Capital Radio Takes Choice FM For £15m

Choice operates two Hip Hop and R&B-based stations – 96.9FM in south London, which has been broadcasting since 1990, and 107.1FM in north London, which launched in 2000. Between them, the stations broadcast to a potential audience of 5.8 million adults. In the most recent Rajar figures Choice actually reached a total of 415,000 listeners.

The group also operates a network of five digital radio licences covering London, the North West, Yorkshire, North East and the Severn Estuary and has also recently been offered an additional service across the West Midlands, giving an aggregate potential audience reach of 25.8 million.

Capital secured a put and call option deal with Choice at the time of its 19% acquisition in 2001. This allows Capital to acquire the remaining 81% of Choice between September 2004 and September 2006. Shareholders have agreed to bring this deal forward so that Capital will take control of Choice from January 2004.

In order to finance the acquisition, Capital Radio will issue approximately 2.5 million new shares in the group, worth around £11.7 million at yesterday’s closing price of 467.5p.

Choice had revenue of approximately £1.8 million in the year to September and made an operating loss from analogue radio activities of approximately £0.3 million.

Commenting on the deal, Capital’s chief executive David Mansfield said: “Choice is an excellent investment for Capital and one which complements our existing portfolio of stations in London. We believe that Choice has significant opportunities under its existing formats to grow its audience across London and the UK. We already sell advertising on Choice and will now see increased benefits of bringing it fully into the Capital family of stations.”

Shares in Capital Radio had fallen by 3% to 435.5p this morning, following news of the deal.