NEWS: SCOTTISH RADIO HOLDINGS DISMISSES IMPENDING BUYOUT BY EMAP by GRANT GODDARD

www.grantgoddard.co.uk April 2005

Scottish Radio Holdings plc [SRH] continues to dismiss speculation that EMAP plc is about to make a 300m bid for the 73% stake in the company that it does not already own. SRH continues to insist that it has its own plans for an independent future based upon further acquisitions and organic growth. Last Thursday, EMAP issued a statement acknowledging that the radio assets of SRH would be an attractive strategic fit with EMAP's existing radio assets. The statement confirmed that EMAP is interested in acquiring SRH but warned: EMAP has, on occasions since buying this [27%] stake, made clear that, were it to make any offer for SRH, it would not pay a price which runs counter to the interests of EMAP's shareholders. The board of EMAP will keep the situation under review." The next day, SRH issued its own statement as a direct response to EMAP. It said that: the Board is confident about the independent future of the company and believes SRH is well-placed to continue to generate significant long term shareholder value. The SRH statement implied that it would only accept an offer that included a premium: "The board of SRH will not support an offer for the company unless it is in the interests of SRH's shareholders and reflects the full and fair value of SRH's growth prospects, including a premium for control. For the avoidance of doubt, the board of SRH does not believe that the current share price adequately reflects this value." Reports suggest that EMAP is dithering about the price it is prepared to pay for SRH. Analyst opinion is divided between those who say EMAP should make a move as early as possible, and others who suggest waiting until SRHs share price falls further below the 930p price EMAP paid a year ago for its 27% stake. EMAP finance director Gary Hughes said candidly: SRH is a good company, with good assets and good people. But the share price is stuffed full of takeover premium, and it is hard to make the numbers work. Hughes added that EMAP was willing to play the long game and would support SRHs acquisition plans: They have to do whats in the interest of all shareholders, and we are wholly supportive of acquisitions if they are going out and creating value. SRH released its interim results last week, which showed a 13% year-on-year increase in radio revenues, boosted by its purchase of stations in the Irish Republic including Dublins 'FM 104'. Like-for-like revenue for the six months ended 31 March 2005 increased by 3%, comprising a 9% increase in local revenue and a 4% fall in national revenue. SRH owns 22 radio stations and 45 local newspapers. SRH said: "The board considers that the group is in a strong position to continue its development both organically and by acquisition and believes that the immediate and longer-term prospects remain attractive." EMAPs trading update for the year ended 31 March 2005 showed radio revenues to have grown 2% year-on-year. Revenues were said to be very strong in the fourth quarter, up 11% year-on-year due to increased national advertising. EMAP predicts that it will outperform the market in the coming year on the back of solid audiences, particularly in London and on digital radio.

News: Scottish Radio Holdings Dismisses Impending Buyout By EMAP 2005 Grant Goddard

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Paul Richards, media analyst at Numis Securities, is convinced that an EMAP/SRH deal will happen. He said: "EMAP and SRH are a perfect geographical fit and all they need to do is dot the Is and cross the Ts. Its a question of time."

[First published in 'The Radio Magazine' as 'SRH Shrugs Off Emap', #678, 6 April 2005]

Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of experience in the broadcasting industry, having held senior management and consultancy roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at http://www.grantgoddard.co.uk

News: Scottish Radio Holdings Dismisses Impending Buyout By EMAP 2005 Grant Goddard

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