SMG set to announce Virgin Radio deal

Published on Wednesday 2 April 2008 21:56

SMG is today expected to outline a long-awaited deal to offload Virgin Radio for about £60 million alongside its annual results.

The Glasgow-based media group, which owns the ITV franchise for Scotland, is expected to report losses of about 45m after major write-downs when it reports its 2007 numbers.

It was reported yesterday that Virgin would be sold to Absolute Radio – an outside bidder in the protracted battle for ownership of the station.

Front-runners for the acquisition were Northern Irish media group UTV and TalkSport. A spokeswoman for SMG refused to comment.

The figure of 60m, believed to be the value of Absolute's deal, is well below the 225m SMG paid for Virgin in 2000, but radio assets have fallen out of favour recently.

While SMG put an 85m book value on the London-based radio station, most analysts had expected it to sell for 60m-65m.

The firm wants to sell Virgin Radio so it can concentrate on its core television businesses, including STV and Ginger Productions.

SMG postponed the disposal last September after offers came in below its target price. It has since completed a 95m rights issue, and maintains that it is not a distressed seller.