Radio Otago predicts another $1M profit

Press, 15 July 1987, Page 44

Radio Otago predicts another $1M profit

PA Dunedin Another $1 million profit was predicted by the chairman of Radio Otago, Ltd, Mr John Fairy, after the annual meeting. Speaking at a reception to mark the company’s first seven-figure result, he said it could be done again in the current 12 months without the aid of extraordinaries.

Radio Otago produced a profit of $1,052,253 for the 16 months to March 31, which compared with a profit of $235,094 for the 12 months to November 30, 1985. The latest profit included an extraordinary profit of $602,875, the amount made on the sale of Queenstown Underwater World, bought only a few months before it was sold.

As a result of that profit and investments in other activities made in the meantime, Mr Farry said: "The result for the first three months of the present financial year is significantly ahead of budget and we are very pleased with the results so far.

“The company is in a strong position and is poised for development in the year ahead.” Mr Farry said the 25.8 per cent investment in Hauraki Enterprises gave the company not only an interest in Radio Hauraki, but also an interest in the Auckland company’s 30

per cent shareholding in Radio i.

This meant exposure to about 300,000 listeners, or about three times the total listening audience in Otago. Closer to home, Radio Otago now had 52 per cent of Foveaux Radio and had been working with its chairman to bring about a better result for the Invercargill company. It was moving in the right ■ direction, he said, indicating that the Dunedin company appreciated the struggles involved in making a private radio station viable. However, Dunedin was very conscious that this was a Southland enterprise and had no wish to be heavy handed with its involvment.

Mr Farry also referred to the purchase of a 20 per cent shareholding in Arthur Barnett Properties, Ltd.

Being a service company, Radio Otago did not generate tangible assets but the board saw the need to acquire some. Investment property had been considered, but the opportunity to buy 20 per cent of Arthur Barnett Properties had arisen. It was an opportunity which did not occur regularly, he said.

Although the company was conceived as a defensive measure against a take-over bid it had real potential, with a current asset backing of 70c a

share compared with the most recent price of 59c. Arthur Barnett Properties held the most important property in its area and the investment offered a better opportunity for investment than property itself.

"We feel we have a contribution to make and an opportunity to make real profits rather than revaluations by fancy footwork,” Mr Farry said. “Its conservative approach coincides with our business philosophy.”

The investments take Radio Otago from being a broadcaster to being an investment company with its anchor firmly in broadcasting, he said. Transmitting the board’s elation at the condition of the company, Mr Farry said financial considerations had not been a factor when the prospects of launching an Otago broadcasting company had been discussed in the early 19705. “It was a public relations exercise,” he said. “But it has developed into something else.” “We are happy to take on the more onerous financial duties if the shareholders agree.

The shareholders did agree and raised the directors’ fees to $30,000 from $20,000, to be divided between the six members as the board thought fit. Mr Farry said the company would apply for an

FM warrant when it was considered opportune to do so.

He pointed out that significant changes were possible soon, with the National Party having published a policy statement advocating radical changes to broadcasting and the Labour Party moving either to privatisation or corporatisation. However, he cautioned that 4XO remained the bulwark of the company. Only through that were the stations in Alexandra and Queenstown able to operate.

“We do not think it would be possible to have a stand-alone station in either place, as has been suggested,” he said. In particular, Queenstown “is the jewel in the crown of Central Otago and we would not give way there without a battle.”

Mr Farry paid tribute to the company’s managing director, Mr Richard Raynor, whose experience in broadcasting had been translated into success for the company.

“It is one thing to have selectors and coaches, but another to have a captain on the field. Our anguish came to an end with the appointment of Richard Raynor six years ago after an American and two Aucklanders had held the top executive position,” he sdid.