Radio companies trade assets

A raft of trading statements from radio companies yesterday showed that the advertising environment remained difficult.

A flurry of small deals was also announced as the sector prepares for the consolidation period that is expected to follow new rules that will liberalise media ownership when they become law next year.

It was thought that Chrysalis may eventually sell its radio assets but yesterday it moved in the opposite direction, buying LNR for £23.5m. LNR, which owns the ITN News Direct and LBC stations, was sold by GWR. Chrysalis will switch LBC on to the more popular FM waveband, while News Direct will be put on to AM.

Scottish Radio Holdings announced a joint venture with GWR, called Vibe Radio Services, which made an immediate acquisition. Vibe bought Galaxy Radio, based in south Wales and the West of England, for £12.5m from Chrysalis.

Analysts said they were surprised at the prices paid in both cases for these loss-making stations. SRH said it would report a 2 per cent drop in radio revenues for the full-year – the same figure that Capital Radio gave yesterday, made up of a 7 per cent fall in the first half of the year, followed by 2 per cent rise in the second half.

GWR reported that full-year UK underlying radio revenues were also down 2 per cent, but its flagship Classic FM station would be up 8 per cent.

Simon Mays-Smith, analyst at JP Morgan, said: "The radio market remains tough. The TV guys are sucking ads away from them."