In one of the most significant M&A deals in the Irish media industry in recent years, Bauer Media Audio is to acquire Denis O’Brien’s Communicorp for a figure believed to be in excess of €100m.
The deal is subject to regulatory approval and if concluded it marks Bauer’s first move into the market in the Republic of Ireland. It also marks the exit of Denis O’Brien from the Irish media market after 30 years.
Bauer already owns Downtown Radio and Cool FM in Belfast. Given that it doesn’t have an existing media business in the Republic of Ireland, industry experts believe that clearance from the Competition and Consumer Protection Commission (CCPC) and the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, who has the power to approve media transactions, is a mere formality.
Communicorp is the largest largest commercial radio group in Ireland and owns stations like Newstalk, 98FM, Spin 1038, Spin Southwest, Today FM as well as leading digital radio sport brand Off The Ball, digital audio exchange audioXI and aggregated listening platform GoLoud. The company employs around 255 staff across the business.
The deal effectively means that a large chunk of the commercial radio sector in Ireland is now controlled by two international groups – Bauer and Wireless Group- part of News UK & Ireland- which owns stations like FM104, WLR FM, Q102, LMFM, Galway Bay, Cork’s 98 FM and Live95 FM in Limerick.
According Paul Keenan, president of Bauer Media Audio: “Radio is very popular in Ireland with more than 80% of the population tuning in every week. The industry makes a vital and much-valued contribution to the country’s rich cultural landscape. Communicorp’s award-winning radio stations are reaching record listening highs, and the combination of these highly valued audiences offered alongside fast growing and innovative digital brands means they are well positioned to capitalise on the future development potential of the wider world of audio. This offers more choice for listeners alongside enhanced, targeted solutions for advertisers. We are very much looking forward to working with Communicorp CEO Simon Myciunka and his talented team.”
Lucy Gaffney, chairperson of Communicorp adds: “Communicorp has been at the forefront of Ireland’s media industry for over 30 years and this agreement marks the culmination of an exciting and dynamic journey, which has enhanced and transformed radio in Ireland. Hundreds of incredibly talented and special people, both in front of and behind the mic, have made that journey possible and I want to thank them for their enormous contribution to the company. I also want to thank our advertisers, our stakeholders and especially our listeners, for their support and loyalty over many years.”
It had been speculated for a number of weeks that a deal to sell Communicorp might be in the offing following a restructuring of the group over the past few years. The most recent set of accounts for Communicorp show a considerable turnaround in the company’s financial fortunes. The accounts, which cover the 12 months to the end of 2019 but which were signed off in September 2020, show that the group’s turnover amounted to €43.7m, a 9% increase on 2018, while it made an operating profit of €3.7m and a pre-tax profit of €1.57m. Of this €43.7m, €31.49m came from advertising while €10.48m came by way of sponsorship.
The company’s balance sheet shows that accounts also show that Asset values were estimated to be worth €125m by auditors KPMG, including €106m in intangibles. Net worth was a negative €40m.
However, the group’s retained losses amounted to €92m and, historically, it has depended on loans from its main shareholder, Denis O’Brien, to keep it going down through the years. At the end of 2019, the accounts note that €104m was owed to O’Brien.
While no details of the transaction were revealed, the company’s balance sheet shows that assets were valued at €125m of which €106m was in the form of intangibles and goodwill which suggests that any purchase price is likely to have been in excess of €100m.
For its part Bauer owns radio stations in Finland, Denmark, Norway, Poland, Slovakia, Sweden and the UK where it has 37.8% of the UK commercial radio market. Some of the UK radio assets it owns include KISS, Magic Radio, Absolute Radio, Scala Radio, Planet Rock, Jazz FM and the Hits Radio Network. The combined weekly listenership of all its stations is around 55m.