Evans spectre stalks Virgin's owners

Chris Evans wants Richard Branson's old station back

By Nick Higham Media correspondent

In all the brouhaha in the wake of the government's Communications Bill you could be forgiven for thinking there were only two significant ITV companies, Carlton and Granada.

But there is a third. SMG - or Scottish Media Group - owns Scottish Television and Grampian Television and, though a tiddler by comparison with the Big Two, likes to think of itself as Scotland's very own media conglomerate.

It also owns The Herald newspaper in Glasgow, the cinema advertising business Pearl & Dean and a poster company.

The Communications Bill, when it eventually becomes law, almost certainly spells the end of SMG as a separate company.

Scottish Television makes shows like Wheel of Fortune

Its chief executive, Andrew Flanagan, tacitly admitted as much when he acknowledged that the changes in rules on ownership of media companies made his group a takeover target.

A Scottish-based, Scottish-owned and Scottish-run media company will probably be unsustainable once new rules are in place.

And SMG's own plans for expansion will become history.

Expansion

As well as investments in cinema and outdoor advertising south of the border, SMG has build up a stake of almost 30% in Scottish Radio Holdings, Scotland's dominant commercial radio company, which numbers the Clyde and Forth stations in Glasgow and Edinburgh among its licences.

That expansion has not always gone smoothly. Perhaps SMG's biggest misjudgement was paying £225m for Chris Evans's Ginger Media two and a half years ago.

Ginger's prime asset was Virgin Radio, where Evans himself presented the breakfast show in his own unique way.

Steve Penk left the Virgin breakfast show after just a few months

But ever since SMG bought Virgin just about everything that could have gone wrong has. Evans himself was sacked after failing to turn up for work five mornings in a row.

Evans' successor, Steve Penk, walked out. The station was fined £75,000 for the Radio Authority after one of its late night presenters encouraged a child to repeat an obscene phrase on air.

And the advertising recession has taken its toll on Virgin Radio's revenue and on revenue at SMG's other subsidiaries.

SMG's share price has fallen dramatically as a result. Evans's own four per cent share in the group, worth more than £52m at one point, is now worth around half that.

Evans returns

Last week Evans came back to haunt Flanagan and his colleagues when the ginger one gave an interview to the Daily Mirror in which he offered to drop a long-running legal action against the group if it would let him have Virgin Radio back.

SMG chairman Don Cruickshank has a brighter future

SMG should sell Virgin to new owners, he said, for whom he would then work for free, both running the station and presenting the breakfast show.

But SMG responded by saying Virgin wasn't for sale, and the company's shareholders weren't impressed by the Evans suggestion: the share price went down.

On the other hand that might have had something to do with Scottish Radio Holdings' announcement that its profits for the six months to March were down from £7.8m to £5.7m thanks to the slump in national advertising, and that there were no obvious signs of a recovery on the horizon.

Scottish Radio has had its own problems with diversification - and has just sold its own "underperforming" poster company, Score, though it has continued buying up local newspapers in Scotland and Ireland.

It's hard not to conclude that the days of both SMG and Scottish Radio as independent companies are numbered.

The only consolation for SMG: its chairman, Don Cruickshank, once head of the telecoms regulator Oftel, is tipped as a possible chairman of the new communications super-regulator Ofcom.

A version of this column appears in the BBC magazine Ariel.