SCOTLAND: SCOTTISH MEDIA STRONGHOLDS - For Scottish media groups, acquisition is the name of the game as they buy up smaller players. Meg Carter reports on their expansion

SMG

SMG

Chief executive: Andrew Flanagan

Media interests: TV broadcasting and production, commercial radio, newspapers, cinema advertising



SMG has extensive media interests across the UK including the ITV licences Scottish Television and Grampian, which SMG acquired in June 1997 for pounds 105 million. It also holds a 25 per cent interest in GMTV.

The group in its current form was born in 1996 with the pounds 120 million acquisition of Caledonian Publishing, the owner of the Glasgow Herald and Evening News. SMG also owns Pearl & Dean, the cinema advertising sales business, which it picked up for pounds 25 million in 1999.

But it was SMG's acquisition of Chris Evans' Ginger Media Group earlier this year that caused a particular stir and earned SMG's chief executive, Andrew Flanagan, the dubious title of 'the media tycoon that Soho forgot' - as a result of the media and business world's London-centric focus.

The move, according to Flanagan, was an unashamed attempt to secure Scottish Media Group a place alongside Granada Group, Carlton Communications and United News & Media.

'To grow we really had to move beyond Scotland and what we wanted to do was build out into the rest of the UK into fast-growing sections of the media with well-funded and well-branded businesses,' Flanagan said at the time.

A subsequent name change - to SMG - underlined this and firmly positioned it as a UK player.

Today, SMG operates in three core areas: TV, press and national radio through Virgin Radio.

'There are three strands to the TV business: broadcasting, STV, Grampian and digital licence S2 (Scotland's equivalent to ITV2); production, through Scottish TV Network Productions and Ginger, and our investment in GMTV,' Donald Emslie, the managing director of SMG's TV operations, explains.

'We are also looking to develop our activities in the rest of the UK,' he adds, which is why SMG has openly declared its desire to up its stake in GMTV should an opportunity arise.

Content production is another priority. Emslie proudly recounts how SMG has broadened its production slate beyond TFI and Taggart with network re-commissions for the children's drama Harry and the Wrinklies and six new one-hour dramas starring Robson Green slated for next year. And it is content that is driving another strand of the business, an online platform branded S1.

The aim is to develop a range of S1-branded, Scottish-focused sites. So far, there are two: S1homes.com and S1jobs.com. It is just one indication of the importance of closer co-operation between different media interests within the group.

Also on the cards is the development of cross-media packages for advertisers.

However, Emslie stresses, 'this will not be by combining sales teams in the way Emap has done.'

Des Hudson, the managing director of SMG's publishing interests, agrees.

Closer cross-media co-operation is essential, he says, but not at the expense of SMG's already strong individual media brands.

'A major preoccupation is the Scottish newspaper price war,' he adds. SMG's Sunday Herald, however, is resolute in the face of cost-cutting from its arch-rival The Scotsman.

The coming months will see new investment in both The Herald and Evening Times.

Meanwhile, online publishing will be extended both through the S1 platform and Virgin Online, which SMG acquired as part of its Ginger deal.



SCOTTISH RADIO HOLDINGS

Chief executive: Richard Findlay

Media interests: commercial radio, outdoor and local newspapers



Scottish Radio Holdings' roots lie firmly in commercial radio. Its flagship, Radio Clyde, was one of the first three independent local radio stations launched in the UK back in the early 70s ... and the first ILR station to turn a profit.

Three decades on, however, SRH is working to build an integrated multi-media, regionally based business. While radio remains its biggest revenue earner (pounds 17 million for the first half of its latest financial year - although new results came out on 14 November), recent acquisitions have taken SRH into local newspapers (which generated pounds 9.2 million revenue over the same period) and outdoor advertising (pounds 7.3 million).

The chief executive, Richard Findlay's catchwords for the company's strategy are 'cautious' and 'prudent'. Today, SRH holds 15 radio licences in Scotland, Northern and southern Ireland and it is developing new digital radio multiplexes in areas where it already has a radio presence. But while it is also pursuing opportunities south of the border with applications for new licences in the West Midlands and Yorkshire, he stresses: 'We know our strengths.'

It's a similar story in weekly newspapers where SRH owns 44 local titles in Scotland and Ireland. 'We went into local weeklies as this sector is less vulnerable to the vagaries of the newspaper marketplace,' he says.

'Our titles are all firmly rooted in their localities. And we saw obvious synergies between local content and local newsgathering in print and radio.'

SRH has increased both circulation and revenue across its portfolio of papers since moving into the market, and has done so at 'a very modest investment', Findlay is quick to stress.

Synergy was also the reason behind SRH's recent move into outdoor. It acquired three large independent contractors in the south west, Midlands and Scotland and has since added to this a number of smaller operators.

Every purchase, however, has to fit with SRH's measured approach to growing its business. 'We don't want to be spread across the UK weakly, we want to be strong in areas where we have a presence now and then develop and consolidate new markets,' Findlay says.

For all its prudence and caution, SRH's attempt to buy Border Television earlier this year may strike some as, well, little short of rash. The rationale, however, had less to do with ambitions to move into TV and more to do with Border's portfolio of radio interests. As it turned out, Border slipped from its sights in May when Capital Radio made a pounds 151 million cash offer.

Unperturbed, however, SRH counters any suggestion that the loss of Border in any way represented a setback for the group. 'There is still considerable room for growth in the areas where we already have a presence,' Findlay explains. And then there's the internet.

'We've not thrown lots of money in this area, but we are developing a presence - all of our radio stations have sites and we offer live audio streaming,' he says. 'Our next step will be to explore cross-media opportunities within the group as large advertisers seek to target consumers, not by demographics, but on a lifestyle targeted basis.'



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