It’s easy to focus on the bad news out of the media sector at the moment — perhaps best demonstrated by Fairfax Media’s market value slipping to an all-time low under the $1 billion mark on Friday — but on the weekend we also saw a bit of very good news emerge from the Murdoch family camp.

Lachlan Murdoch, Rupert Murdoch’s youngest son, has paid around $100 million to buy the 50% of radio group DMG Radio Australia that he didn’t already own.

Murdoch made a huge splash back in 2009 when he paid British media company Daily Mail and General Trust $112 million for a 50% stake in DMG, which is best known for its youth-orientated network Nova FM. Murdoch raised the money for the transaction by selling shares in News Corp, and so the original DMG deal was seen as Lachlan’s big attempt to branch out from the family fold.

Murdoch has had mixed results from his other Australian media investments — earlier this year he sold a stake in regional television group Prime at a profit, although he remains well down on his investment in free-to-air giant Ten Network — but his radio play has been a pretty good one.

According to the company’s latest results for the year ended September 30, 2011, DMG Radio’s operating profits increased from $93.9 million to $122.8 million, with operating profit rising from $1.5 million to $5 million. Financing charges saw the company post a net loss of $5.7 million, compared with a loss of $7.5 million the year before.

Reports suggest Murdoch and his executive team, led by CEO Cathy O’Connor, have worked hard to cut the group’s costs and increase ad revenue.

In a year when radio sector revenues have remained flat, O’Connor told Fairfax that DMG’s revenues were up 9%. Murdoch’s investment company Illyria claims its internal rate of return from the DMG investment is running at 60%.

I think Murdoch’s $100 million investment in the other half of DMG Radio can be read as a three-way bet.

Firstly, he’s betting that radio can continue to hold its ground as the media sector restructures. According to PwC’s recently released Media Outlook report, radio advertising revenue is expected to have a compound annual growth rate of 3.9% between 2012 and 2016, compared to 4.1% for the wider media sector. In other words, radio is not stumbling in the way that newspapers (advertising CAGR of -5.1% over the outlook period) and television (advertising CAGR of 1.8%) are.

Secondly, he’s betting on the media. The Murdoch family knows no other way, of course, but after months (even years) of bad news about the state of Australia’s media sector we should at least take some heart from the fact that there are media assets that are holding most of their value, and investors prepared to place big bets on their future.

Finally, in the same way that Warren Buffett’s investment in local/regional newspapers are seen by many as a bet on the US economy, Murdoch’s investment in DMG can be seen as a long-term bet on the Australian economy.

Media revenues always rise and fall with the business environment; Murdoch is betting the current downturn in spending has more to do with the economic cycle than the structural change currently sweeping through the media sector.

As Ten Network’s profits and share price tumble, question marks about Lachlan Murdoch’s ability as a media mastermind will remain.

But the $200 million bet on DMG Radio Australia is surely his biggest test. If he can continue to lift the group’s earnings and orchestrate some type of deal — perhaps a sale to another media group, as many have speculated — then his media sector acumen will need to be reassessed.

*This article was originally published at SmartCompany