Thursday June 5, 01:55 AM
Virgin Radio owner sets his dial for the web
By Ben Fenton, Media Correspondent,Ben Fenton
As the head of a booming Indian company which is spending almost £70m ($136m) buying into an unremarkable business in a struggling sector of a troubled economy, A.P. Parigi anticipates questions. "Why would we invest in the UK radio
market?" the chief executive and managing director of TIML, which last Friday bought Virgin Radio for £53.2m ($104.6m), asks rhetorically."The Indian media market, in terms of profits, of margins, in terms of growth opportunities, is way above America, Australia, Europe. But my boss, Vineet Jain, the managing director of the Times (1832.HK - news) of India Group, is a bit of a contrarian." Mr Jain, one of two brothers who own India's largest media group, which includes 32 radio stations in 90 cities, indicated almost five years ago that the commercial radio market in the UK was ripe for investment. "'Now is the time, Parigi,' he told me. 'Pick an asset and an appropriate price.' "He sees this market as one of untapped potential because of the convergence of audio and the internet. "We could have just gone for serving the Asian diaspora, but Vineet said also look at the mainstream, so we did." Mr Parigi found partners in Donnach O'Driscoll and his team at Absolute Radio, which spent some of its time managing two radio stations in southern England and some acting as international consultant to the industry. Together they began to look for a station to match Mr Jain's vision. After four years and having had several false starts (which they were not prepared to discuss), Mr Parigi and Mr O'Driscoll settled on Virgin. Its position as the market leader in terms of internet listeners was one of the attractions for its new Indian owners, as was its size - Virgin has an FM licence in London and a national AM space. Another factor was British culture. "At the end of the day, radio is an integral part of the English way of life. There is no question of it just fading away." But Mr Parigi said that his company was also exploiting a certain ennui in the commercial radio sector, which has tumbled in popularity with the markets in recent years. Virgin itself was bought by SMG (LSE: SMG.L - news) from UK disc jockey Chris Evans's Ginger Productions for £225m in 2000 and has now been sold for less than a quarter of that. "I think that a fatigue has set in. Sometimes it does in industries. Look (Munich: 867225 - news) at the automotive industry in America at the time when all the brilliant ideas started to come from Japanese manufacturers." As a result of that fatigue, he said, owners overlooked the fact that the way in which the younger generation consumed media had changed and that radio was at least potentially something they would love. TIML intends to spend £15m marketing not only the radio station - they did not buy the rights to the Virgin brand but have not yet announced what they intend to call it - but the medium of radio itself. And they are not looking for quick returns. "We are a 170-year-old company, so I think we will have patience with the markets." So is TIML going to restart the commercial radio industry in the UK? No, that would be too presumptuous, he said. "Let's just say we want to be energetic participants in its renaissance."
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