Media: Forum - Media figures react to SMG’s pounds 225m Ginger deal/Senior staff at Ginger Media are happy - the Scottish Media Group takeover was better than a lottery win. SMG is happy too: despite the hefty price tag, the deal will help keep Gr

We all know what senior Granada sources think of the latest acquisition by Scottish Media Group. They insist that 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.

We all know what senior Granada sources think of the latest

acquisition by Scottish Media Group. They insist that 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, obviously. 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 certainly makes it harder, in theory, for Granada

to absorb SMG without breaching regulations which 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

consideration.



But the proposed United News & Media merger with Carlton has changed

everything.



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 that it was restructuring in acknowledgement of the

non-Scottish nature of its properties. Its national UK media - Pearl and

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 that this

restructure sends important signals, though it doesn’t necessarily mean

that 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 particular and unique dynamics. But having said that,

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 marketplace.’



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 and 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 -

and they question the sincerity of SMG directors when they protest

otherwise. Within a timescale of 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, regards the Ginger

takeover as a mixed blessing. It’s probably good news on the radio

front: ’It could inject faster investment into Virgin Radio,’ he points

out. But he insists that 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 believes it 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

cross-selling.



’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 horizontal

basis.’



Much of that is echoed by Robert Ray, joint managing director of

MediaVest.



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. We 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 - 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.’



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Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).