Waheed Alli, the Labour peer and media entrepreneur, has offered SMG £100m in cash to buy its troubled Virgin Radio business.
The approach, first secretly made before Christmas directly to SMG's chairman, Christopher Masters, was rebuffed by the media company, which also owns two ITV franchises and cinema and billboard advertising businesses.
Lord Alli, who is backed by the private equity group 3i, sent a letter to SMG yesterday, reiterating the offer and requesting talks. The letter suggested that Lord Alli would go to SMG's shareholders if he did not get a hearing.
It appeared last night that Lord Alli's proposal had again been rejected. Callum Spreng, SMG's director of corporate affairs, said: "Nothing is under consideration." He added: "We receive approaches like this all the time, which is not surprising because Virgin Radio is a great business."
Lord Alli derided SMG's stewardship of Virgin Radio, which was bought in 2000, at the height of the stock market boom. SMG paid £214m for Ginger Media, a business founded by the DJ Chris Evans, of which £192m was attributed to its Virgin Radio asset.
Lord Alli, the chairman of Chorion, said Virgin Radio had been neglected under SMG's ownership and it had consistently lost huge numbers of listeners. Virgin Radio owns one of only three national radio licences in the commercial sector. "You have to make an effort to lose this many listeners. If SMG has been focused on something here, it's been getting rid of audience," he said.
Virgin's combined AM and FM audience shrank a further 4.4 per cent in 2004. Its share of the radio audience at the end of 2004 was just 1.4 per cent nationally. or 3.3 per cent in the lucrative London market. Virgin Radio is in SMG's books at £160m. Lord Alli, who would chair Virgin Radio if his consortium managed to buy it, said: "SMG's attitude seems to be that, no matter what we offer, it's not for sale."
Virgin Radio is an integral part of the strategy outlined more than a year ago by SMG after it sold its Scottish newspaper interests to pay down debts.
- More about:
- Film Directors
- Market Research
- Stock And Equity Market And Stock Exchange