Macquarie Media Ltd (ASX: MRN) has reported a 152% increase in net profit for the 2016 financial year (FY16) to $14.4 million compared to the previous year.

It’s slightly misleading though – the previous year’s reported net profit only included 3 months of the merged Fairfax Radio Network. However, the results do show that the merged entity is achieving results.

Macquarie acquired Fairfax Media Limited’s (ASX: FXJ) radio network for a cash payment of $18 million and issuing shares to Fairfax. Fairfax now owns 54.5% of Macquarie media, but Macquarie Media now has several radio stations in its stable, including Sydney’s 2GB and 2UE, Melbourne’s 3AW, Brisbane’s 4BC and Perth’s 6BR. The Group also sold its 8 regional radio stations in Queensland for 2.3 million.

The good news for radio stations is that they aren’t seeing the structural decline of their advertising revenues like newspapers and free-to-air television media are. The problem for radio networks is keeping their market share high and maintaining leading programming in a number of key broadcasting time slots. That is a tough business and once a network loses its lead, it can be very difficult to get it back.

Echoing that – Macquarie Media says its key focus in future financial years is maintaining its strong market presence and lead in the Sydney and Melbourne ratings.

However, should the proposed relaxed media changes be implemented, Macquarie Media is likely to be a prime takeover target from its major shareholder Fairfax Media.

Foolish takeaway

At the current price of 99 cents and with earnings per share of 7.8 cents, Macquarie Media’s shares are trading on a P/E of roughly 12.7x and with a dividend of 4 cents fully franked, a dividend yield of 4%. That’s a reasonable price – but not cheap enough to entice me.

Investors might want to keep an eye on Southern Cross Media Group Ltd (ASX: SXL) when it reports later this month and compare the two radio broadcasters.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.