SMG, the Scottish media conglomerate, is reputedly in the process of sounding out potential buyers for its Virgin Radio station, which it hopes to sell for £130 million.
It is understood that several rival radio groups have expressed an interest in the radio station, which SMG acquired for £225 million three years ago. However, industry sources say potential bidders believe it could be worth as little as £80 million.
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 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. January saw Emap acquire SMG’s 28% stake in Scottish Radio Holdings for just over £90 million(see SMG Sells Radio Stake To Reduce Debts).
US conglomerates Viacom and Clear Channel are also believed to be interested. 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.
This news comes in the wake of SMG’s AGM statement, released last Friday, which saw the outgoing chairman Don Cruickshank commend SMG’s achievements to date, including growth in its television advertising revenues, which showed increases well ahead of ITV as a whole.
The second half of 2004 also looks promising for the company, which is set to receive a boost from the forthcoming Euro 2004 football championships, which are expected to attract record audiences and advertising revenue.
Outdoor revenues are reported to be performing particularly well, enjoying double digit growth this year reflecting investment in additional panels and a strong market for existing 6-sheets. Cinema and radio operations are also in good shape with further predictions for growth before the year’s end.
Commenting on the state of SMG as a whole, Cruickshank said: ” With the financial strength of the company now restored and the prospects of a sustained recovery in advertising now under way, the Group can look forward to a promising future.”
He added: “We are now almost wholly focused on national advertising markets which stand to gain most from the recovery, while the rapid conversion of advertising revenues to profit and cash, plus the prospects for renewal of the financial terms of our television licences at the end of 2004, provides the opportunity for good growth over the coming year.”
Cruickshank’s positive predictions came shortly before stepping down from his position, to be replaced by Chris Masters as new non-executive chairman(see SMG Appoints Media Newcomer As Chairman). Earlier this year, SMG predicted an increase in the speed of advertising recovery but simultaneously published poorer than expected profits for 2003(see SMG’s Profits Tumble 28% As Advertising Decline Bites).
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