$25m bid gets the licence

A JOINT venture between the Daily Mail Group and Australian Radio Network bought Perth’s newest commercial radio licence this week for just $25 million, a price well below market expectations.

DMG chief executive officer Paul Thompson said the low price for the licence was indicative of the current media and advertising slump in the State.

In 2000, DMG paid $155 million for a new licence in Sydney and $70 million for one in Melbourne.

“I think it’s a very vigorous city that’s going through a little bit of a downturn in radio and advertising,” Mr Thompson said.

“I think that’s a very good time to get in.

“I’m a big believer in going in when the cycle is down and riding the cycle up.”

DMG already operates 18 stations in regional areas in WA.

Mr Thompson said the price was very close to his personal best guess.

In the end, Reg Grundy’s RG Capital was the only bidder DMG and ARN had to compete with.

“I think there were more bidders in the room but, once it started hotting up, I think they chose not to act,” Mr Thompson said.

The format for the new Perth station won’t be finalised until comprehensive market research is undertaken.

However, it seems very likely the new radio station will stick to the advertising format that delivers no more than two commercials in any single ad break.

“We’re really being embraced to an incredible degree in Sydney and Melbourne,” Mr Thompson said.

Despite the price premium for advertisers, Mr Thompson claims advertisers and the audiences are very supportive.

Research undertaken by DMG in Sydney and Melbourne suggests commercials are more effective in a single break or coupled with one other ad.