Emap's Irish radio stations could be worth more than €200 million, based on profit forecasts provided in an information memorandum circulated to interested buyers yesterday.
The document shows that Today FM, FM104 and Highland Radio are expected to achieve combined earnings before interest, tax, depreciation and amortisation (EBITDA) of €14.6 million in the year to March 2008 on turnover of €34.5 million.
This is significantly ahead of expectations within the radio industry and is based on strong growth in advertising, sponsorship and promotions revenue.
With UK stock market-listed radio groups attracting valuations of 16 times or more EBITDA, the projections suggest a valuation of €233 million for Emap's Irish assets.
The document indicates that the three stations will achieve a healthy EBITDA margin this year of 42 per cent.
It is understood that about 15 parties received the sale document, which was circulated by Merrion Capital.
These include Denis O'Brien's Communicorp, owner of Newstalk and 98FM; Doughty Hanson, which owns TV3; Sir Anthony O'Reilly's Independent News & Media; Thomas Crosbie Holdings, publisher of the Irish Examinerand an investor in Cork's Red FM and WLR and Beat FM in Waterford; The Irish Times Ltd; and UTV, the Belfast-based TV and radio broadcaster.
A number of private-equity groups are also thought to have expressed an interest in buying the stations. The process is being led for Emap by Willie O'Reilly, Today FM's chief executive.
Suitors have been given three weeks to lodge indicative offers, after which a shortlist of bidders will be compiled.
Emap's stations have increased their profitability significantly in the past couple of years. Their combined EBITDA rose from €8.4 million in the year to March 2006 to €11.6 million in the financial year just closed.
The profit margin in this period increased from 31 per cent to 37 per cent.
The document predicts EBITDA of €15.4 million for the year to the end of March 2009 and €16.7 million for 2010.
Today FM is Ireland's biggest commercial national radio station, while FM104 is Dublin's number one music station and Highland is the clear market leader in Donegal.
The document highlights the favourable economic conditions and demographics in Ireland, opportunities in digital radio and the potential to secure new licences offered by the Broadcasting Commission of Ireland.
It is understood that Radio Ireland, Today FM's holding company, will be part of a consortium bidding for the multi-city licence, which was recently advertised by the Broadcasting Commission of Ireland.
It highlights the 9 per cent compound annual growth rate in radio advertising revenues here between 2002 and last year. Radio advertising is forecast to hit €135 million this year.
