SMG To Sell Publishing And Online Business
Scottish media company, SMG, intends to sell its newspaper and magazine publishing business in order to reduce debt and to concentrate on its core operations of television and radio. By divesting of the publishing interests, SMG hopes to be able to benefit more readily from the changes in media ownership legislation that the new Communications Act should herald.
The group publishes three regional newspapers – the Herald, Sunday Herald and Evening Times – along with 11 business to business and specialist consumer titles. The key revenue driver for these titles is regional advertising; the majority of the remainder of SMG’s businesses rely on national advertising. The division also includes the online content and advertising business, s1.
SMG says that the best future for the publishing business will be within the portfolio of a larger publishing group. A number of interested parties have already come forward and the auction process will start immediately. Given shareholder approval and regulatory clearance, it is anticipated that a sale will be completed by Q2 2003.
Andrew Flanagan, SMG’s chief executive, said: “In an increasingly consolidated newspaper and magazines sector, it is clear that the ongoing success of these businesses is best assured as part of a larger publishing network. Initiating the sale of these valuable newspapers now, will ensure that SMG has the flexibility to capitalise on the opportunities presented by the Communications Act next year.”
SMG Profits Hit By ITV Ad Decline Pre-tax profit at SMG, the Glasgow-based media company, dropped by 42.5% to £11.5 million in H1, whilst earnings fell by 9.0% to £31.3 million, the group announced this morning.
The figures, which exclude online activities and goodwill amortisation, are in line with the company’s expectations and ahead of predictions by analysts at ABN Amro. SMG notes that the results come after a period of continued difficult trading; £4.0 million of the £8.5 million decline in pre-tax profit resulted from the decline in ITV advertising revenue and reduced programming commissions (SMG is part of the ITV Network).
Cross media approach SMG says that it remains committed to the cross-media approach and that this is experiencing an increasing level of interest from major advertisers.
“It is also clear that cross media works most effectively where there is commonality, both of advertisers and geographic coverage. With the exception of our newspapers, all of SMG’s media assets – in television, radio, cinema and outdoor – attract predominantly national advertising as the geographic footprint of these businesses is also national, albeit in the case of television as part of the wider entity, ITV,” explains chief executive Andrew Flanagan.
Television ad revenue Airtime revenues fell by 5.0% in the first half, with a 10.0% decline in Q1, followed by a more modest decline in Q2. The 5.0% decline compares to an overall dip of 6.0% for ITV, according to SMG. Accordingly, the group slightly increased its share of net advertising revenue (NAR), with local ‘micro’-markets in Scotland remaining attractive to advertisers and therefore more resilient to the decline.
“In difficult trading conditions, the Group is performing robustly and all our businesses are profitable. We are well-prepared for the advertising upturn when it comes. The sale of our Publishing Division, will provide us with the flexibility, both financial and regulatory, to pursue our cross media strategy, building national positions in the faster growing media sectors,” says Flanagan.
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.