Shareholders round on SMG for rejecting pounds 100m Virgin bid

SOME OF SMG's leading shareholders have criticised the media group for instantly rebuffing a pounds 100m bid from 3i, the private equity group, for its Virgin Radio business.

F&C Asset Management lashed out yesterday at SMG's performance record with the Virgin Radio business, and implored that it enter talks with 3i. Meanwhile ITV, which is SMG's biggest shareholder, has agreed to meet the 3i consortium and its chairman, Lord Alli, the media entrepreneur.

City and industry sources said the approach for Virgin could lead to a break-up of SMG, which owns two ITV franchises and billboard and cinema advertising businesses.

In unusually blunt comments, Hilary Aldridge, a fund manger at F&C - a top three SMG shareholder with a 4.5 per cent stake - said: "Virgin Radio is a great asset but one that would benefit from more dynamic management. We could welcome discussions on its value."

A number of shareholders expressed concern that SMG never brought the bid, first made before Christmas, to their attention. Lord Alli made a face-to-face presentation to Christopher Masters, SMG's chairman, in mid- December but the cash offer became public only on Thursday when the Labour peer wrote to SMG again, seeking talks. Lord Alli was rebuffed on both occasions. SMG said it is not considering his offer.

Shareholders said they were concerned about reports that SMG had apparently set its face against selling Virgin Radio.

Following the latest rejection, Lord Alli's consortium has contacted SMG shareholders, seeking talks, to try to put pressure on SMG to sell.

ITV, which has a 17 per cent stake, has agreed in principle to meet Lord Alli's bidding team. Chris Evans, the former owner of Virgin Radio and a 3 per cent shareholder in SMG, is unlikely to support the company, as he has clashed repeatedly with SMG management. The attitude of Fidelity, which has a 10 per cent stake, will now be crucial.

It also emerged yesterday that other radio groups would be interested in buying Virgin, which owns one of only three national analogue broadcast licences in the commercial sector. It is understood that Guardian Media Group (GMG), Emap, Capital Radio and Chrysalis may be interested in Virgin Radio.

City sources said if Virgin Radio was put up for auction, it would be likely to fetch more than the pounds 100m offer made by Lord Alli's consortium. Some reckoned it could make pounds 130m.

Virgin Radio was bought for about pounds 200m as part of SMG's Ginger Media acquisition in 2000 at the height of the stock market boom. Under SMG control, Virgin Radio, a rock station, has seen a collapse in its audience numbers and profitability.

Richard Menzies-Gow, an analyst at Dresdner Kleinwort Wasserstein, said: "They've yet to prove they can truly run a radio business."

Since the end of 1999, Virgin combined its AM and FM audience and it has dropped by 40 per cent, from 24.7 million listening hours per week to 14.8 million in the most recent figures. Estimated earnings, before interest and tax for the current year at Virgin Radio, are forecast at pounds 5.6m.

In the key battleground of breakfast shows, Virgin Radio's morning DJs, Pete and Geoff, have lost out. In the most recent figures for the lucrative London market, their show had a market share of just 2.4 per cent.

Mr Menzies-Gow said: "GMG is particularly keen and can afford a longer- term view on the investment so would be our favourite to win in an auction."

John Myers, the head of radio at GMG, has said it would be interested in acquiring Virgin. David Mansfield, the chief executive of Capital Radio, recently reaffirmed his interest, despite Capital's forthcoming merger with GWR, which will give it 40 per cent of the radio advertising market.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power