Google Elbows Into US Radio Market With $1.24bn Deal

18 January 2006

The question constantly on the mind of Google-watchers these days: for how much longer can the search engine titan remain on its high roll?

A while yet, seems to be the answer if Google's largest acquisition to date is any yardstick.

Sergey and Larry's acolyte dudes announced Tuesday that the company had agreed to purchase privately-owned US radio firm dMarc Broadcasting in a deal that could ultimately cost it up to $1.24 billion (€1.03bn; £703.43m).

The initial purchase price, however, is petty cash by Google standards - a mere $102 million in cash. But over the next three years this pittance is likely to be supplemented by performance-linked payments totalling $1.136bn. They will be based on ad revenues, net revenues and product integration.

However, dMarc boasts not a single listener. It is not itself a broadcaster but the operator of an automated network through which radio stations sell and schedule ads.

According to Google head of advertising sales Tim Armstrong, the dMarc system opens up the medium to a host of smaller advertisers whom radio stations would not otherwise be able to reach efficiently.

Google plans to integrate the new buy with its Adwords internet advertising network - a move that will enable Google advertisers at some future date to bid in an online auction for access to individual radio slots - replicating the way they already jostle for internet search keywords.

Enthuses Armstrong: "Both sides get higher scale from this." He was, however, less forthcoming as to whether there are plans to extend the scheme to TV ads.

Data sourced from Financial Times Online; additional content by WARC staff