Nine Entertainment makes offer valuing Macquarie Media at $275m

Nine has made its long-awaited move to buy the rest of Macquarie Media, setting up a big potential payday for John Singleton.

Major Macquarie Media shareholder John Singleton. Picture Glenn Hampson

Nine Entertainment has made its long-awaited move to buy the remaining 45.5 per cent of Macquarie Media that it doesn’t already own, with advertising boss John Singleton set to pocket around $81 million from his 32.4 per cent stake.

Nine, which inherited its 54.5 per cent controlling-stake in Macquarie Media following its $4 billion merger with Fairfax Media in December, lodged a confidential $1.46 a share cash offer after the market closed on Friday. It has been unanimously recommend by the radio network’s independent directors.

The offer equated to an enterprise value of $275.4 million, inclusive of Macquarie Media’s net debt of $22 million and payment of its August 2019 dividend.

Nine shares were up 1.1 per cent to $1.90 on the ASX around midday, while Macquarie Media fell 2 per cent to $1.71.

Nine’s move comes just days after Macquarie Media, which owns stations 2GB, 3AW, 4BC and 6PR, booked an 18.7 per cent drop in annual underlying profit, hurt by legal costs, impairment charges for its Perth operation and difficult advertising market conditions.

Macquarie Media’s No.1 star, Alan Jones, 2GB and 4BC were ordered in September to pay more than $3.4m in damages, plus interest, for defaming Queensland’s Wagner family.

After months of uncertainty about Jones’s future at 2GB, he re-signed on a two-year deal, worth $8 million, at the end of May, which paved the way for Nine to buy the remaining shares in Macquarie.

But Nine’s $1.46 offer for Macquarie is well below what many expected. Nine boss Hugh Marks told The Australian in December that it would not pay more than $2 a share for Macquarie, with owners wanting as much as $2.15.

“The acquisition of Macquarie Media consolidates Nine’s position as the leading provider of news and current affairs content across all of the key platforms: television, digital, print and now radio,” Mr Marks said in a statement.

Mr Marks said the group was investing more than $400 million annually on “providing premium news and editorial content, entrenching Nine as the go-to place for all news needs, for all Australians.”

In addition to cost cutting at Macquarie Media, bringing the two businesses together would realise further annualised savings of more than $10 million, he said.

Nine’s proposed offer requires 90 per cent of shareholder approval, with all eyes now on Mr Singleton, Macquarie Media’s second biggest shareholder, and venture capitalist Mark Carnegie, who owns 3.6 per cent.

Mr Singleton told The Australian in March that a sale of his stake was “inevitable” to avoid future business tensions. “It’s inevitable I will sell it. I will not hang on to it and be a minority shareholder,” he said.

“I am not a great minority shareholder. I would rather have things myself. I don’t like disagreements. It’s best to sell and move on.”

Mr Singleton couldn’t immediately reached for comment following the announcement of Nine’s offer.

In an email to staff, Mr Marks said the move was a “real positive”, saying he was excited about the “additional string it adds to our bow”.

“The dedicated and talented people who bring the airwaves to life each day will continue today as they did last week, but with the certainty and support of the broader Nine business to enable them to be bold and speak to and for their audience each and every day,” he said an email seen by The Australian. Mr Marks wasn’t available for comment.

2GB has been Sydney’s most popular radio station for the past 15 years, accounting for 14 per cent of the market, down 0.8 percentage points from a year earlier, according to the latest radio ratings survey by GfK.

Jones’s audience fell 0.2 points to 17.4 per cent, while fellow 2GB radio host Ray Hadley, who rules the 9am to 12pm Sydney radio airwaves, was down 1.7 points to 16 per cent.

Nine is set to report its full-year results on August 22.