It was an expensive ``homecoming" for Paul Thompson.
The DMG Radio chief executive, who hails from the Queensland capital,
yesterday paid the Federal Government $80 million for a new Brisbane FM radio
Mr Thompson's winning bid at the Australian Broadcasting Authority's latest
auction completes DMG's national FM network, adding to licences in Sydney,
Melbourne, Perth and Adelaide.
It also makes plans by Virgin Radio Australia an alliance between UK
entrepreneur Sir Richard Branson and ad man John Singleton to launch a rival
network that bit more difficult.
However, in a market that only generates about $70 million of advertising
revenue a year, the Brisbane licence is one of DMG's most expensive on a per
capita basis. Last week, Mr Thompson paid $106 million for his second Sydney
licence, $1 million more than Virgin offered in a market that generates about
$200 million ad revenue.
After that auction, Mr Thompson predicted bidding for Brisbane would be even
more aggressive, pushing the price sky high and making losers out of everyone.
``Brisbane was part of the Nova network that was missing so for us it might
have had a value that was slightly greater than for anybody else," Mr Thompson
``[Brisbane] is absolutely booming, the city has been booming for a long
time, the radio market is also booming . . . in fact, for this year so far it is
leading Australia quite a long way."
DMG's UK owner, Daily Mail & General Trust, will fund the acquisition. The
group has now spent $481 million on seven metropolitan city licences in
Australia in the past few years, a market that last year generated total ad
revenue of $737 million.
The new Brisbane station will be based on DMG's Nova format, which has rated
strongly elsewhere with people aged under 40. Mr Thompson said slight changes to
the format might be made but the station would retain Nova's policy of playing
no more than two commercials in a row.
No launch date has been set because DMG has only just finished building a new
station on the central coast of NSW, has not completed its Adelaide station
after winning a licence there in October, and has yet to set a launch date for
its second Sydney station.
Mr Thompson said that, on top of the licence price, DMG could expect to pay
between $6 million and $7 million to build each station.
DMG's latest win has derailed the plans of its competitors.
Virgin, which pulled out of the bidding at $15 million, is not now expected
to bid aggressively for a Melbourne licence due to be auctioned in August.
Rural Press, the only other serious bidder yesterday, was hoping to team a
Brisbane station with one it has in nearby Ipswich but pulled out at $70
million. DMG also beat it for a Brisbane licence in 2001.
For Hot Tomato, owned by the former wife of Rupert Murdoch, Anna Mann, and
her two brothers, Hans and Jaan Torv , Brisbane was considered vital for
expansion. Two years ago, Hot Tomato became the first new commercial FM
broadcaster for 14 years on the Gold Coast when it paid $26 million for a
There is some hope for yesterday's runners-up. DMG runs a station on the
Sunshine Coast, considered by the ABA as part of the Brisbane market, as well as
owning half a Brisbane licence with Australian Radio Network. ABA regulations
stipulate a maximum of two licences per market, which means DMG has six months
to decide which one to sell.