Bennett Coleman makes overseas foray with £53.2 million acquisition of Virgin Radio

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BCCL, owner of leading newspapers like The Times of India (TOI) and The Economic Times, has made the acquisition through its wholly owned subsidiary, TIML (or Times Infotainment Media Ltd) Golden Square.

Glasgow-based Scottish Media Group or SMG, which paid £225 million in 2000 to acquire Virgin Radio from Ginger Media Group, said the all-cash sale was a strategic one as it wanted to focus on its television businesses, which include STV in Scotland and Ginger Productions. SMG's other businesses include outdoor and cinema advertising.

"The disposal of Virgin Radio is consistent with our overall strategy and the proceeds of the sale will allow us to return cash to shareholders, as well as further strengthen an already healthy balance sheet," said Rob Woodward, CEO of SMG. "I believe that £53.2 million represents a sound price for Virgin Radio and a good deal for SMG shareholders."

Initially, SMG wanted to sell Virgin radio for £60 million but the parties could not agree on the branding. SMG said it would return £30 million to the shareholders.

Virgin Radio, which has a FM license for London and AM license for the rest of UK and enjoys an audience-base of 2.6 million listeners, will be managed by TIML, jointly with European group Absolute Radio, which already owns the popular music station Jack FM and FM 107.9 in Oxford.

TIML will be allowed to use the brand name Virgin for 90 days after which billionaire Richard Branson's Virgin Group will have exclusive rights to the name. TIML said it would launch a £15 million rebranding exercise soon.

"This decision was arrived at collectively only after we had all carefully considered the various options. I wish TIML all the best of luck with their new radio brand," Branson said in a statement.

TIML's acquisition comes at a time when businesses of traditional media companies of the west are struggling with falling advertising rates, gloomy economic environment and increasing competition from the internet.

"The opportunity to acquire a valuable radio asset couldn't have come at a better time. Now is a great period to be entering the UK market. We are pleased to be working with a great team of UK-based radio experts, Absolute Radio," said TIML CEO A.P. Parigi.

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