Johannesburg - The purchase of a 65 percent stake in struggling MPowerFM Radio in Mpumalanga for R6 million by Times Media Group (TMG) was a good strategy if the aim was to grow the company’s foothold in online radio, an analyst has said.
On Friday, TMG announced the acquisition of MpowerFM, which was placed under business rescue in August after experiencing financial difficulties. The English medium station based in Nelspruit was launched in 2007. In April, Timeslive, a brand of TMG, launched its streaming radio.
TMG said the purchase consideration payable to the business rescue practitioner was R6m and the company had already paid R1.5m by the time the acquisition became unconditional last Tuesday.
The station has a satellite studio in Emalahleni and has been broadcasting in an adult contemporary format.
TMG chief executive Andrew Bonamour declined to comment yesterday and referred to TMG’s statement.
In the statement, the company said: “It is the intention of TMG to re-launch and re-brand the station in early 2014 as part of a larger broadcast strategy in South Africa and Africa.
“In a broadcast landscape where frequencies and commercial licences are scarce, MPower presented an opportunity to establish a footprint in radio for TMG.
“TMG recently bought a controlling interest in Multimedia Ghana, which has television and radio assets.”
TMG said it had set aside R12m for working capital for MPower’s turnaround over the next two to three years. TMG would back commercialisation of the station with an advertising sales solution including additional management and programming resources. Other shareholders include African Media Entertainment, Direng Investment Holdings and the Mbombela Media Consortium.
Afena Capital head of research Khulekani Dlamini said the internet was gaining “quite a lot” of interest from advertisers and it this trend could possibly continue for a long time. An advantage of online streaming was that one could listen from anywhere in the world.
Dlamini said strong radio brands could participate in online radio and retain their market share in ad spend “if they can find a way to illustrate that their online presence is quite strong”. He said it was possible that TMG was aiming to merge online and conventional radio.
According to PwC’s South African Media and Entertainment Outlook 2013-2017, revenue from radio will grow to R5.5 billion by 2017 from R3.8bn this year.
TMG shares shed 1c to close at R20 yesterday. - Business Report