The end of an era for Scottish radio RADIO: EMAP BUYS SRH RADIO:

0 Comments | Sunday Herald, The, Dec 18, 2005 | by Steven Vass

MANY will remember 2005 as the year when independent Scottish commercial radio effectively came to an end. Heritage stations, such as Forth, Clyde and Northsound came under London ownership with Emap's pounds-282 million deal in June to buy the 72-per cent of Scottish Radio Holdings (SRH) it did not already own.

With stations in every big city around the country and a host of national digital brands, Emap Radio now controls about 25-per cent of radio listening hours.

This leaves it second to GCap Media, which has about 36-per cent, but that group is dogged with structural problems and takeover rumours.

The SRH/Emap deal did not happen quickly. It began all the way back in January 2004 when Emap bought SMG's 27.8-per cent stake in SRH for pounds-90.5m.

"SRH was always seen as the first target for consolidation because it didn't overlap with very many people, " says Malcolm Morgan, a media analyst at Investec.

"When Emap bought that stake, it effectively covered that pocket from other radio companies, so it was a great move."

There was just one problem. Emap had paid 930p per share for its stake, and SRH's share price refused to fall below 900p. This would have demanded an exorbitant price for the rest of the company, which led to a "Will they or won't they?" saga that could have gone on for years.

Stocks finally fell as the radio ad market took a dive this spring, but Emap waited until June to break cover. It announced it was disappointed that an indicative offer of pounds-10.40 had been rejected, and threatened to go hostile if the SRH board did not reconsider.

SRH responded in kind, but three weeks later a deal was done at pounds-10.88 a share before things could turn uglier. SRH's regional newspaper division, Score Press, was neatly sold to Johnston Press for pounds-155m, and the Clydebank headquarters began scaling down.

But while observers are still waiting to see what schedule changes will come to the Scottish stations, a mood of radio inertia appears to have gripped the stock market.

"It was probably the merger of the two best radio companies, " says Morgan.

"Chrysalis has had a torrid time and GCap has been even worse. In truth, the City is probably gutted not to have SRH out there as a viable investment."