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'News: GCap Media plc And The Local Radio Company plc Share Prices Rebound From Lows Following Takeover Rumours' by Grant Goddard

'News: GCap Media plc And The Local Radio Company plc Share Prices Rebound From Lows Following Takeover Rumours' by Grant Goddard

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Published by Grant Goddard
News story about a rebound in share prices of UK commercial radio groups GCap Media plc and The Local Radio Company plc following takeover rumours, written by Grant Goddard in August 2006 for The Radio Magazine.
News story about a rebound in share prices of UK commercial radio groups GCap Media plc and The Local Radio Company plc following takeover rumours, written by Grant Goddard in August 2006 for The Radio Magazine.

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Published by: Grant Goddard on Mar 02, 2013
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11/20/2013

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NEWS: GCAP MEDIA PLC AND THE LOCAL RADIO COMPANY PLC SHARE PRICES REBOUND FROM LOWS

FOLLOWING TAKEOVER RUMOURS by GRANT GODDARD

www.grantgoddard.co.uk August 2006

Shares in GCap Media plc staged a recovery last week, ending the week’s trading up 15% week-on-week at 215p. Despite a lack of good news from the company that 'The Guardian' newspaper described last week as “the most loathed media stock in the City”, expectations appear to be mounting that, following the fall in the company’s share price below the 200p threshold last month, an imminent sale is likely to be on the cards. When the share price had fallen to an all-time low, Schroders seized the opportunity to buy 11% of the company which, together with Fidelity’s existing 14% holding, now eclipses GCap’s longstanding major investor, 'The Daily Mail', which owns 14%. The share price of The Local Radio Company plc [TLRC] also improved last week, ending the session up 10% week-on-week at 17p. In its quarterly update on the radio industry, Charles Stanley Securities upgraded its recommendation for TLRC to a 'strong buy' because it said the company’s market capitalisation had fallen below £10m and, “although it is currently loss-making, its licences are still valuable assets, assembled at a cost of nearly £50m.” The statement admitted that “with profitability not anticipated this year or next, [TLRC] is clearly an asset play” because “the shares now look stunningly cheap”. UTV plc was mentioned as a possible buyer.  New data published by the Radio Advertising Bureau last week showed that radio revenues increased 3.5% year-on-year during the second quarter of 2006, although the base quarter in 2005 had been the industry’s weakest performance since 2003. Charles Stanley felt that “we are not yet calling the bottom of the advertising market” though it believed “we cannot be far from the bottom of the cycle”. It concluded that there exists “good potential for foreign media owners to buy into the UK market with prices at their lowest levels since the Communications Act allowed them to enter” and suggested that CanWest, Macqaurie, Emmis and Clear Channel “will need to make their moves soon, and for those that are serious about the UK market, they will have noted that there are few assets of size, so there may be no prizes left for those that wait around”.  Enders Analysis’ newly published outlook on the radio industry noted that commercial radio’s share of listening had fallen year-on-year in all but four quarters of the last eight years, and concluded that “a large part of the industry’s problems are structural rather than cyclical”. It asserted that commercial radio’s recent focus on 15 to 44 year olds as its “heartland audience” was a strategy “fraught with danger”, as this demographic group’s share of listening had already fallen from 60% in 2000 to 54% last quarter. It predicted that, by next year, 15 to 24 year olds would be the only remaining demographic that spends more time listening to commercial radio than the BBC.

[First published in 'The Radio Magazine' as 'GCap And TLRC Shares Bounce Back', #750, 23 August 2006]

News: GCap Media plc And The Local Radio Company plc Share Prices Rebound From Lows Following Takeover Rumours page 2 ©2006 Grant Goddard

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: GCap Media plc And The Local Radio Company plc Share Prices Rebound From Lows Following Takeover Rumours page 3 ©2006 Grant Goddard

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