Scottish Radio Holding plc

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Scottish Radio Holding plc

Clydebank Business Park
Clydebank, Glasgow G81 2RX
United Kingdom
Telephone: (44) 1565 2200
Fax: (44)1565 2322
Web site: http://www.srh.org.uk

Public Company
Incorporated: 1973 as Radio Clyde
Employees: 1,034
Sales: £40 million ($104.9 million)(2000)
Stock Exchanges: London
Ticker Symbol: SRH
NAIC: 5131 Radio and Television Broadcasting

Scottish Radio Holding plc (SRH) is holding steady in the growing consolidation of the United Kingdom’s radio industry. The Glasgow-based group is one of the United Kingdom’s largest radio station operators, with stations including Radio Clyde, Radio Forth, Radio Borders, the Irish national station Today FM, and others, for a total of 16 radio licenses. The company’s operations are primarily in Scotland and Ireland, with some also in northern England. SRH is also entering the digital radio market, having been awarded a national digital license in 2000. Formed in 1973, Scottish Radio has expanded its interests at the turn of the century to include publishing, focusing on the local weekly newspaper market. Through its SCORE Press publishing subsidiary, the company has 43 titles, including both paid and free publications. Another area of strong growth for SRH is billboard advertising, a market it entered in 1999. SCORE Outdoor has seen quick growth since its formation, notably through the acquisition of six outdoor billboard advertising companies. SCORE Outdoor gives SRH a network of more than 4,000 billboards throughout Scotland and into England. Coming changes in the British government’s radio ownership rules is expected to lead to a shake-out in the sector; already in 2001, SRH has fought off a hostile takeover attempt from rival SMG (formerly known as the Scottish Media Group), which built up a 29.4 percent holding in SRH. Yet SRH may have found a white knight in privately owned DC Thomson, based in Dundee, the publishing group behind comics “Beano” and “Dandy,” as well as the owner of a number of newspaper titles. Merger talks among the various parties were called off in May 2001, after sharp drops in advertising revenues caused falling profits—and share prices—throughout the radio sector. With an immediate takeover averted, SRH announced its intention to remain independent and to step up its own acquisitions, pointing to a war chest worth more than £160 million. SRH is led by Richard Findlay, CEO, and cofounder and chairman James Gordon. Traded on the London Stock Exchange, the company reported revenues of £40 million.

Scottish Radio Pioneer

When Radio Clyde began broadcasting shortly before midnight on New Year’s Eve 1973, it marked a turning point in U.K. radio history. Until then, radio—like television—had been the exclusive realm of government-owned British Broadcasting Corporation (BBC)Radio. The opening up of the United Kingdom’s airwaves to private radio stations, made in part to thwart the growing numbers of offshore and otherwise pirate radio stations, became a fact in 1972. Radio Clyde became the first independent radio station in Scotland and quickly captured a leading share of its local Glasgow and west central Scotland audience, a position it maintained into the next century.

Although they offered the choice of listening to something other than the BBC, the United Kingdom’s local radio stations were often criticized as being amateurish, a reputation that did little to help Clyde and its competitors to raise advertising revenues. Ownership rules limited the number of stations any single group might own, and the small size of most radio companies made it difficult for them to raise the capital needed for investing in new broadcasting equipment and technology. Radio owners faced other severe restrictions, such as a requirement to duplicate their programming on both AM and FM bands.

Led by founder Ian Chapman as chairman and cofounder James Gordon as CEO, Radio Clyde began taking steps to lead Radio Clyde into becoming a more mature operation. The company made an important move when it took a partial listing on the London Stock Exchange in 1984, helping it fund future growth. Meanwhile, the radio market had grown steadily since the beginning of the decade, with more than 200 local radio licenses issued. The publication of the Peacock Review of Broadcasting in the mid-1980s gave new impetus to the growing independent radio industry; among the concessions that the government made was that it gave stations the right to split programming for the their AM and FM licenses. This allowed broadcasters to double their programming formats.

Another move toward a more mature organization came in 1986 when Radio Clyde led other independent radio station owners in Scotland and Ireland in forming an advertising booking service, Scottish & Irish Radio Sales Ltd., which became known as SIRS. The new entity gave SRH representation in London to compete for the slowly rising levels of radio advertising spending.

