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Scottish Radio Holdings
Scottish Radio Holdings is a radio broadcaster and a newspaper publisher. it owns a number of local radio stations and newspapers, mostly, but not all, Scottish. Like the other radio broadcasters Scottish Radio Holdings has reported that demand for radio advertising is currently weakening.
The 2004 results were healthy enough with radio and newspapers (the two main businesses) producing strong LFL growth (+10% and +9%) respectively and margins growing in the latter (from 29.7% operating margin to 31.9%). The weakening of radio operating margin (from 27.8% to 26.4%) was more than offset by the growth in turnover.
The most recent statistics showed the Scottish Radio Holdings losing share within the commercial radio market, which was itself shrunk by a fall in total listening and gains in share by the BBC.
Current trading is showing evidence of slower growth in radio (LFL revenues +5%) but newspapers remain strong (revenues +8%) in the last quarter. In both radio and newspapers local demand seems to holding up better than national so the company is better positioned than most of its peers.
The rating is at least lower than Chrysalis’s, with a PE of 21 at the current price of 968p. Given the apparent slow down in growth in ad revenues across the radio industry this, like other radio company ratings, looks somewhat expensive. Against this advertising in general appears to be recovering and it seems unlikely that the trend in radio is likely to go the other way for long. In the case of this company there is no sign of weakness in the newspaper business so the outlook there looks a little better.
We are in general inclined be be a little more cautious on the sub-sector until we can see a clearer trend in advertising.
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