Nine Entertainment boss Hugh Marks has scored a coup by snapping up Macquarie Media on the cheap after the radio network was wounded by an Alan Jones defamation defeat.
Nine offered $1.46 a share, or $114 million when debt is considered, for the 45.5 per cent of the radio network it doesn’t already own.
Macquarie independent directors agreed immediately, meaning it’s a done deal once regulatory measures are complied with.
It delivers Nine full control of Sydney’s 2GB and Brisbane station 4BC, which host shock jocks Alan Jones and Ray Hadley, along with Melbourne’s 3AW, home of high-rating presenter Neil Mitchell, Perth’s 6PR and Macquarie Sports Radio.
It is also a slap in the face for advertising and media impresario John ‘Singo’ Singleton, who made a fortune out of populist ad campaigns.
Mr Singleton, who holds 32.3 per cent of Macquarie, faces the unhappy prospect of selling his stake for $82 million when the market had recently valued it at $1.80 a share, or $99.6 million.
Mr Singleton – along with high-profile investor Mark Carnegie with 3.6 per cent and Mr Jones, who also has 1.3 per cent – was forced to accept a low-ball price because, with Nine sitting at 54.5 per cent, there was no other conceivable buyer in the market.
Nine inherited its stake with its $4 billion takeover of Fairfax Media last December and at the time said it wanted the lot.
Back then, Mr Marks floated a price of $2 a share, but has been able to get a much better deal.
Marks plays cards well
Media analyst Steve Allen, of Fusion Strategies, said Nine’s timing for the bid was sweet.
“Hugh Marks has played a very good game of cards,” Mr Allen said.
“Last week Macquarie announced a profit fall after Alan Jones has been re-signed, Chris Smith has left and they have settled a defamation bid.”
Macquarie reported a drop in profit of 16.4 per cent to $27.1 million on weaker sales, an $8 million deal re-signing Mr Jones for two years and a $3.75 million defamation finding against 2GB and Mr Jones.
The defamation finding was over claims Mr Jones made on air that Queensland’s Wagner family had been responsible for flash floods in the Lockyer Valley that claimed the lives of 12 people after a quarry wall collapsed in 2011.
Nine took the opportunity to move during an unusual slump for radio ad revenues that pushed down Macquarie’s value, Mr Allen said.
Commercial radio revenues for the June year were down 0.5 per cent, compared to a 4 per cent rise the year before.
Meanwhile television and newspapers and their digital sites have been on the slide for some years.
Mr Marks told staff the move would deliver significant benefits.
“There is real strength to be gained both for our people, and the audience we serve, from the breadth of our news and current affairs offering across television, digital, publishing and now also radio.”
Mr Allen said the deal would give Nine the opportunity of advertising to the wealthy baby boomer market.
“Areas like financial services and travel are where people are really spending,” he said.
Full ownership of Macquarie would also give Nine the benefit of a wider age demographic.
“The Macquarie audience is mainly the over-50s, while Nine is the under-50s,” Mr Allen said.
The newspapers Nine bought from Fairfax have an older demographic, but their expanding digital readership is younger, meaning the total readership is not ageing, he explained.
Nine’s A Current Affair is generally seen as the same audience demographic as 2GB, while The Age and Sydney Morning Herald have often done co-investigations with the ABC’s Four Corners.
But Nine Newspapers’ recent investigation into Crown Resorts was carried on Nine’s 60 Minutes.
While Nine is unlikely to break the Four Corners nexus, the 60 Minutes program “delivered an audience of around 900,000, compared to the 500,000 to 600,000 Four Corners usually gets,” an industry observer said.