regional Victoria is an unlikely starter. And while the target network may be too far north for their tastes, it’s probably too far east for Seven West Media which owns WA’s Spirit Network. Yet, they could prove to be a dark horse as they are not averse to building assets and have proven expertise in broadcasting to remote areas.

In my opinion, that leaves two front runners. First is the Resonate Network headed up by Sally and Guy Dobson + Rex Morris. The other is Glenn Wheatley’s EON Broadcasting with the backing of private equity firm Oceania Capital Partners.

Understandably, both groups were reticent to tip their hand when contacted by radioinfo. Yet both had previously stated that they are keen to expand their fledgling networks.

The best we could do was to get Sunshine Coast duopoly stakeholder Glenn Wheatley to agree that such a network as that to be offered by MRN, virtually in his own backyard, was worth a look, even if just to kick the tyres.

Just over 18 months ago, Resonate was so frustrated by the lack of stations “at the right price” coming on to the Australian Market it eventually found stations in Hawaii to buy and have turned them from being “dark” into market leaders.

Wheatley’s company, EON Broadcasting, bought Sea FM and Mix FM from Southern Cross Austereo in March 2013 for $17.5 million and has never looked back. The stations have since returned a tidy profit, mostly for the private equity firm that posted the cash for the original purchase. They would likely not hesitate to back Wheatley again should the right opportunity arise.

The market for commercial radio licences in Australia is tiny with very few buyers but even fewer stations. Unlike the stations in Hawaii that were boarded up and off the air when Resonate purchased them, there has never, in my living memory, ever been a similar situation in Australia.

For all the talk of the falling value of radio licences, demand remains stronger than supply.

Peter Saxon