This Rose smells sweet

SMALLER COMPANIES

Shareholders in Golden Rose Communications have had a distinctly tarnished time since shares in the radio broadcaster launched in early 1995.

From 135p they slumped to 51p by the end of their first year as a quoted company. They have since staggered up to 66.5p.

Recent gains, however, mask some fundamental changes to the underlying businesses. Golden Rose is the home of Jazz FM, which has two regional licences to broadcast, in London and Manchester. It was once also the home of Viva!, the London station aimed at women. However, the current management pulled off a remarkable coup in 1966, when it sold Viva! to Liberty Publishing, the fledgling media empire of Harrods owner Mohamed Al Fayed, for pounds 3m.

GR's fortunes were transformed at a stroke. From a fairly indebted company, GR had cash in the bank and got rid of a heavily loss-making operation.

Chief executive Richard Wheatly, who joined from advertising agency Leo Burnett, has concentrated on reviving the Jazz brand and wringing every penny from it. GR would concentrate on jazz, and do it "consummately well," he said.

His ambition seems to have been realised. He has kept the station trained firmly on the youthful A,B,C1 audience advertisers love, and made sure programming is not aimed solely at jazz fanatics, but also does not stray too far into MOR rock - a previous failing.

From there, the company has developed a small CD label specialising in jazz compilations, ranging from classic jazz to modern, street sounds. The label has proved a success for relatively little capital and is easily marketed on the radio.

Holidays have also been added to GR's repertoire. Jazz festivals in exotic locations such as New Orleans or St Lucia are sold in packages to listeners. So far GR has sold packages for three festivals, and this exercise has proved successful.

Finally it has branched into the restaurant business, through its partnership with Regent Inns, to open Cafe Jazbars. The first one has opened in Liverpool's Albert Docks, and more are planned. GR just takes a slice of revenues for marketing the brand, mainly over the station. So far, the venue is packed.

What next? Mr Wheatly believes GR is a viable niche media company, and in due course he wants to expand the company where there is a strong marketing opportunity, although it need not be in the media.

He also wants GR - which has yet to pay a dividend - to move to the dividend list next year. There is a strong prospect he will achieve his aim. With the outlook positive, GR looks like a business worth investing in. There may still be ups and downs, but the shares are a good buy at current levels.

RICHARD PHILLIPS