The sale of Communicorp to Bauer Media Audio represents Denis O’Brien’s exit from Irish media after 30 years of decidedly mixed fortunes.
The price has been reported at about €100 million, which is thought to equate to more than 10 times’ earnings.
It is not clear if O’Brien has actually made any money from the sale. The latest accounts for the media group show that he had loans with Communicorp of €104.2 million at the end of 2019. That was before the pandemic hit media advertising last year.
Most of the loans would have related to financial support for Newstalk, the national talk radio station that has racked up huge losses over the years.
It all began for O’Brien and Communicorp when he won the Dublin radio licence for 98FM in 1989 in the early days of commercial radio. The station was a hit with listeners, offering a music alternative to RTÉ, later raking in huge advertising revenues in the Celtic Tiger years.
It provided the foundation stone for Communicorp, which would go on to own a stable of media assets across Europe and provided the financial resources for O’Brien to launch his business career in the mobile sector.
In 2007 Communicorp joined the buying frenzy for Irish radio assets by splashing €200 million to buy national station Today FM, FM104 in Dublin and Highland Radio in Donegal. It quickly sold on FM104 and Highland for an aggregate €62 million.
Today FM was highly profitable before the financial crash and before media became disrupted by digital. But the price paid by Bauer clearly doesn’t reflect the €138 million valuation of more than a decade ago.
O’Brien’s sortie into print media, via a near 30 per cent stake in Independent News & Media (INM), beginning in 2006, also left him nursing substantial losses, reported to be about €500 million by the time he exited two years ago.
He succeeded in wresting control of the media group from Sir Anthony O’Reilly and his family but did so at the worst possible time, with the State in the middle of the troika bailout and print media being disrupted by digital and new media.
In 2016, O’Brien tried to sell Newstalk to INM for €35 million. Robert Pitt, INM’s then chief executive, resisted the proposal, after Davy placed a top value of €14 million on the business in an exercise for INM.
This led to a row between Pitt and Leslie Buckley, INM’s chairman and a long-time business associate of O’Brien.
Pitt’s protected disclosure to the Office of the Director of Corporate Enforcement set in motion a series of events that led to High Court inspectors being appointed to investigate a major data breach at INM, which it is alleged was directed by Buckley and paid for by O’Brien.
The various legal cases connected with INM will probably take years to play out. O’Brien cut his ties to INM when it was sold to Mediahuis in mid-2019 for €145 million.
Why has he decided to sell Communicorp now? This is not clear. O’Brien will be 63 in April and he may feel the time is right to exit the business and focus on his other interests, notably his Digicel mobile empire in the Caribbean and the Pacific Islands.
He might also have made the calculation that this is the best price he is ever going to get for Communicorp. The full economic impact of the pandemic has yet to be felt in the Irish economy and there could be a major financial hit for an advertising-led business such as Communicorp, which has had its own financial struggles in recent years.
Communicorp’s staff will be wondering what lies ahead for them. A change in ownership brings hope of new ideas and fresh investment. The Irish radio stations have been subjected to various cutbacks and resource limitations in recent years.
Bauer is a German private company with about 100 radio stations in eight European countries, including Magic, Kiss, and Absolute Radio in the UK. It is thought to run a tight ship.
Interestingly, Newstalk will be only the second talk station in its portfolio along with one in Poland.
Bauer Media Audio’s chairman Paul Keenan was a senior executive with UK group Emap when it sold the three Irish stations to Communicorp in 2007. Bauer later acquired Emap, with Keenan moving with the business.
In a Guardian interview in 2011, he said Bauer prefers “to let our brands speak for themselves”. It he remains good to that pledge, the future could be bright for the Irish stations.