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.

News
The clocks go forward an hour at 1am on Sunday 30 March
news
Arts and Entertainment
The Doctor finds himself in a forest version of London in Doctor Who episode 'In the Forest of the Night'
TVReview: Is the Doctor ever going stop frowning? Apparently not.
Sport
footballMatch report: Real fight back to ruin Argentinian's debut
News
Bruce, left, with Cream bandmates Ginger Rogers, centre, and Eric Clapton in 1967
people
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
News
i100
News
people
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
arts + entsSam Smith’s Mobo triumph is just the latest example of a trend
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

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker