EMAP profit rise fuels bid rumour

EMAP group managing director David Arculus is playing down speculation that the company is considering a bid for Metro Radio following confirmation this week that Metro’s two largest shareholders, Capital Radio and Chrysalis, plan to sell their stakes.

The speculation coincides with the company’s announcement of a 40 per cent surge in pre-tax profits to 63.9m for the year to April 1. Turnover and operating profits were up for all divisions, notably radio, where the company hopes to benefit from relaxed ownership rules.

Capital and Chrysalis are selling their 18.1 per cent and 19.5 per cent respective interests in the radio station. Potential bidders have three weeks to respond. Any buyer of the combined shareholding would be required to launch a full bid for the company.

“It would be strange if we weren’t looking at any potential opportunity,” Arculus says. However, he adds, even under recently relaxed radio ownership rules, a combined group would exceed the 15 per cent market share ceiling.

According to the Radio Authority point-based ownership system, EMAP Radio has about an 11 per cent market share following its acquisition of Trans World Communications last summer. Metro represents around seven per cent, according to an RA estimate.

EMAP’s radio operating profits increased by 415 per cent from 1m for the year ended 1994 to 5.2m last year. Radio turnover during the same period rose from eight per cent to 22.6 per cent. Ad revenue growth for EMAP stations was 27 per cent year on year.

Group turnover was up 51 per cent to 547m with operating profits up 55 per cent to 67.6m.

Consumer magazines operating profits were up 31 per cent to 32.3m with turnover up 15 per cent representing a ten per cent increase in overall circulation revenue and a 20 per cent rise in advertising revenue. Advertising growth was strongest in the women’s and teenage sectors.

Chairman Sir John Hoskyns predicted EMAP would feel the pinch of soaring paper costs in the year ahead, although predicted slower revenue growth would be offset by better yields.

The company is considering expansion into TV, Arculus confirmed, but he added: “Timing remains key. At present we are unsure there is sufficient cable penetration to justify [a move into specialist TV channels].”

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