Nine Entertainment has denied dismissing an 11th-hour takeover bid for its national talkback radio network amid claims the offer gazumped the $56m cash and debt deal the media giant has now accepted from billionaire Sydney pub baron Arthur Laundy.
Multiple sources said the fully financed offer – worth well in excess of $50m in upfront cash alone and led by a respected business figure – was submitted via email about 4.30pm on Wednesday.
Even though they claimed the last-minute proposal rivalled the deal tabled by the Laundy family, Nine’s board signed off on selling its radio business to the hotelier during its annual general meeting the following day.
Nine categorically refuted any suggestion the last-minute proposal was ignored and insisted all offers were considered and fully evaluated by both the media giant’s executives and board before they agreed to accept Mr Laundy’s offer.
If you look at previous EBITDA multiples for media company acquisitions (5x to 10x), I think Laundy picked up 9 Radio for a fair price.
The $56 million sale price represents a multiple of 6.2x based on 9 Radio’s FY25 EBIDTA of $9.1 million.
What’s worth remembering is that due to the Laundy Family Office being a private company, it’s less concerned with growth and more concerned with a strong, stable and immediate cash flow.
It’ll be interesting to see how the acquisition impacts the Olympic Radio Rights given Nine Entertainment pays its $305 million Olympic deal in annual instalments. The Laundy deal is debt free meaning it’s on Nine, not Laundy, to honour its Radio Rights repayments with the IOC.
Wouldn’t The Laundy Family pay some form of retransmission fee to Nine to simulcast LA 2028, Nice 2030, and Brisbane 2032 on a station-by-station basis, as part of the long-term partnership that was previously discussed?
I’m sure that would’ve been written into the price. They’ve said they wanted to air Stan Sports in their venues, so that would be a win for Nine/Stan, as I’m assuming Olympic events would be screened on Stan.
Stan Sport, as I understand it, took over the Optus slots on TAB’s venue distribution when Stan got the Premier League rights. I even spotted a custom “Stan Venues” bug on one of the Aus Open matches the other day but didn’t get a chance to take a photo.
It would seem strange for the Laundy venues to want to pay for Stan twice, once through their TAB subscription and again directly to Nine, unless they get something special out of it. Maybe they get their own app in-venue to control what events they show, rather than having to rely on whatever Stan feeds out on the linear feeds which are sent to venues via TAB…and if that’s the case I wouldn’t blame them as I’ve lost count of how many times I’ve seen those feeds go to a screensaver between live events instead of highlights/replays and sometimes completely forget to put on a live event.
Given the claims of cross-subsidisation towards Radio from other parts of Nine, I do wonder about that EBITDA figure. It could be real and representative of their performance, but who knows…
Not sure about Laundy’s venues, but there are a lot that have exited (or are going to) their TAB arrangements
But aren’t TV and radio Olympics broadcasting rights sold separately? Was it Nine Entertainment who got the rights?Or was it Channel Nine and 2GB, etc. individually?
$50 mill was what Nine wanted, articles prior to announcement of the sale specifically had a ballpark of $25-30 mill from the usual bidders influenced by the way Nine had managed to merge the business with Nine Television.
It appears that Laundy has overpaid as on top they will pay with additional non-financial support promoting Stan in their venues and through boosted take up of Nine Group advertising packages even with the high sale price.
See how they go in extracting extra value from the radio stations that Nine were unable to achieve.
$25-$30 million would be way too low given 9 Radio’s EBITDA for FY2024 being $8.4 million and FY2025 being $9.1 million.
From what I can gather, the $25-$30 million figure was first bandied about by the AFR’s Media and Marketing Reporter Sam Buckingham-Jones in December 2024 where he mixed two different valuation lenses to make a point of showing how far 9 Radio’s fallen under Nine’s ownership.
“Back in 2019, Nine bought the 45.5 per cent of what was Macquarie Media that it didn’t own for $113.9 million, valuing the business at about $250 million. Macquarie Media wrote $131.8 million in revenue in 2019 and $17.7 million in EBITDA. By 2024, the business posted $103 million in revenue and just $8.4 million in EBITDA.
ASX-listed radio companies Southern Cross Austereo, which owns the Triple M and Hit networks, and ARN Media, which owns Pure Gold and KIIS brands, are trading at valuations less than three times earnings. On this measure, Nine Radio would be worth less than $25 million."
That’s a little misleading because the AFR is using share-market maths to judge a full business sale. Share prices reflect what cautious, passive investors are willing to pay for small, non-controlling stakes in a declining industry. A buyer purchasing the entire company is paying for control (i.e.: the ability to cut costs, change strategy, merge operations and extract value the market assumes will never happen). So applying listed trading multiples ignores why buyers pay more in real-world sales and ends up answering the wrong question: what the market fears today, not what the business is actually worth to someone who can run it differently.
Apologies about getting bogged down in economics theory, but no one in the industry ever actually thought it would sell for sub $50 million.
And that would have been closer to reality if the radio business wasn’t so reliant on Nine Television to achieve the numbers bandied about. If Laundy didn’t agree to keep the two together, it would add additional costs to the business with which he has nothing to back it with - no other radio stations so no HR, payroll etc to generate synergies to increase its worth closer to what Nine desired. He NEEDS Nine to keep costs down while paying a premium for a business that is not self-contained.
