Just six months after millionaire Sydney yachtsman Mr Rod Muir sold
his two FM radio stations - 2MMM-FM and 3EON-FM - for $90 million, his Sydney
broadcasting competitor, Mr Mike Willesee, has agreed to sell 2DAY-FM to the
Lamb family's Broadcast Investments for about $70 million.
This is the highest price paid for an Australian radio station and follows
the ballooning multi-million dollar prices for other radio and television
stations in the recent media auctions, such as the $1 billion Bond-Packer deal
for the Sydney and Melbourne Nine Network television stations.
2DAY-FM is controlled by Mr Willesee's Trans Media group which produces
his early evening current affairs television program.
When asked why Broadcast Investments had re-entered the Sydney radio
market after selling 2UE for a comparatively paltry $20 million last year to Mr
Kerry Packer, Mr John Lamb, managing director of Broadcast Investments' NWS-9
Adelaide, said: "Well, I think the commonly held belief is that the FM industry
is worth being involved in in this country".
"We've always had an investment in the Sydney market. When we sold out of
2UE (which is an AM station), the 2WS (minority) shareholding was always
Mr Willesee and Mr Lamb refused to comment on the seemingly inflated
price, but Mr Lamb said his company's sale of 2UE, 2KO and 2MC last year had
"helped provide some funds".
However, the $70 million price tag can be justified, according to media
experts contacted yesterday.
They said 2DAY-FM was widely regarded as Australia's most profitable radio
station, and estimated it had a turnover of $9 million-$10 million in
advertising revenue last year, with an expected increase on those figures to
about $15 million for this year. On that basis, running costs would lie at
about $6 million with a potential before-tax profit of $9 million for the year.
This would justify a sale price in excess of $70 million.
According to a statement, 2DAY-FM general manager Mr Noel McGurgan will be
invited to join the board and the current management will be offered positions
by Broadcast Investments.
While the deal was announced yesterday, it is understood the Lamb family
and another FM radio group involving Adelaide-based 5SSA-FM and Melbourne's
3FOX-FM had targeted the station for takeover for about two to three months.