Value of digital lost on City, says Emap

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The radio and magazines group, Emap, yesterday bemoaned the City's inability to value digital radio accurately, citing this as one reason why there had so far been no consolidation in the radio sector.

The company said it was leading the development of digital radio by a long way, with 24 per cent of its total listening hours coming from its digital stations. It sells advertising for the digital stations at the same rate as its established analogue stations, which include Kiss and Magic.

Reporting interim figures, Gary Hughes, the finance director, said: "The digital game has started ... some of the analogue valuations look down right silly."

He said that only Emap had any scale of audience in digital radio. Emap, GWR and Capital Radio all claim leadership in digital radio. Tom Moloney, Emap's chief executive, added: "I suspect that's part of the reason why there has been no consolidation."

The radio sector was expected to be in the grip of a round of mergers by now, since the ownership rules are being freed up. However, there are still no signs of merger activity.

Analysts said that, if Emap was waiting for investors to accord value to its loss-making digital businesses, it would be waiting a long time.

Paul Richards, an analyst at Numis, said: "The reason why the City won't place any value on this is that digital radio will be loss-making for a number of years. The City was badly burned in the dot.com boom. It doesn't want to again start ascribing big valuations to loss-making businesses."

In magazines, Emap said it was at a "well advanced stage of development" with three launches planned.

Emap reported a 9 per cent rise in pre-tax profits to £94m for the six months to 30 September.

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