Austereo's majority shareholder Village Roadshow is in talks for a $400-$500m sale of its majority stake in Australia's biggest radio group, AdNews understands.
The sale would trigger a potentially huge shake-up in the radio sector. Village Roadshow, controlled by the Melbourne-based Kirby family, has entertained a sale of its Austereo stake on numerous occasions in the past decade and discussions are understood to have taken place recently with several potential buyers.
Based on its 2010 earnings before interest and tax (EBIT) of $80.6 million, Village Roadshow's stake – around 51% - is worth at least $400 million. Historically, radio assets have traded on a multiple of around 11 times EBIT although there are suggestions Village is looking for well above 12.
Private equity groups and other media players are likely contenders, particularly media companies looking to diversify their media assets and build stronger cross-platform programming, promotional and advertising capabilities.
"Operationally it is performing highly and therefore has limited upside," said one media executive familiar with the Austereo business. "What that doesn't take into account is that it has low debt and a lot of resources in people and skills to grow beyond a single radio focus. Purely as a radio business it is at a near high but if you look at how the company is going into new media, there's plenty of room for expansion."
Austereo chairman Peter Harvie talked up Austereo's digital media credentials late last year at the company's AGM. It's online audience had grown 25% in 2010 to 1.2 million unique browsers per month, podcasts had doubled to nearly 5 million a month and video streams were up 135% to 1.4 million per month.
"This is a clear path to an expanding cross-platform future for Austereo," said Harvie, the former boss of ad agency Clemenger Harvie, now operating as CHE. Another former Melbourne advertising industry stalwart, David Mattingly, also sits on Austereo's board.
Harvie was unavailable for comment at the time of writing.
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