Hold SRH as Emap waits in the wings

"Lacklustre" is how Scottish Radio Holdings described current trading but that was still better than its quoted rivals.

"Lacklustre" is how Scottish Radio Holdings described current trading but that was still better than its quoted rivals.

The radio operator benefits from having a great proportion of its ad revenues being generated by local, rather than national advertisers. That means that it is better insulated against general economic trends when big advertisers take fright during downturns - as is the case now.

SRH reported a 20 per cent jump in operating profit for the half-year to the end of March. Like-for-like revenues were 4 per cent up for the period. But April has seen a 7 per cent decline, May was better but still down, and June would be flat.

But that is relatively positive for the sector. Still, even though SRH is doing better than competitors, any negativity is unwelcome because it has the big tanks of Emap parked on its lawn. The number two radio player took a 27 per cent stake in SRH early last year. It has since been looking for the right time to make a full takeover bid. The current share price weakness could be the moment for Emap to make its move.

SRH is thought to be a well managed business. That, together with the near-certain bid interest, means that, at 861p, the shares are well worth holding on to.