P. 1
'News: Scottish Media Group plc Says It Will Not "Sell Businesses Way Below Their Value" And Rejects £100m Bid For "Virgin Radio"' by Grant Goddard

'News: Scottish Media Group plc Says It Will Not "Sell Businesses Way Below Their Value" And Rejects £100m Bid For "Virgin Radio"' by Grant Goddard

|Views: 5|Likes:
Published by Grant Goddard
News story about a statement by UK media owner Scottish Media Group plc that it will not "sell businesses way below their value" and its rejection of a £100m offer for 'Virgin Radio', written by Grant Goddard in March 2005 for The Radio Magazine.
News story about a statement by UK media owner Scottish Media Group plc that it will not "sell businesses way below their value" and its rejection of a £100m offer for 'Virgin Radio', written by Grant Goddard in March 2005 for The Radio Magazine.

More info:

Categories:Types, Research
Published by: Grant Goddard on May 09, 2013
Copyright:Traditional Copyright: All rights reserved

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

05/14/2014

pdf

text

original

NEWS: SCOTTISH MEDIA GROUP PLC SAYS IT WILL NOT "SELL BUSINESSES WAY BELOW THEIR VALUE" AND

REJECTS £100M BID FOR 'VIRGIN RADIO' by GRANT GODDARD

www.grantgoddard.co.uk March 2005

Scottish Media Group plc [SMG] was keen to dismiss any possibility that Lord Ali’s £100m bid for 'Virgin Radio' might succeed, following the release of its financial results last week. Andrew Flanagan, SMG chief executive, said: "All of the analysts’ valuations of Virgin Radio significantly exceed the Waheed Ali approach and, unless he has something else to say, the matter is closed.” In a conference call with journalists, Flanagan refused to place a valuation on Virgin Radio: “I'm not going to have a negotiation with anyone through the media; it's up to others to put a value on it.” He added: "Waheed Ali has not spoken to us since we rejected his offer. It substantially undervalued the business. Let's be clear, we'll do whatever is in the interest of shareholders, but what we won't do is sell businesses way below their value.” Flanagan said there was no dialogue with Lord Ali: "From our point of view, unless he has something to say or is more realistic about the value, there's nothing more to be said. There has been mudslinging but there's nothing further to say. The balance sheet valuation for Virgin Radio is supported, because it has to be to satisfy our auditors, by a detailed valuation of future revenue streams, and it's supported by the opinions of investment banks. It's a very robust calculation. What may or may not be offered to you is a different discussion. This business has huge potential and it's up to us to deliver that and demonstrate the paucity of the offer by Waheed Ali." Lord Ali said he had already met five of SMG’s ten largest shareholders and planned to meet the remainder now that SMG’s results had been unveiled. He claimed that SMG had been “sending smoke signals” that it would accept between £125m and £135m for Virgin Radio, a price he believed was “ludicrous”. Lord Ali said that SMG’s results had proved “incredibly disappointing” and commented: "The company reported advertising figures up 8% this quarter, claiming that is proof of a recovery. But we believe that is worse than what other firms are doing. They have owned the radio station for four years and taken the value down. I am absolutely not going to raise the price above £100m. I will not pay for a fixed business when it is not yet fixed." ITV plc chief executive Charles Allen claimed he had not met with Lord Ali’s consortium regarding its bid for Virgin Radio, despite ITV holding a 17% stake in SMG. Allen was unenthusiastic about breaking up the business to sell Virgin Radio: "If I have a pound to invest, I will get more value out of investing it in ITV rather than SMG." But a meeting was reported to have taken place last Wednesday night between the two parties, though no statements were issued. In the City, Numis Securities suggested that the SMG board should look again at Lord Ali’s bid. It estimates that Virgin's post-tax profits last year could be as low as £3m, which pitches the £100m bid at an earnings multiple higher than radio groups such as Capital Radio plc and GWR Group plc. "If Waheed Ali is offering between £100m and £110m, I don't think that offering thirty times
News: Scottish Media Group plc Says It Will Not "Sell Businesses Way Below Their Value" And Rejects £100m Bid For 'Virgin Radio' page 2 ©2005 Grant Goddard

earnings for a business can be dismissed out of hand," said Numis analyst Paul Richards.

[Submitted to 'The Radio Magazine', unpublished]

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 Media Group plc Says It Will Not "Sell Businesses Way Below Their Value" And Rejects £100m Bid For 'Virgin Radio' page 3 ©2005 Grant Goddard

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->