As the advertising upturn continues, Scottish Media Group (SMG), has seen a turnaround in its fortunes as pre-tax profits grew by 20% to £5.5 million during the first half of this year.
The Glasgow-based group’s television division recorded the strongest performance of all sectors, for the period from January to June, as operating profits grew by 35% to £8.4 million, on turnover which was up 8% to 58.1 million.
SMG’s television sector proved it was going from strength to strength, as it enjoyed its best start to the year for nearly a decade, with advertising revenue growing to 6.4%, beating the rest of the ITV network in national airtime sales.
In a statement issued this morning, SMG said the improvements in advertising revenues were as a result of a growing peak-time audience, which hit a 32.4% share during the six month period, up from 31.4% year-on-year.
However, SMG’s radio business, Virgin, paled in comparison to its television achievements. Operating profits for the station fell to £2.5 million, from £3.0 million for the same period in 2003, while turnover was down to £10.2 million from £11.8 million.
SMG hit out at Rajar, the audience research group, for the disappointing results at Virgin, which it believes was caused by ‘important weaknesses in Rajar’s sampling sizes and listening weights’.
The statement said: “For us, this was exacerbated by the effects of the Q4 2003 Rajar audience figures, which saw a marked decline in Virgin Radio’s listening hours. Although the Q2 2004 Rajar results, published in July, showed a significant correction in Virgin Radio’s reach and listening hours, the Q4 2003 Rajar results affected the station’s trading position and overall turnover fell.”
SMG’s out-of-home division, which is made up of outdoor and cinema advertising, saw improvements during the quarter but this was only as a result of the strong outdoor market, which helped grow revenues by 16%. Cinema took a tumble during the period, down 9%, caused by a lack of blockbuster movies in the first half of 2004, said SMG.
The group looks set to build on the achievements produced in the first half of the year, as improvements in television and outdoor continues to be maintained in the third quarter and SMG hopes that cinema will benefit from an improved film line-up during the second half of the year.
Virgin Radio should also see a turnaround towards the latter part of this year, as second quarter Rajar results push through.
Chairman, Chris Masters said: “With a strengthened balance sheet and current trading in line with our expectations, we believe the group is well placed to take advantage of the advertising upturn as it feeds through the remainder of 2004 and into 2005.”
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