News story about the dismissal by UK local commercial radio group Scottish Radio Holdings plc of an imminent buy-out offer by EMAP plc, written by Grant Goddard in April 2005 for The Radio Magazine.

1. NEWS: SCOTTISH RADIO
HOLDINGS DISMISSES
IMPENDING BUYOUT BY EMAP
by
GRANT GODDARD
www.grantgoddard.co.uk
April 2005

2. Scottish Radio Holdings plc [SRH] continues to dismiss speculation that EMAP
plc is about to make a £300m bid for the 73% stake in the company that it
does not already own. SRH continues to insist that it has its own plans for an
“independent future” based upon further acquisitions and “organic” growth.
Last Thursday, EMAP issued a statement acknowledging that “the radio assets
of SRH would be an attractive strategic fit with EMAP's existing radio assets.”
The statement confirmed that EMAP is “interested in acquiring SRH” but
warned: “EMAP has, on occasions since buying this [27%] stake, made clear
that, were it to make any offer for SRH, it would not pay a price which runs
counter to the interests of EMAP's shareholders. The board of EMAP will keep
the situation under review."
The next day, SRH issued its own statement as a direct response to EMAP. It
said that: “the Board is confident about the independent future of the company
and believes SRH is well-placed to continue to generate significant long term
shareholder value.” The SRH statement implied that it would only accept an
offer that included a premium: "The board of SRH will not support an offer for
the company unless it is in the interests of SRH's shareholders and reflects the
full and fair value of SRH's growth prospects, including a premium for control.
For the avoidance of doubt, the board of SRH does not believe that the current
share price adequately reflects this value."
Reports suggest that EMAP is dithering about the price it is prepared to pay for
SRH. Analyst opinion is divided between those who say EMAP should make a
move as early as possible, and others who suggest waiting until SRH’s share
price falls further below the 930p price EMAP paid a year ago for its 27%
stake. EMAP finance director Gary Hughes said candidly: “SRH is a good
company, with good assets and good people. But the share price is stuffed full
of takeover premium, and it is hard to make the numbers work.” Hughes added
that EMAP was “willing to play the long game” and would support SRH’s
acquisition plans: “They have to do what’s in the interest of all shareholders,
and we are wholly supportive of acquisitions if they are going out and creating
value.”
SRH released its interim results last week, which showed a 13% year-on-year
increase in radio revenues, boosted by its purchase of stations in the Irish
Republic including Dublin’s 'FM 104'. Like-for-like revenue for the six months
ended 31 March 2005 increased by 3%, comprising a 9% increase in local
revenue and a 4% fall in national revenue. SRH owns 22 radio stations and 45
local newspapers. SRH said: "The board considers that the group is in a strong
position to continue its development both organically and by acquisition and
believes that the immediate and longer-term prospects remain attractive."
EMAP’s trading update for the year ended 31 March 2005 showed radio
revenues to have grown 2% year-on-year. Revenues were said to be “very
strong” in the fourth quarter, up 11% year-on-year due to increased national
advertising. EMAP predicts that it will outperform the market in the coming year
“on the back of solid audiences, particularly in London and on digital radio.”
News: Scottish Radio Holdings Dismisses Impending Buyout By EMAP Page 2
©2005 Grant Goddard

3. News: Scottish Radio Holdings Dismisses Impending Buyout By EMAP Page 3
©2005 Grant Goddard
Paul Richards, media analyst at Numis Securities, is convinced that an
EMAP/SRH deal will happen. He said: "EMAP and SRH are a perfect
geographical fit and all they need to do is dot the I’s and cross the T’s. It’s a
question of time."
[First published in 'The Radio Magazine' as 'SRH Shrugs Off Emap', #678, 6 April 2005]
Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of
experience in the broadcasting industry, having held senior management and consultancy
roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at
http://www.grantgoddard.co.uk