Macquarie Radio Network (MRN) executive chairman Russell Tate says he expects loss-making Melbourne station MTR will be at break-even by the end of 2011/12.
MRN’s accounts show MTR1377, which is a 50-50 joint-venture (JV) with Pacific Star Network (PSN), posted an earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $6.2 million in 2010/11.
Moreover, the radio station was continuing to trade at a “substantial loss” during the first half of the current year, given low ratings and a weak broadcast signal.
MRN said it was seeking to reduce MTR’s operating costs and stem the heavy losses and was in discussions with PSN on the matter.
PSN, fearing a shutdown of the station, last week went to court seeking an injunction to prevent MRN from acting until discussions were finalised. The company was unsuccessful.
Mr Tate told shareholders at MRN’s annual general meeting in Sydney on Thursday discussions over the past couple of weeks had been “to say the least, robust”.
He said the company had made it “very clear” to Pacific Star that if the joint-venture was to continue, it “must do so with a significantly reduced operating cost base”.
This would be until the MTR was able to “drive audience and revenue growth with a better broadcast signal and promotional platform in place”.
“I am pleased to say that we are now making very good progress with Pacific Star and am confident that a board meeting of the JV next week will agree to a revised business plan and budget for MTR,” Mr Tate said.
“By the end of this financial year, I expect the new plan will have the station operating at or near break-even.”
Mr Tate said he was hopeful that, by the middle of calendar 2012, MTR would have received all necessary approvals to upgrade MTR’s signal quality and reach across Melbourne.
“If and when that happens, the station will be capable of very quickly moving into profit,” Mr Tate said.
In terms of current trading, Mr Tate said 2011/12 first half EBITDA was likely to come in five to 10 per cent below the prior corresponding period.
Macquarie Radio shares closed steady at 74 cents, while Pacific Star was untraded at 30 cents.
