Austereo tunes in to CanWest radio frequencies

Australian media company Austereo Group is believed to have lodged an indicative bid for CanWest Global Communication's New Zealand radio assets.

Austereo, Australia's biggest radio operator, is hungry for overseas assets as it tries to offset a big advertising downturn and increased competition in its home market, the Australian Financial Review reported yesterday.

Industry sources told the Review that the group had held talks about buying CanWest's New Zealand radio stations, which include the More FM and RadioWorks networks.

They are likely to fetch $200 million.

CanWest also owns TV3 and TV4. It wants to sell its New Zealand assets to help repay C$3.9 billion ($5.13 billion) in debt.

In Australia, heightened competition from operators like the Daily Mail Group's Nova appear to have ended Austereo's five-year run of double-digit earnings growth.

It has warned that it will not achieve the A$52.6 million ($60.71 million) after-tax profit forecast in its prospectus.

Austereo owns 2Day FM in Sydney, Fox FM in Melbourne and the Triple M network. It has a potential war chest of up to A$300 million and has been looking to buy this year.

CanWest's New Zealand radio operations had improved earnings before interest, tax, depreciation and amortisation of $22 million last year.

JB Were analyst Lou Capparelli said Austereo would be a logical bidder for the business.

Austereo executive chairman Peter Harvie declined to comment on the possible bid.

He said Austereo's overseas operations would be key profit sources in the next three years when a further five commercial radio licences would be awarded in Australia.

"Those businesses will absolutely become more important moving forward," Mr Harvie said.

"What we would like to think we can do is export Austereo's intellectual capital and provide great radio products offshore and enjoy a return."

Rival Australian radio operator RG Capital is also rumoured to be considering a bid for the assets. RG Capital chairman Tim Hughes said last week that his company had expressed an interest but would not comment further, citing a confidentiality agreement.

RG Capital, which is listed on the Australian Stock Exchange, is the largest commercial radio operator in Queensland and Tasmania with 32 stations.

The battle for TV3 and TV4, estimated to be valued at between $100 million and $150 million, could turn into a scrap between Australia's Nine and Ten networks.

Prime New Zealand said last week that it was interested in buying the two channels from CanWest.

Last December, Prime entered a programming and management arrangement with Nine Network which allows Nine to buy 50 per cent of the local broadcaster during the next five years. The Ten Network, 57.5 per cent owned by CanWest, is also believed to have made a bid for TV3 and TV4.

- NZPA, staff reporter