Absolute Radio owner courts potential buyers

TIML Radio, part of Indian media giant Bennett Coleman, is considering a sale of its British asset Absolute Radio and has appointed investment bank Jefferies India to review its options.

Absolute Radio: 'faces for radio' campaign by Albion London
Absolute Radio: 'faces for radio' campaign by Albion London

Industry sources suggest that Jefferies has drawn up a review of the Absolute Radio business and potential buyers in the UK have already been approached.

Ravi Dhariwal, chief executive of Bennett Coleman, said: "We are in the process of conducting a review as to where we stand. It's too premature to talk about the likelihood of sale, etc. I wouldn't want to comment any further."

Absolute is the only business within TIML Radio, a wholly owned subsidiary of Bennett Coleman and Bennet's investment outside of India.

TIML Radio reported losses on ordinary activities before taxation of £4.3m in 2009, the most recent accounts available, up 62.2% year on year from losses of £2.7m in 2008.

Revenues were £14.8m in 2009, down 32.7% from £22.0m in 2008, as the advertising recession weighed on the company.

Bennett Coleman bought Virgin Radio, as it was known, on 30 June 2008 for £55.06m and rebranded the station as Absolute Radio on 29 September 2008. The value of Absolute Radio was written down by £7.9m in 2009.

Despite Absolute Radio's chief executive Donnach O'Driscoll setting a target of three million listeners at the time of the rebrand, Absolute Radio’s audience and listening hours, the metric used by buyers when trading, have declined.

In the fourth quarter of 2010, the most recent figures available, the core station had an audience of 1.38 million a week, down 7.9% year on year and 16.9% quarter on quarter and particularly disappointing as it followed an encouraging Q3.

Though sources suggested radio companies, such as Global Radio, Bauer Media and UTV Media, would be the only businesses able to use economies of scale to make Absolute Radio profitable, there is likely to be a question over its value.

An industry source said: "The problem is how do you write a cheque for the business? Let's assume it lost the same in 2010 as 2009, which it didn’t, you would need to make savings of at least that to make it worth your while."

Though Absolute Radio is expected to report a loss for 2010 when it publishes its accounts later this year, O'Driscoll has publicly stated 2009 and 2010 were "building years". The company believes that rather than making a loss, it has invested in the brand, talent and marketing.

A spokeswoman for Absolute Radio said she had nothing more "to add" to Dhariwal’s statement.

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