Virgin Radio Could Be Sold For £130 Million
SMG, the Scottish media conglomerate, is reportedly in the process of sounding out potential buyers for its Virgin radio station, which it hopes to off-load for around £130 million.
It is understood that several rival radio groups have expressed an interest in Virgin, which SMG acquired three years ago for £225 million. However, industry sources say bidders may only be willing to pay around £80 million for the national station.
A report in yesterday’s Observer claims that Emap is interested in acquiring Virgin Radio at the right price. The cross-media group is looking to grow its radio business, which already includes Kiss 100 FM in London and a range of digital stations such as Kerrang! and Smash Hits.
If Emap does decide to buy Virgin Radio, it will be the second major deal the media group has agreed with SMG this year. Back In January, Emap bought SMG’s 28% stake in Scottish Radio Holdings for just over £90 million (see SMG Sells Radio Stake To Reduce Mounting Debts).
Other radio groups believed to be interested in Virgin Radio include US conglomerates Viacom and Clear Channel. Non-EU investors were cleared to buy into the sector last year after the Government’s recently passed Communications Act relaxed the radio ownership regulations (see NewsLine Column: A Spanner In The Works For Radio Consolidation?).
SMG bought Virgin Radio from high-profile DJ Chris Evans and went on to fight a costly legal battle after sacking the aspiring media mogul for failing to turn up for work. SMG won the case and was awarded legal costs of around £4 million (see SMG Triumphs Over Evans In High Court Battle).
The latest RAJAR figures for the three months to March reveal a less than impressive performance for Total Virgin Radio, which saw its weekly reach fall by 8.1% year on year to 2,486,000. The station, which broadcasts on FM in London and AM across the rest of the country, has seen its listening figures decline steadily over the last five years.
SMG had been forced to rein in its ambitious plans to create a Scottish media giant, with assets in every sector, after running up huge debts. However, the group is now in better shape and expects to see increases in revenue across all of its main media interests over the coming year (see Outgoing SMG Chairman Predicts Positive Year).
SMG: 0141 300 3000 www.smg.plc.uk
Recent Radio Stories from NewsLine Modest Revenue Improvements For Capital Radio Scottish Radio Sees Encouraging Growth In First Half French TV Listings Holding Back Emap Despite Profits Rising
Subscribers can access ten years of media news and analysis in the Archive