The valuations put on radio stations appear to have dropped significantly with Radio Kerry preparing a takeover of Shannonside/Northern Sound for approximately €6 million.
The deal, which has yet to be approved by the Broadcasting Commission of Ireland (BCI), involves Radio Kerry buying two stations: Shannonside, which serves Longford, Roscommon and south Leitrim, and Northern Sound, which serves Cavan and Monaghan. The advisers for the sellers were Merrion Corporate Finance.
The two stations are owned by the Midlands Radio Group. It is believed this group makes an annual profit of about €500,000. Based on these returns, the stations are set to be purchased for more than 10 times earnings. This is considerably less than the €9.5 million paid for LMFM by UTV a few months ago. LMFM, owned by Coderidge Ltd, made similar profits to the Midlands Radio Group.
The main beneficiary of the sale would be agri-businessman Mr Pádraig "Buddy" Kiernan, who holds a 38 per cent shareholding in the business. Mr Richard Devlin, chief executive of the two stations, has a 10 per cent shareholding.
The chief executive of Radio Kerry, Mr Paul Byrne, was not available yesterday to comment on the proposed deal.
The deal will have to go to the Competition Authority for approval.
Industry sources claim a cap on the ownership of stations from the BCI has severely reduced valuations because large buyers are no longer active.
In December, the BCI imposed a temporary cap on the number of stations a company could own.
It said it would be "unacceptable" for a firm to own 17.9 per cent of "the total number of commercial sound broadcasting services" in the Republic.
