Three Munster businessmen who invested £2.5 million (€3.2 million) five years ago for a majority stake in Cork radio-station company County Media will get an £18 million windfall from the sale of the firm to Ulster Television (UTV) for £28.5 million. UTV is also taking on £3 million in debt, bringing the total cost of the acquisition to £31.3 million.
County Media managing director Mr Colm O'Conaill and Limerick businessman Mr Alex McCarthy will each get £6.8 million for their 24 per cent stakes in County Media, while Mr Jim O'Mahony - the former chief executive of Golden Vale - will get £4.8 million for his 17 per cent. Mr O'Mahony was dismissed as chief executive of Golden Vale almost five years ago and left with a severance package estimated at £750,000.
The remaining 35 per cent of County Media is held by venture capital group Delta Partners, which will get almost £10 million for its investment.
County Media's 70 full-time and 30 part-time staff are also to benefit from the acquisition, and will share £1 million provided by the three former shareholders and UTV. How this £1 million fund will be paid to the 100 staff has yet to be finalised but it works out at an average of £10,000 each.
County Media operates three radio stations - 96FM in Cork city, 103FM in north Cork and 103FM in west Cork - and dominates the region with a market share in excess of 52 per cent and a daily listenership of 199,000, according to the most recent JNLR figures. It also published a 20,000 circulation freesheet newspaper, Inside Cork, and has a Dublin-based advertising sales operation, Broadcast Media Sales. The group had turnover of £5.4 million last year with operating profits of £1.5 million.
This is UTV's biggest acquisition to date and represents a big move into the Republic's media market. UTV - which already derives substantial advertising revenue from advertisers in the Republic - is the latest group from outside the State to enter the Republic's media market.
Already, Guardian Media has invested £38 million for 45 per cent of TV3, where another 45 per cent is held by Canwest, the Canadian group that owns 29.9 per cent of UTV. Scottish Radio Holdings owns 22 per cent of the now very successful Today FM national radio station.
In addition, Scottish Radio has invested heavily in Irish regional newspapers and also owns Ire- land on Sunday. Trinity Mirror owns the Sunday Business Post, as well as a range of regional titles in the north-west.
UTV managing director Mr John McCann would not expand on a supplied statement as the acquisition still has to be approved by the Independent Radio and Television Commission and the Minister for Enterprise, Trade and Employment, Ms Harney. In his statement, he said that County Media would strengthen the group's multimedia business in Ireland. He said that County Media would also enhance UTV's earnings.
Mr McCann said the acquisition was a key step in the implementation of UTV's strategy of expanding its media interests on an all-Ireland basis. It will also put UTV in a strong position to compete against British and international media groups in a consolidating market. Market sources believe the Irish media market will increasingly become the target for outside investment given the strength of the economy and the current strength of advertising revenue.
Just as the £28 million paid by Scottish Radio for the Kilkenny People put hefty potential valuations on other regional newspaper groups, the price UTV is paying for County Media will probably have a similar effect on the valuations of other local radio stations, especially those with strong market shares in the areas they service.
