GWR plays down talk of potential takeovers

GWR, the radio group that owns Classic FM, yesterday downplayed the prospect of a takeover by its key shareholder Daily Mail & General Trust or a bid from a US predator.

Reporting interim results, Ralph Bernard, the executive chairman, said there were no signs that DMGT, which has a 29.9 per cent stake in GWR, had lost interest in the industry. The Communications Bill, now passing through Parliament, frees DMGT to make a bid for a radio company and many analysts have said it is only a matter of time before it buys GWR.

Mr Bernard said: "If the opportunity came along, I'd expect them to want to buy the whole of GWR but I don't think an outright acquisition will necessarily happen."

Analysts have suggested that DMGT is highly limited in its capacity for acquisitions. The current media downturn has hit the ability to make cash acquisitions and paper deals are ruled out because the Rothermere family does not want to see its controlling stake in DMGT diluted.

Mr Bernard said that DMGT had always been a "supportive" shareholder and suggested that it would not stand in the way of an all-paper merger between GWR and another radio player. He said that nil-premium all-share deals were the most likely for any sizeable mergers in the sector. GWR, Capital Radio and Emap are the three big players in UK radio.

He said UK radio was a big draw for US companies, especially given the further loosening of the rules on sector consolidation announced by the Government last week, but he denied that any approach had been made to GWR by an American company. The Government announced last week that mergers can now proceed to the point of leaving just two commercial operators in any area.

"That change will completely revitalise the prospects for commercial radio in the UK. It was already attractive to oversees companies but this begins to put a value on it," he said.

GWR shares fell 10 per cent to 149p yesterday, on receding hopes of a takeover and some downgrades to full-year City forecasts.

For the six months to 30 September, pre-tax profits before goodwill and exceptionals dropped to £2.2m, below expectations, from £2.8m last year.

At Classic FM, a national station, revenues were up 6 per cent but GWR's local stations saw sales down 6 per cent, which was much worse than the industry as a whole has seen.