We all know what senior Granada sources think of the latest
acquisition by Scottish Media Group. They insist the pounds 225 million
SMG will pay for Ginger Media is silly money. They believe it doesn’t
represent anything like good value for SMG shareholders (especially an
SMG shareholder called Granada). And they think that it’s folly to spend
all this money on a company that is so reliant on the audience pulling
power of one performer, Chris Evans.
Granada has an agenda. It has never hidden its desire to make a bid for
SMG when the time is right. SMG, for its part, has never made a secret
of its intention to make things as hard as possible for Granada. And
this latest deal makes it harder for Granada to absorb SMG without
breaching regulations that restrict consolidation of ownership.
But maybe - over the short term at least - that’s somewhat academic.
A matter of weeks ago, Granada was primed and ready to move on SMG, so
its views on the Ginger deal would have been an important
But the proposed United News & Media merger with Carlton has changed
Granada now has bigger fish to fry, and, as it prepares a bid for one or
other or both of its two major rivals, its threats to mount an SMG bid
over the coming weeks are taken a lot less seriously.
In short, SMG has more breathing space than it could have expected a few
weeks back. SMG will seek to make good use of that space. Last week it
announced it was restructuring in acknowledgement of the non-Scottish
nature of its properties. Its national UK media - Pearl & Dean,
Primesight and Virgin Radio - will now be overseen by the Ginger Group
chief executive, David Campbell.
John Pearson, the chief executive of Virgin Radio, says this restructure
sends important signals, though it does not mean there will be any
radical sales shake-up in the immediate future. He states: ’We do not
intend to combine our sales teams. We don’t see a need for it. The three
national media now owned by SMG - posters, cinema and radio - have
unique dynamics. But it would be wise for us to acknowledge that, as
advertisers centralise and agencies consolidate, an increasingly smaller
number of people are talking to each other in the media market.’
The immediate benefits, he adds, will be felt in other ways: ’There are
marketing opportunities available to us now that weren’t there before.
For instance, our (Virgin Radio) ad campaign runs on Scottish Television
and in Pearl & Dean cinemas. In the future, those sorts of talks will be
conducted on a different basis. But the important message to take from
the Ginger deal is that we see this as a platform for growth across
existing media and possibly into others.’
Some industry sources remain unconvinced about SMG’s rhetoric. They
question whether it has a long-term future as an independent entity.
Within months, ITV will consolidate into ownership by one company. It is
unlikely, they argue, that SMG will be that company.
On the other hand, this argument tends to assume that SMG is principally
an ITV franchise holder. This latest deal (and the subsequent SMG
restructure) begins to undermine that assumption. In short, SMG could
find a way to sell just its ITV franchises, while remaining a lot more
than a Glasgow newspaper publisher. One way or another, advertisers
would like a clearer idea of what the grand vision is - and the fact
that SMG now has a greater London presence may be one of the more
obvious upsides in this. Campbell will doubtless be asked to make up a
lot of corporate public relations ground over the coming weeks.
Peter Buchanan, the director of marketing communications at the Central
Office of Information, a big radio advertiser, says: ’The deal could
inject faster investment into Virgin Radio.’ But he insists the bigger
picture is important. ’We are more concerned about further mergers
within ITV and whether advertisers will benefit from that. This deal
effectively blocks a Granada takeover of SMG.’
Derek Morris, a founding partner of Unity, says it will be interesting
to see if SMG can unlock added value from this acquisition.
He says: ’You’ve got to believe that it was motivated in part by an
instinct for self-preservation, but they must have convinced City
analysts that there are synergies to be found in this particular
acquisition. The interesting thing about SMG following this deal is the
fact that it has a complete suite of media - everything from posters
through print and electronic media to cinema. The big question is
whether SMG can make something of that in the advertising market through
’Many people remain broadly sceptical about whether it’s possible. Emap
has set up a new structure to do exactly that, albeit with a more
limited spectrum of media. And it is easier to see how it might succeed
by offering a mixed-media deal to youth advertisers. But Emap’s
teenage-targeted media comprises a vertical market. SMG is a horizontal
company and I find it difficult to see how you cross-sell on a
Much of that is echoed by Robert Ray, joint managing director of
He comments: ’I believe it’s healthy for media owners to think more in
terms of the audience groups they can offer, rather than in terms of
media as a commodity. I welcome the potential to move beyond
one-dimensional conversations. But a broader approach has to be in the
interests of the advertiser as well as the media owner.
At a broader level, I also worry about the present climate and the
assumption that media owners have to keep getting bigger. Sometimes we
lose sight of the fact that we are talking about potentially
unacceptable levels of concentration in individual media sectors.’