SMG reports on Virgin Radio sell-off plan

By This Is Money
Updated: 06:39 EDT, 3 April 2008

Rob Woodward, chief executive of SMG, the Scottish commercial broadcaster, has remained tight-lipped about the upcoming sale of Virgin Radio.

Tight-lipped: SMG is remaining quiet over Virgin Radio sell-off

'The disposal process is making good progress,' he said. 'We are pleased with the level of interest in the business but some of the recent speculation may be a bit premature. We will are not a forced seller and we will keep shareholders informed.'

But most industry insiders are convinced that Absolute Radio, a consortium formed by former Capital Radio executives with the financial backing of one of India's largest media combines, has reached preferred bidder status with its offer of £60m. It still has to negotiate a royalties deal with Virgin Group to use the station's name.

Once the deal is done, Woodward will have succeeded in one of his major ambitions set when he was brought in to turnaround the former Scottish Media Group after its merger plans failed. Assuming Virgin Radio fetches £60m, SMG will have shifted from debts of £157m at the end of 2006 to net cash of well over £10m shortly.

Woodward has also streamlined SMG's ITV stations in Scotland cutting back on staff and costs and emphasising its Scottishness. Pre-tax profits fell from £10m to £4.4m in 2007 but analysts are confident they will start moving in the other direction this year.