Scottish Media Group [SMG] continues to defend the poor recent performance of 'Virgin Radio' and is refuting suggestions that it will be sold. Preliminary results for 2004 released last week showed that Virgin’s revenue fell last year by £3.1m to £20.1m, and profits fell from £7.3m in 2003 to £4.3m, a worse result than had been predicted by media analysts. SMG attributed Virgin’s poor performance to “erratic conditions” in both the national advertising market and audience data. It pointed to the fact that Virgin’s operating margin is “a healthy 21%” and noted that the “benefits of digital listening” have yet to take effect. SMG blamed the “volatility” of its RAJAR ratings results and said it is working with the ratings body “to increase the robustness of Virgin Radio’s listening figures.” Despite SMG’s comment in its published results that Virgin Radio is “the most popular online radio station worldwide”, its poor performance in the UK relegates it to seventh place in a ranking of the UK’s eight national analogue radio stations. SMG chairman Chris Masters talked in glowing terms about Virgin’s “sister stations”, 'Virgin Radio Classic Rock' and 'Virgin Radio Groove', both available on DAB in London, and was upbeat about Virgin Radio’s future, emphasising its “return to growth”, with revenues in the first quarter of 2005 expected to increase by 8%. Asked about Virgin Radio’s declining ratings, SMG finance director George Watt admitted the station had lost 39% of its total audience between March 2000 and the end of 2004, but argued that 'Capital Radio' had lost 46% of its audience over the same period. "Relative to the rest of the commercial sector, the comparatives stand up rather well," Watt said. He added that a shortlist had already been prepared of candidates to replace departing Virgin Radio chief executive John Pearson. The SMG accounts included an exceptional charge of £3m to cover costs incurred in unsuccessful applications for local radio licences to the Radio Authority and Ofcom. In September 2000, SMG had appointed Bobby Hain, former managing director of 'Beat 106' and former programme director of Virgin Radio, as business development director of its radio division. By December 2003, SMG had won no radio licences, and Hain was promoted to the post of managing director of Scottish TV. Jason Bryant, chief executive of Town & Country Broadcasting, was then appointed to the post of development director of Virgin Radio. SMG’s preliminary results were welcomed by analysts at Bridgewell, which said it might make a "small upgrade" to its estimate of SMG's profits for the current year. But Merrill Lynch commented that SMG had “glossed over” Virgin Radio’s “exceptionally weak” performance last year.

[First published in 'The Radio Magazine' as 'SMG Defends Virgin', #675, 16 March 2005]

News: 'Virgin Radio' Owner Defends The Station's Declining Listening, Revenues And Profits ©2005 Grant Goddard

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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

News: 'Virgin Radio' Owner Defends The Station's Declining Listening, Revenues And Profits ©2005 Grant Goddard

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