CIARÁN HANCOCK, Business Affairs Correspondent

Costs associated with its sale to Denis O’Brien’s Communicorp Group in January 2008 depressed profits last year at national radio station Today FM in spite of a 17 per cent rise in like-for-like sales.

Accounts obtained by The Irish Times for the 18-month period to the end of September 2008 show that Today FM recorded an after-tax profit of €3.9 million. This compared with a bottom-line surplus of €6.4 million in the year to the end of March 2007, when the station was owned by UK media group Emap.

Radio Ireland Ltd, which trades as Today FM, had retained profits of €17.9 million at the end of last September. The accounts covered 18 months to help bring the station in line with Communicorp’s financial reporting period.

Revenues totalled €34.2 million last year compared with €19.4 million in the previous financial period. The accounts state that Today FM recorded like-for-like sales growth of 17 per cent between the two periods, indicating annualised turnover of about €23 million.

Today FM’s administration expenses rose sixfold to €12 million between the two periods. It is understood that this was largely due to costs associated with the €200 million acquisition by Communicorp of Today FM and its then sister stations Dublin-based FM104 and Highland Radio in Donegal, and the subsequent sale by Mr O’Brien of the two local radio stations for €63 million.

The remuneration paid to directors rose to €2.36 million last year from €574,733 in the previous financial period.

This is believed to include bonus payments of just over €1 million by Emap to three of the station’s executives – Willie O’Reilly, Paul Lynch and Eamon Fitzpatrick – relating to the sale of its Irish stations to Mr O’Brien.

Mr O’Reilly, who is Today FM’s chief executive, declined to comment on the payments to directors or the costs associated with the sale of the stations by Emap.

He said trading was “positive” during the 18-month period but that the “past five months have seen a more difficult trading environment” due to a 10 per cent drop in advertising sales.

“A good performance in 2009 would be flat revenues,” Mr O’Reilly added.

In spite of the downturn in advertising revenues, Mr O’Reilly said none of Today FM’s star presenters – who include Ian Dempsey and Ray D’Arcy – would be asked to take a pay cut.

RTÉ stars, including Pat Kenny and Gerry Ryan, have been criticised recently for refusing to take a pay cut.

“We had a good year so we’re not asking our stars to take a [pay] cut,” he said. “In relation to RTÉ, it’s about taxpayers’ money paid through the licence fee but it’s up to them to take a position on that.”

Today FM’s 83 staff earned €6 million in wages and salaries last year. Mr O’Reilly said a pay-freeze is in place and the station is “examining every cost in the business”.

© 2009 The Irish Times

Today FM profits down after takeover

By Laura Noonan

Annual profits at Today FM more than halved last year despite a 17pc rise in like-for-like revenues, new accounts show.

The filings chart the radio station’s performance in the 18 months to September 2008, including the January 2008 acquisition of Today FM by Denis O’Brien’s Communicorp.

The costs surrounding that change of ownership are understood to have largely contributed to the plunge in profitability, which saw Today FM return pretax earnings of €4.7m for the 18-month period against a €7.4m figure for the 12 months ending March 2007.

Those change of ownership costs are included in the 18-month period’s overall operating expenses bill, which came in at €30.3m, well above the €12.7m in operating costs for the year end March 2007.

The major operating costs rise was in administration, which jumped from €2m to €13m, while programming costs were also significantly higher.

Payments

Below the pretax line, directors’ remuneration rose from €575,000 to €2.3m — the higher payments are understood to include bonuses of about €1m shared by Today FM’s three executive directors on completion of the Communicorp sale.

On the revenue side, income for the 18-month period came in at €34m, up from €19.4m for the year ended in March 2007, including a 17pc rise in “like-for-like revenue”.

Chief executive Willie O’Reilly said a “flat” performance on revenue would be a “good result” for 2009 as the radio industry contemplates a 5pc to 10pc fall in income.

“The trading environment is currently tough, and there has been a deterioration in the last five months,” Mr O’Reilly added.

“Radio doesn’t do as well in an upturn but doesn’t suffer as much as other media in a downturn.” The radio station’s next accounts will cover the 15 months to December 2009, bringing the company’s financial year in line with Communicorp’s. The next accounts are expected to include substantially lower costs, as the change of ownership costs aren’t repeated and the station continues to “scrutinise its cost base to better prepare us for any further turbulence in the market”.

The latest accounts also show an investment of more than €3.3m in Today FM’s new Digges Lane, Dublin 2, home.

This included a one-off six-figure payment to release the station from its Abbey Street, Dublin 1, lease.