RadioWorks puts its money aside to bid for frequencies

By KARYN SCHERER

New Zealand's second-largest radio company has predicted it will need at least $15 million to tender for new FM frequencies.

RadioWorks, which includes the Radio Pacific, Solid Gold, The Rock and The Edge radio stations, said in June that it would not pay a final dividend this year because it wanted to save money for next year's tender of the 100-108MHz FM band.

The sale could spawn dozens of new FM stations and is opposed by RadioWorks' main competitor, The Radio Network.

Radio Network, which is partly owned by Herald publisher Wilson & Horton, has tried to persuade the Government to stop the tender going ahead, as it believes the country is already "over-radioed."

At its annual meeting in Auckland yesterday, RadioWorks' new chairman, Craig Thompson, said the company expected the tender to go ahead in the middle of next year, and that the Government would sell between two and five of the new FM frequencies in most areas, with some reserved for non-commercial use.

RadioWorks is keen to acquire new frequencies in Auckland - a market Mr Thompson agreed was its main weakness.

"We would dearly love to be able to replicate Energy FM in Auckland."

He admitted the frequencies sale could also be a threat if competitors or new entrants topped its bids.

Asked by a shareholder why the company's new owner, Canadian group CanWest, could not use its own money for the new frequencies, he conceded it was a fair question, but said the decision was made by prudent directors.

Mr Thompson, who has taken over from Derek Lowe, said the company could raise money through a cash issue, but at this stage preferred to pay off debt, which stood at about $9 million.

In June, RadioWorks announced an after-tax profit for the year ending March of $5.6 million.

Managing director Steven Joyce said the company had since exceeded revenue budgets, and was on track to match or better budgets for the five months to the end of this month. It is changing its balance date to August to match CanWest's.

RadioWorks will announce a result for the five-month period in early November.