Acquiring Growth in the 1990s

Further relaxation of radio license ownership rules at the start of the 1990s opened the way to a growing shake down among the many independent groups operating within the United Kingdom’s independent radio industry. The passage of the Broadcasting Act of 1990 not only created a number of new radio licenses, it also helped remove more ownership restrictions governing the country’s body of radio licenses. These changes gave the signal for a renewed consolidation of the U.K. radio market.

After obtaining a full listing on the London Stock Exchange, Radio Clyde began to build up its own position. The company’s first acquisition was a friendly takeover of Northsound Radio in 1988. Serving the Aberdeen and northeast Scotland area, Northsound had been set up in 1981 and had quickly achieved a strong listener base in its area—reaching 60 percent of its target population, giving it one of the highest scores in the U.K. market.

Radio Clyde continued to target expansion within its Scotland base. In 1991, the company launched another takeover bid, this time through a recommended share offer directed at the shareholders in Radio Forth. That station, which had begun broadcasting in 1975, brought not only its own audience, but those of Radio Tay and Radio Borders. Radio Tay had begun broadcasting in 1980, reaching an audience in northeast Fife, Tayside, Perth, and Kinross. The station’s success among listeners had even led some to dub the rather diverse listening area as “Tay Territory.” Radio Borders was at the time one of the youngest of the United Kingdom’s radio stations, having begun broadcasting only at the start of the 1990s and broadcasting to Scotland’s Borders and England’s North Northumberland areas. Radio Forth, Radio Tay, and Radio Borders became part of Radio Clyde in April 1991.

The newly enlarged group changed its name to Radio Clyde Holdings plc shortly after the acquisition of Radio Forth. By 1994, however, the company decided to emphasize its larger focus, changing its name to Scottish Radio Holdings pic. As the decade proceeded, Scottish Radio had managed to gain a place for itself among the leading U.K. broadcasting groups, which had begun to narrow to a small number, including Emap, GWR, Capital Radio, and its closest rival, Scottish Media Group.

Scottish Radio—or, as it increasingly preferred to be called, SRH—began to diversify its activities during the mid-1990s. The company’s move into newspaper publishing—which, like radio, relied heavily on advertising revenues—came in 1995, when SRH set up its SCORE Press subsidiary. SCORE immediately acquired a base of operations when it bought Morton Newspapers for £11.2 million. Morton’s collection of local weekly newspapers targeted at the Northern Ireland community gave SRH its first entry into that market.

In 1996, SRH added to its Northern Ireland activity with the acquisition of Downtown Radio. That station had been launched in 1976 and was the first independent, commercially based station to broadcast in Northern Ireland. Downtown Radio had established a sister station, Cool FM, in 1990. Meanwhile, back in Scotland, SRH added new West Sound Radio, which had been broadcasting to its Ayrshire and southwest Scotland region since 1981. West Sound was to take advantage of the splitting up of AM and FM broadcasting requirements, developing two distinct radio formats, an AM West Sound station, West FM for the Ayrshire region. When SRH acquired South West Sound that same year, the West Sound subsidiary also received a third format, that of West Sound FM, broadcasting to the Dumfries and Galloway markets. The two purchases cost SRH £1.6 million. When Ian Chapman retired as chairman that year, Peter Gordon took over his position, while the company named former Radio Forth chief Richard Findlay as CEO.

Merger Dance for the 21st Century

SRH continued to look for new acquisitions. In 1997, the company acquired majority control of Moray Firth Radio. Based in Iverness and founded in 1982, Moray Firth had originally come into SRH’s sphere of operations through Radio Forth’s minority share. SRH later acquired full control of Moray Firth, an acquisition that gave it the United Kingdom’s largest single geographic broadcasting area. The company also added to its publishing wing with the acquisition of Montrose Review Press for £480,000 and The Buteman, located on the Isle of Bute, for £300,000.

Company Perspectives:

SRH is successfully focused within the media sector: Our approach to serving local audiences, in both commercial radio and weekly newspapers, has delivered an impressive track record. All our radio services are ranked first and second in terms of their market share of listening within their broadcast areas. Similarly, all our local weekly newspapers are the most popular in the areas in which they are sold.

