Friday, 31 August 2007

Virgin Flotation

SMG (owners of big screen advertiser’s Pearl & Dean and Primesight) is trying to float Virgin Radio, aiming for a valuation of about £80 million, although the challenge is to make a relatively small radio player attractive to investors. UTV who was in negotiations with SMG since last year to make a joint venture but never succeed, is hoping that the listing, handled by ABN Amro, will run into difficulties.

UTV is valued at £228 million. SMG - battered by poor trading last year - is worth £145 million. With such a price disparity, SMG is unlikely to be willing to sell, particularly as Rob Woodward, its recently installed chief executive, is backed by an investor club led by Hanover Investments. Mr Woodward from SMG said “I can confirm no communication of potential interest by UTV has been received by the SMG board,” he said. Virgin Radio’s brand is licensed from Sir Richard Branson’s Virgin Group, but, under the present terms, is not allowed to be owned by a company that competes with Virgin Group. Virgin Group’s stake in the cable operator Virgin Media means that potentially every broadcaster is a rival.

UTV posted static figures, in which a strong performance from Talksport offset a weak television market. Turnover was marginally ahead at £57.2 million, while pretax profit was 5.6 per cent up at £8.98 million. Talksport, marginally up in the first half, is reporting advertising bookings 15 per cent ahead in the third quarter, reflecting the forthcoming Rugby World Cup.

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