Credit crunch delays SMG's Virgin Radio IPO

The Scottish Media Group’s plans to float Virgin Radio have been delayed by market turbulence although the group’s three-year turnaround programme has progressed well after a few months, chief executive Rob Woodward says.

Scottish Media Group, which intends to make itself a core television broadcaster, has sold its billboard division Primesight for £62 million and wants to dispose of cinema advertiser Pearl & Dean. Selling Virgin Radio is also on the table.

‘An IPO (initial public offering) remains an option but credit market turmoil means we have to revise the timetable,’ Woodward told a conference call with reporters.

He declined to elaborate on the timetable, but said there had also been interest in buying the radio station which is now to be headed by former Chrysalis chairman Richard Huntingford.

‘We’ve always said we’re following a dual track process,’ Woodward said. ‘This is an attractive asset performing well ahead of the market and not surprisingly there are a lot of people interested in it.’ He declined to say who.

Glasgow-based SMG (SMG) owns the Grampian and Scottish ITV franchises.

Woodward said there has been a general improvement in advertising through the year, but was guarded.

‘We have to be cautious about the consumer because of interest rates but there is cautious optimism,’ he said.

In the six months to 30 June, SMG reported pre-tax profit of £1 million against £8 million last year on revenue flat at £89 million.

The group was meeting cost savings goals of £2.5 million for this year and had identified another £2.5 million for next year. It was keen to sell its non-core assets, concentrate on television, reduce debt of £189 million at end June and strengthen its balance sheet.