Findlay and SRH made no secret of their interest in expanding their media interests through acquisitions, pledging as much as £100 million to the effort. Not all of their targets succumbed to SRH’s charms, however. Such was the case with the company’s attempt to acquire Border TV, which would have not only boosted SRH’s radio operations on the Scottish and English borders, but also have brought it one of the United Kingdom’s rare independent television licenses. Border Television rejected SRH’s offer in 1998.

The following year, SRH struck out into new media territory, laying bare its advertising-driven base with the establishment of SCORE Outdoor, a subsidiary set up to handle the company’s foray into billboard and other outdoor advertising. SRH literally acquired the number four spot in the United Kingdom in that market segment, making six acquisitions before the end of the decade. The first of these came in March 1999 when SRH paid £27 million for Trainer Ltd. A new acquisition followed in April, when the company bought Parkin Advertising, based in Bristol, for £9 million. A month later, SRH added operations in Birmingham, through the acquisition of Visions Posters, for £15 million.

SRH was also building up its publishing side, acquiring Angus County Press, based in Forfar for £4.2 million in 1999, and then Title Media, which published Ireland on Sunday, and Kilpenny People Holdings, giving the company its first operations in the Republic of Ireland. SRH had not abandoned growth in its core radio business, however, as it fought for one of the new digital radio licenses. The company won its license bid in 2000 and launched its 3C digital radio service by 2001.

As the dust settled on the U.K. radio industry, the consolidation frenzy of the past decade had reduced the number of major players to a select few. SRH remained an independent player, yet analysts criticized the group for its lack of size against its larger competitors. The company attempted a second time to acquire Border Television, upping its offer to £116 million. Once again, however, SRH’s bid was rejected.

By the end of 2000, SRH, which had no single major shareholder to help it ward off a hostile takeover, had come into rival Scottish Media Group’s line of sight. As that company sought to enhance its own largely television- and newspaper-based media holdings, it began to buy up a position in SRH. By spring of 2001, Scottish Media had acquired more than 28 percent of SRH’s stock—near to the cutoff point at which, under U.K. law, a full-fledged takeover offer became mandatory.

SRH fought back however, and it was saved by DC Thomson, a Scotland-based publisher of comic books and newspapers. DC Thomson began increasing its own shareholder position in SRH, nearing the 29 percent mark by April 2001. Yet a collapse in the U.K. market’s radio advertising spending had crippled share prices across most of the U.K. radio community. In May 2001, SRH announced that it had ended its merger talks with DC Thomson. At the same time, SRH, which had initially seemed interested in the idea of joining into a larger group, now affirmed its desire to remain independent and promised to spend up to £180 million on the acquisitions that would give it the critical mass to do just that.

Principal Divisions

SCORE Outdoor; Angus County Press; Black Country Bugle (England); Bute Newspapers (Scotland); Ireland on Sunday; Kilkenny People Holdings (Ireland); Leitrim Observer (Ireland); Morton Newspapers (Northern Ireland); Downtown Radio (Northern Ireland); Moray Firth Radio; Northsound Radio; Radio Borders; Radio Clyde; Radio Forth; Radio Tay; Score Digital; South West Sound (85%); West Sound Radio; Score Interactive; SRH Radio Sales.

Principal Competitors

BBC Corporation; Capital Radio pic; SMG pic; Chrysalis Group pic; GWR Group pic; Virgin Group Ltd; Emap pic.

Key Dates:

1973:: Radio Clyde begins broadcasting.
1975:: Radio Forth begins broadcasting.
1976:: Downtown Radio begins broadcasting.
1980:: Radio Tay is launched.
1981:: Northsound Radio and West Sound Radio begin broadcasting.
1982:: Moray Firth is established.
1988:: Radio Clyde acquires Northsound Radio.
1990:: The company has a full listing on the London Stock Exchange.
1991:: The company acquires Radio Forth and changes its name to Radio Clyde Holding.
1994:: The company changes its name to Scottish Radio Holding.
1995:: The company sets up SCORE Press and acquires Morton Newspapers.
1996:: The firm acquires West Sound Radio and South West Sound and also acquires Downtown Radio.
1999:: The company sets up SCORE Outdoor.