Macbank Milks Media For $60m

Sydney Morning Herald

Thursday August 31, 2006

Lisa Murray

MACQUARIE Bank's foray into the media sector has paid off handsomely with Macquarie Media Group revealing it handed over more than $60 million in fees to the mothership last year.

MMG, which owns 85 regional radio stations and a cable television company in Taiwan, reported a net profit for the year to June 30 of $16.3 million from revenue of $186.7 million in its maiden result.

It paid a management fee to Macquarie of $9.2 million and a performance fee of $9.3 million, which the bank opted to receive in shares.

It also paid the bank $12.9 million in transaction fees related to its November float and $30 million for financial advice and debt arrangement services on the acquisition of Taiwan Broadband Communications.

"The fees extracted by the manager are significant but it's really what you get when you invest in this type of structure," White Funds Management's Atul Lele said yesterday.

MMG shares dropped 2c to $2.94. The fund will pay a final dividend of 11.5c. Macquarie Bank shares rose 26c to $64.51.

MMG's result included just two months of earnings from TBC, which offers pay TV, broadband and internet phone services, and seven months from its radio business.

The group said it had looked at acquisitions in Australia, the US, Europe and Asia but had knocked them back because the numbers didn't stack up.

"We're busy looking at stuff but we'll be disciplined," chief executive Alex Harvey said in a briefing yesterday.

MMG is often touted as one of the key players when cross-media ownership changes come in next year.

However, executive chairman Tim Hughes said it was "very hard for us to see much value" in some of the prices media companies are trading at in Australia.

He believes there are synergies to be gained from a merger between radio and television stations but not between newspapers and electronic media.

MMG declined to comment on speculation it was interested in buying another cable TV company in Taiwan, China Network Systems, which is expected to fetch about US$1.5 billion. CNS is owned by Rupert Murdoch's News Corp and Taiwan's richest family.

MMG said it was cooperating with the media regulator's investigation into the control of five regional radio stations but had made no provision in its accounts for a negative outcome.

The investigation began in February after MMG helped finance the purchase of the stations by another company in September 2005.

The second $2 instalment on MMG shares is due in November.

© 2006 Sydney Morning Herald

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