Solid Performance At SMG Gains Merrill Lynch Upgrade

SMG is currently outperforming the market in its television, radio, outdoor and cinema businesses, leading Merrill Lynch to upgrade its investor recommendation on the Scottish media company from neutral to buy.

The broker says that SMG is gaining share amongst the ITV franchises, whilst the company’s Virgin Radio station is showing revenue growth year on year for the fourth quarter – virtually unique in the UK radio sector. Outdoor, meanwhile, has been on the rise since Q3 and revenues at the group’s cinema advertising contractor, Pearl & Dean, are set to recover in Q4.

However, there is the possibility that the ad recovery might ‘double-dip’ going into 2003, warns Merrill Lynch.

SMG is currently receiving bids for the sale of its publishing assets, which comprise the Herald group of titles and eleven business to business and specialist consumer magazines. Second round bids are understood to have come from Daily Mail & General Trust, Independent News & Media, the Barclay brothers, Archant and four financial investors.

SMG is hoping to raise around £200 million from the disposal. This would halve the group’s £400 million debt and will permit a refinancing at lower rates, says Merrill.

Subscribers to MediaTel Insight can access this report in full, along with more national and international media analysis, forecasts and news. For subscription details please visit the site.