Gary Allen

Radio Jamaica looks promising

Radio Jamaica generated revenues of $1.2 billion in the March 2017 quarter, $156 million less than the December quarter but had $49 million more in direct expenses in the March quarter when it was expected that direct expenses would have fallen in keeping with the reduced income.
The group also reported lower profits in the March quarter compared with the December quarter and suffered a loss before taxation of $30 million and $65 million after an increased taxation charge of $35 million, bringing the full year taxation provision to $75 million. RJR ended the fiscal year with profit after tax of $145 million or just 6 cents per share. Results for 2018 should be much better as staff cost will fall with reduction in staffing while some one off cost that affected profit, should not recur.
In the March quarter, general expenses fell by $110 million from the December quarter to reach $562 million. The sharp change could result from reclassification of some expenses to direct cost, resulting in the jump in this area in the last quarter of the fiscal year. In the December quarterly report, the company stated that “increased cost of $64 million was incurred largely from further operational investments and one- off costs”. The areas that incurred the cost are continued rollout of 1 Spot Media, legal expenses incurred in protecting copy rights and defending legal action and repairs to broadcast transmitters. This was reconfirmed by Managing Director, Gary Allen in response to questions posed by IC Insider.com as the reason why profit in the Television segment had fallen even as revenues rose.
“The figures have seven months of the old structure. Only five months of HR synergies were realised in the financial year under review, as redundancies took place in September/November” Gary Allen, Managing Director advised IC Insider.com, in response to our question of how much staff cost is in the 2107 figures for person who were made redundant?
Prior to the merger investors were advised of major cost reduction and improved revenues that will flow from the merged entity. Allen stated ‘they have started with the HR synergies. Others are being realised as we integrate systems in the operations. Most elements will be implemented by the end of 2018/2019.”
Cash flow from operating activities was $363 million but $248 million was spent on acquiring fixed assets with the group ending with cash and equivalent of $291 million at the end of the year. RJR also has investments in bonds and Government of Jamaica securities amounting to $487 million.

Gleaner & RJR execs signing merger agreement in 2015

The RJR Group underwent major changes with the acquisition of the Gleaner media business. Comparing the 2017 fiscal year’s results with that of 2016 makes little sense with the latter having very little financial data of the acquired business.
Data contained in the segment results, provide some indication as to the performance of various parts of the group. The performance of the segments in 2017 over 2016 show, Audio Visual generating just $65 million more in revenues in 2017 to end with $1.868 billion and contributed $72 million to profits compared to $157 million in 2016, Audio comprising radio operations had revenues of $711 million compared to $567 million and contributed profit of $238 million versus $112 million, Independent Radio coming on stream and growth in Outside Broadcasts contributed to the increase. The print division showed revenues of only $78 million in 2016 and a loss of $190 million saw a major about turn, with revenues of $2.8 billion and profit of $173 million for 2017.

Allen went on to state that “the market will remain competitive and the economic conditions of Jamaica will continue to impact media spend. Improvements will come from those able to leverage market leadership positions, product diversification, overseas earnings and new marketing strategies. RJR has all the necessary ingredients to meet these challenges and the opportunities on the horizon.”
The stock traded at $1.60 on the Jamaica Stock Exchange on Friday and with IC Insider.com projecting earnings of 25 cents per share for 2018 fiscal year ending in March, the stock seems attractive coming against a back ground of continued growth in the Jamaican economy.

RJR Gleaner a formidable political force

The Gleaner Company has been feared by the political forces of Jamaica for decades, as they know the pressure that the entity can wheel. The most telling evidence is the battle of socialism versus capitalism in the 1970’s when the paper relentlessly stood up against the then government of the day and won. If the political forces were fearful of the power of the Gleaner, combine the Gleaner with the other news media powerhouse in the country, RJR and the fear levels must have gone up several degrees since Wednesday’s announcement of the merger of the media business of the Gleaner Company, with that of RJR.

Oliver Clarke Gleaner chairman

On Wednesday the boards of Radio Jamaica, (RJR) and The Gleaner Company (Gleaner) announced that their directors have signed an agreement which will see the combination of their respective media businesses.
The transaction, is to be pursued through a court approved scheme of amalgamation and will be a stock for stock deal. Radio Jamaica will issue 1.2 billion shares on a one for one basis to shareholders of The Gleaner Company in exchange for 100 percent of a newly formed subsidiary Gleaner Company (Media) Limited (GCML) which will hold the assets of the media entities of the Gleaner Company.
Simultaneous with the transaction, the remaining publicly traded Gleaner Company, with non-media assets comprising mainly real estate and other investments will be renamed. This will result in the shareholders of the Gleaner Company Limited owning 50 percent of Radio Jamaica’s stock and existing RJR shareholders owning the remaining 50-percent of the combined business.
The coming together will create the country’s leading Media Company, providing, print, online, radio, television, cable television and new media products and services.
The combined entity will have revenues of J$5.2 billion and assets of just under $4 billion. RJR had profit of $113 million for the year to March this year and Gleaner had a loss of $57 million for the year to December 2014. RJR had total assets of J$1.66 billion and the media segment of the Gleaner had assets of $2.17 billion.
“This combination creates a stronger company that delivers maximum value for our shareholders, greater career opportunities for our employees and superior experience for our customers,” said Christopher Barnes, Managing Director of Gleaner Company Limited. ”Both management teams have built industry-leading suites of products and services, and we’re excited to be part of delivering all of the possibilities to Jamaican consumers,” He added.
The expanded media group which will be renamed once the transaction is complete, is to be led by Chief Executive Officer, Gary Allen with Christopher Barnes as Chief Operating Officer. Lester Spaulding is to be Chairman with Hon. Oliver Clarke as Deputy Chairman.
“The current market, with the amount of existing players, is saturated; especially where there is low economic growth. When added to the recent moves by local telecoms to enter the media space, heightened competition is sure to put increased pressure on the industry. It is therefore very important that Jamaican media look also to shore up their resources in order to engage in the fast changing landscape, as well as to preserve the independence required for our media to do its work on behalf of the Jamaican people” Lester Spaulding stated.

The transaction close, subject to shareholder and court approval along with regulatory review and other customary procedures, is expected by the end of 2015.
Radio Jamaica was listed on the Jamaica Stock Exchange (JSE) in 1994. The company is the parent entity in the RJR Communications Group. The members of the Group are RJR 94FM, FAME 95FM, HITZ 92FM, Television Jamaica (TVJ) and TVJ-Sports Network, Reggae Entertainment Television, RETV, and Jamaica News Network, JNN.
The Gleaner Company Limited, established in 1897, is the parent company of a group comprising media operations and investments in Jamaica, Canada, the United States and the United Kingdom. Publications include the 180 year old Gleaner Newspaper in continuous publication since 1834, The Sunday Gleaner, The Star and Weekend Star, the UK Weekly Gleaner, the Weekly Gleaner and Star in USA and Canada, Gleaner Online, Independent Radio Company (Power 106FM, Music 99FM), other print publications, websites and the Gleaner Archives.
This is a big merger and one that will require lots of skills to ensure that the mix of people who are involved can be brought together with little fall out and fall out there will be, if the full benefit is to be achieved from the merger. The greatest benefit will come from a large staff cut as areas of duplication in the newsroom and administration are eliminated.
Initially, the big winners will be the Gleaner shareholders who will be getting over $3 in value for sale of the Gleaner assets to RJR, in addition they will still have shares in the remnant of the Gleaner.