Capital Radio Results – Reaction
Capital Radio yesterday posted a 27% decline in underlying profits and said that there is no foreseeable recovery from the prevailing poor advertising conditions (see Capital Radio Profits Fall 27% Following Ad Downturn).
The Times says that whilst there is no good spin to be put on the fall in profits, Capital is nevertheless well placed to boost profit when revenues do pick up, thanks to its low fixed cost base. It also has the financial might to expand its network through the acquisition of new stations; this will prove very beneficial when the Government relaxes ownership restrictions. These long term strengths are reflected in Capital’s high share price, says the paper.
The Telegraph sees latent strength in Capital not only when the ad market picks up, but also in the emergence (in ‘at least two years’ time’) of digital radio.
The Times: Hold Daily Telegraph: Buy
Merrill Lynch: Neutral ABN Amro: Reduce
