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Scottish Radio Holdings H1
As we already knew from Scottish Radio Holding’s trading statement, like-for-like growth has been lower than last year but it has remained significantly positive at 4%, a reasonable result given market share that was little better than flat (and total listening hours down slightly) and radio ad rates under pressure.
We have already commented on the recent RAJAR numbers which showed a reasonable but not particularly good performance in terms of market share and (lack of) audience growth in radio.
Newspapers continued to perform more strongly with both circulation and advertising revenues up, the latter being the main driver of the 7% recovery in total revenues. In general (not just for Scottish Radio) newspapers seem to be benefitting from a cyclical recovery in ad revenues but radio does not. This is not good for SRH. Given that radio has started the second half very weakly it is quite possible that radio revenues may even show a decline on last year.
Cash flow was held back by an increase in in working capital - the combined effect of an increase in debtors and a decrease in creditors was to absorb £3.4m of cash flow - which would otherwise have been fairly healthy.
At a prospective PE of 19× (at 888p) Scottish Radio holdings is reasonable against the radio sub-sector given its fairly solid past performance and the prospects of further consolidation in the sub-sector which may make it a takeover target. However radio in general looks rather expensive given that it is not seeing recovery in advertising rates, radio audiences are static and commercial radio is losing ground to the BBC.
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