The Dartmouth-based parent company behind national broadcaster Newcap Radio is picking up two FM radio stations in New Glasgow in a deal that still has to be okayed by Canada’s regulatory watchdog for the industry.
Newfoundland Capital Corporation, which owns the 72-station Newcap Radio chain, did not divulge the price it is to pay under that deal for the Hector Broadcasting’s CKEC and CKEZ in Pictou County.
Hector Broadcasting president Mike Freeman declined a request for comment about the deal or the stations’ profitability, noting the deal needs the approval from the Canadian Radio-television and Telecommunications Commission (CRTC).
“I won’t be discussing it until we have a decision from the CRTC,” said Freeman. “It’s still pending.”
Newfoundland Capital Corporation chief financial officer Scott Weatherby said in an interview Friday the federal regulator is expected to make its decision on the deal within the next four months.
The sale of the two radio stations comes only a bit more than five years after Hector Broadcasting’s launch of its CKEZ rock-format station in May 2012.
In its application to the CRTC for the go-ahead for that second radio station, Hector Broadcasting claimed in 2011 that 70 per cent of New Glasgow residents listened to CKEC at least once a week.
In its third-quarter financial results, Newfoundland Capital Corporation noted it expects to add $3.3 million to its long-term debt and other liabilities because of this deal.
On Friday, Weatherby said that figure includes the purchase price, the deal’s transaction costs and money the company has to pay for Canadian content development under the CRTC’s rules. The CRTC sets Canadian content development costs at six per cent of the purchase price of new radio stations.
Scooping up the two radio stations in New Glasgow fills a gap in Newcap’s coverage in Nova Scotia. The media chain already owns five radio stations in the province, Q104 – The Home of Rock n Roll and Mix 96.5 FM in Halifax, The Giant Cape Breton 101.9 and New Country 103.5 in Sydney, as well as K-Rock 89.3 in New Minas.
“It’s another area of the province that we don’t have coverage in,” said Weatherby.
Buoyed by an uptick in the ratings of its stations in Ontario and its purchase of three radio stations and four repeating signals in Kamloops, British Columbia in June, Newfoundland Capital Corporation enjoyed a four per cent bump up in its third-quarter revenues which rose to $43.1 million. Its adjusted earnings before interest, taxes, depreciation and amortization, usually considered to be an indicator of a company’s operational health, also rose by two per cent in that most recent quarter.
Profits for the national broadcaster rose six per cent, to $8.2 million, in the third quarter due to higher revenues and tighter controls on costs.
“The company had a successful third quarter, which made up for the challenging start to 2017 and positioned us for another successful year,” said Rob Steele, the company’s president and chief executive officer, in a statement.
Newfoundland Capital Corporation stock, which trades on the Toronto Stock Exchange under the NCC.A and NCC.B symbols, has a market capitalization of $330.6 million and nudged up slightly in trading Friday to $12.50, the upper limit of its 52-week trading range.