Media: All about ... The takeover of Virgin Radio

Absolute prepares for a fresh start with a new identity.

The right brand can get you anywhere. It's a theory the new owners of Virgin Radio will be putting to the test, as the station waves goodbye to its bearded, hot-air-ballooning boss and his Virgin brand, and attempts to impose a fresh approach and new identity.

The Times of India Group, one of India's largest media and entertainment companies, snapped up the station last week for £53 million. It acquired Virgin Radio through its subsidiary TIML Golden Square, and the station will now be run by TIML's Absolute Radio business.

Absolute, an investment and consultancy company, is headed by two radio veterans: the former Capital Radio executives Clive Dickens, who is Absolute's chief operating officer, and its chief executive, Donnach O'Driscoll.

Absolute, the owner of two stations in Oxford (Jack FM and 107.9 FM), now has the task of seeking new opportunities in the UK and European markets, and this deal marks its first major radio venture outside India.

The new owners will invest £15 million in building a new brand for the station, with a relaunch and a new name in the autumn. Acquiring the Virgin brand would have cost TIML an extra £8 million, but that option came off the table after Virgin refused to grant rights to the licensing of the brand.

This was something TIML was more than happy with, Dickens argues: "It became very obvious in the process that they have a longstanding relationship with other parties in other territories, which made it not possible to grant rights. We got comfortable with the idea of a new brand, because it gives us unfettered access to explore our new business model without seeking permission from anyone."

While the format of the national rock station (which is aimed at 24- to 44-year-olds) will remain, it must evolve, its new owners say. Dickens maintains that central to rebranding the station will be defining what benefits the brand can bring to the marketplace and creating a deeper relationship with a larger audience.

Plans for the station include a spin-off music subscription service, whereby listeners pay a certain amount each month for unlimited downloads. Dickens says that while this is a less-recognised model than pay-per-track music downloading, it is perfect for listeners who want a guide to encourage them and it is a cheaper option compared with paying per track.

"Subscription catalogue is something marketed by the industry, but it has not caught on because I don't think they have found the right way to communicate it," he states.

In terms of building a brand, Absolute will take inspiration from the successes of brands such as Innocent, Skype and the TV channel Dave. "The power of the new outweighs the power of an established brand," Dickens argues.

Dickens will not be drawn on whether this will lead to more UK acquisitions for the group, preferring to put the focus on the task in hand: "We aim to go beyond radio. There is a clear acceptance that commercial radio has to evolve and our station will lead the way."

1Virgin was sold to SMG in 2000, by Chris Evans through his Ginger Media Group, for £225 million. Evans was later sacked after a row, and from that point, the station struggled to recapture the glory of its 90s heyday. SMG's acquisition of Virgin Radio was part of a diversification strategy for the group. After that strategy failed to deliver growth, and SMG's chief executive Andrew Flanagan resigned in 2006, speculation mounted that SMG would put Virgin up for sale.

2SMG then entered fruitless takeover talks with UTV and decided to float Virgin - plans that were later shelved when the Virgin chief executive, Paul Jackson, moved to GCap. In September 2007, SMG invited bids for a trade sale of Virgin Radio. Interested parties included the Guardian Media Group, Global Radio, UTV and the private equity company Vitruvian.

3The station was valued at less than half of the £225 million figure Evans sold it for, and the sale was postponed when the bids fell short of the £80 million asking price. However, it was reignited early this year.

4The latest Rajar results for the first three months of 2008 don't make for happy reading for the station. They showed that it was overtaken by the rival talkSPORT for the first time, with 2.47 million listeners against Virgin's 2.46 million.

WHAT IT MEANS FOR ...

ADVERTISERS

- Advertisers will be encouraged by the fact that Virgin Radio has been bought by a group which intends to invest and see a return on that investment. The station is said to have a good infrastructure and high-profile presenters including Christian O'Connell, whose breakfast show will be the foundation of the new station.

- Losing the Virgin brand is an opportunity for the station, according to Howard Bareham, the head of radio at MindShare: "If it were to retain the Virgin name, it would be beholden to someone else. It would be more of a risk and would be, in some respects, relaunching a radio station." However, Bareham warns that rebranding is going to mean hard work: "It all comes down to content and programming, DJs and the investment they're going to put in beyond media spend," he says. "The proof will be in the pudding. Advertisers want to associate themselves with certain brands. They know what Virgin stands for - it has a personality and a heritage. They buy into that."

- The Rajar results will ultimately be the judge of its success, Bareham says: "From a numbers perspective, what advertisers want is to reach more people. The question is: will it build authority with advertisers and the number of listeners? They need to establish a new station that is as credible a brand as possible."

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