Macquarie Radio Network's $200 million merger with Fairfax Media's radio business is expected to contribute to an earnings slide of more than 50 per cent at the John Singleton-controlled company.
MRN warned investors on Friday that based on unaudited accounts reported earnings before interest, tax, depreciation and amortisation (EBITDA) will have fallen 56 per cent in the six months to December 2014 from the same period in 2013.
MRN executive chairman Russell Tate attributed the plunge to "abnormal changes of around $2 million".
As a result, he said reported net profit was expected to fall 65 per cent, despite a 3.8 per cent revenue boost.
"Revenue gains … from Sydney radio operations were outweighed by operating cost increases, in particular by costs associated with the relaunch of 2CH, costs associated with restructuring of the company's sales force, talent contract renewals, and increases in administration costs," Mr Tate said.
"That cost increases in part reflected the company's focus during the period on the facilitation of a merger proposal with Fairfax Radio Network."
In the six months to December 2013, MRN reported a 14 per cent fall in EBITDA to $6.4 million, while net profit slumped 16 per cent to $3.8 million. It is scheduled to release its 2014 half year results on February 18.
Mr Tate said the Fairfax radio merger, which is subject to approval from shareholders and the Australian Competition and Consumer Commission, is expected to be completed by late March.
The deal, agreed to three days before Christmas, will combine Australia's leading talkback radio stations, MRN's 2GB - home of top-rating presenters Alan Jones and Ray Hadley - in Sydney with Fairfax's 3AW in Melbourne.
MRN's leading Sydney talkback station, 2GB, would continue to compete for listeners side by side with 2UE, but their operations or back offices would be combined.
But 2GB's sister station, 2CH, will be sold to comply with media laws that ban a company from owning two radio stations in one city, as will MRN's eight radio stations in regional Queensland.
The ACCC has launched an investigation into the deal. The regulator is concerned the transaction could affect the quality of content and the pricing of advertising on radio stations in Sydney.
If approved, MRN will acquire 100 per cent of Fairfax Radio Network's share capital in exchange for the issuance of new MRN ordinary shares plus $18 million cash.
Fairfax will own 54.5 per cent of the shares, with MRN holding the remainder.
