The owner of TV3 expects the station to book €23.3 million in earnings before finance costs this year, according to internal projections.
London private equity house Doughty Hanson says in a paper for potential investors that the station is estimated to have booked €21.5 million in earnings before interest, tax, depreciation and amortisation (EBITDA) last year on sales of €53.6 million.
This brought TV3's compound annual EBITDA growth in the past three years to 26.9 per cent. The paper says EBITDA will rise to €23.3 million this year and to €24.3 million in 2008.
Doughty is likely to exit TV3 in 2009 or 2010. The means of disposal mooted by Doughty were to sell TV3 to a trade buyer or financial sponsor or sell down its stake in an initial public offering.
Doughty bought TV3 last August from Canadian firm CanWest, British broadcaster ITV and a group of private investors. The firm says the deal valued TV3 at €280 million, some €15 million higher than mooted in previous reports. That implies a valuation on TV3 of 12.4 times the estimated 2006 EBITDA.
The deal was financed with a €131.5 million equity investment from Doughty and debt from Anglo-Irish Bank. The station's net debt multiple is projected to decline to 5.5 times EBITDA this year from 6.5 times EBITDA in 2006. This is projected to fall to 4.9 times EBITDA in 2008.
Doughty's projections for TV3 were circulated to possible participants in a new investment fund, its fifth. The group, which also owns part of sports broadcaster Setanta, intends to raise some £3 billion (€4.5 billion) by early March.
The TV3 investment makes up some 8.8 per cent of its fourth fund, which has a valuation of some €1.5 billion.
According to Doughty Hanson, TV3 had a compound annual sales growth of 11.6 per cent in the past three years.
Airtime adverts accounted for 93.8 per cent of sales in 2006, with 2.8 per cent coming from sponsorship and promotion and 1.6 per cent coming from production activities. Some €44.49 million of the 2006 sales was sourced in Ireland, with €9.11 million from UK sources.
Doughty says that TV3 is well-positioned to benefit from the "strong underlying economic fundamentals" in Ireland. It also says potential rivals face barriers to entry due to licensing protection and programming contracts.
