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 was announced at around 100 million euros, which is equivalent to more than 10 times the profit.
It is not clear if O’Brien actually made any money from the sale. The media group’s latest accounts show it had loans with Communicorp of 104.2 million euros at the end of 2019. This was before the pandemic hit media advertising last year.
Most of the loans were said to have been tied to financial support from Newstalk, the national radio station which has racked up huge losses over the years.
It all started for O’Brien and Communicorp when he won the Dublin radio license for 98FM in 1989 at the start of commercial radio. The station was a hit with listeners, providing a musical alternative to RTÉ, later raking in huge advertising revenue in the Celtic Tiger years.
He provided the cornerstone of Communicorp, which would own a stable of media assets across Europe and provided the financial resources for O’Brien to launch his commercial career in the mobile sector.
In 2007, Communicorp joined the Irish radio asset buying frenzy by spending € 200 million to buy the national station Today FM, FM104 in Dublin and Highland Radio in Donegal. It quickly sold out on FM104 and Highland for a total of 62 million euros.
Today, FM was very profitable before the financial crash and before the media were disrupted by digital. But the price Bauer paid clearly does not reflect the valuation of 138 million euros from more than ten years ago.
O’Brien’s exit in the print media, via an almost 30% stake in Independent News & Media (INM), from 2006, also left him with substantial losses, estimated at around € 500 million. at the time of its release two years ago. .
He managed to wrest control of the media group from Sir Anthony O’Reilly and his family, but at the worst possible time with the state in the midst of the troika bailout and the print media disrupted by digital and new media.
In 2016, O’Brien attempted to sell Newstalk to INM for 35 million euros. Robert Pitt, then managing director of INM, resisted the proposal, after Davy placed a maximum value of 14 million euros on the company in a fiscal year for INM.
This led to an argument between Pitt and Leslie Buckley, president of INM and longtime partner of O’Brien.
Pitt’s protected disclosure to the Office of the Director of Law Enforcement sparked a series of events that led to High Court inspectors being appointed to investigate a major data breach at the INM, allegedly run by Buckley and paid for by O’Brien.
The various legal cases related to the MNI will probably take years to unfold. O’Brien severed ties with INM when it was sold to Mediahuis in mid-2019 for 145 million euros.
Why did he decide to sell Communicorp now? It’s not clear. O’Brien will be 63 in April and he may think the time is right to leave the company and focus on his other interests, including his Digicel mobile empire in the Caribbean and Pacific Islands.
He may also have calculated that this is the best price he will ever 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 blow to an advertising-led company such as Communicorp, which has had its own financial difficulties in recent years.
Communicorp staff will wonder what to expect. A change of ownership brings hope for new ideas and new investments. Irish radio stations have been subject to various cuts and resource limitations in recent years.
Bauer is a private German company with around 100 radio stations in eight European countries, including Magic, Kiss and Absolute Radio in the UK. He is believed to be running a tight ship.
Interestingly, Newstalk will only be the second chat station in its portfolio with one in Poland.
Bauer Media Audio chairman Paul Keenan was a senior executive at UK group Emap when he sold the three Irish stations to Communicorp in 2007. Bauer subsequently acquired Emap, with Keenan moving with the company.
In an interview with The Guardian in 2011, he said Bauer preferred to “let our brands speak for themselves.” If this commitment remains good, the future could be bright for Irish resorts.