Friday May 16, 08:47 AM
SMG said growth in core TV unit progressing well, no update on disposals UPDATE
(updating to add detail, share price, analyst comment)
LONDON (Thomson Financial) - SMG Plc (LSE: SMG.L - news) . said growth
in its core TV business is progressing well after substantial reductions in its cost base, without providing any further updates on the disposal of its Virgin Radio unit.
The Scottish media group said, ahead of its general meeting on Friday morning, that it is confident of its strategy in the face of uncertain advertising markets. 'We are confident the business now has a strong platform from which to outperform in difficult market conditions'.
Shares in the media group fell 4.35 percent to 11 pence at 8:22 a.m.
SMG's stv platform continues to outperform the ITV (LSE: ITV.L - news) network, both in national and local sales, the group said, with regional sales expected to continue with double-digit growth in May and June.
Growth in the core television and content businesses is progressing well with the broadcasting unit seeing 20 to 25 percent lower controllable costs than a year ago.
The company added that it is expanding its content unit, through the appointment of Alan Clements as director of content, after its biggest-ever commissioning of Taggart, to be delivered in 2008.
But its radio and cinema units are expected to see weaker growth over the next two months given volatility in the radio market and a weak film market which is expected to lead to a continued downturn in film revenues in May, following first quarter revenues falling 10 percent. This will be offset by a stronger summer film market which is expected to deliver growth of 18 percent in June.
The company said that it is still looking at options for its advertising business, Pearl & Dean, with the current OFT review creating a more positive environment for the disposal. This disposals of the Virgin Radio and Pearl & Dean units, both assets taking write-downs last year, will leave the company able to focus on its television broadcasting and production assets. Absolute Radio is seen as the preferred bidder of Virgin Radio according to press speculation.
SMG has previously said that it is not in a 'forced-seller position' and will only dispose of the unit at the right price, after successfully reducing its debt last year.
The company added Friday that its 'historic debt problem has been solved'.
In reaction to the trading statement, Numis said that 'cost savings undertaken by the new management team provide a cushion should the UK advertising environment deteriorate in H2'.
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