How do you get to run small radio company – start with a large one.
That’s how it must feel at both SMG and Gcap. The former has seen a massive slump in its share price this month since announcing what was originally a deeply discounted right issue. The shares are now trading below the new issue price of 15p, with it looking likely Hoare Govett, who are underwriting the issue, will have to buy them.
Gcap’s CEO stepped down recently but the shares are still sliding with sell notes issues by brokers. Great news if you get appointed as the new CEO since either the company will be acquired cheaply and you’ll quickly get a payoff OR you’ll be the hero that stabilise/improves fortunes from this low ebb.
The price Emap’s gets for the sale of its stations is also likely to be hit by the sector malaise.
Part of the reasons for the share price slump is a growing belief that a consumer downturn will hit ad budgets and reduce radio revenues. Additionally the increasing availability of services that allow you to consume music on phones will start eating into audiences that might otherwise tune into radio.
Another station rumoured to be closing is Oneword, the commercial competitor to Radio 4, which was co-owned by ubc media and channel 4. Only available on DAB, it apprently hasn’t secured traction despite quality content.