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Heart and Galaxy sold to former ITV boss for a song
(The Birmingham Post Via Thomson Dialog NewsEdge) Radio stations including Heart and Galaxy have been sold for pounds 170 million in a deal involving former ITV chief executive Charles Allen.
Chrysalis, which owns the stations along with London's LBC, has conditionally agreed to dispose of its radio arm to investment vehicle Global Radio, which is chaired by Mr Allen and includes backing from Irish tycoons JP McManus and John Magnier.
The disposal, which came at the lower end of the price range expected by analysts, leaves Chrysalis with its music publishing business, home to artists including Gnarls Barkley, the Dixie Chicks and Mariah Carey.
Chrysalis chief executive Richard Hunt-ingford plans to concentrate on growing the publishing operation following the sale of the radio stations.
Chrysalis Radio is the UK's third largest commercial broadcaster.
Global Radio wants to use the Chrysalis radio stations as a platform to build a larger commercial radio business.
Chrysalis stations cover major regions including the Midlands, Manchester, Yorkshire the North-east and London, with an estimated six million listeners every week.
The radio business made underlying earnings of pounds 10.2 million in the year to August 2006, on revenues of pounds 65.6 million.
The proposed sale follows a review of the business launched by the group's board in February after calls from some shareholders to create more value by splitting the group up.
Chrysalis plans to return around pounds 100 million to shareholders following the sale, and also expects to save around pounds 3.5 million in reduced overheads over the next 18 months.
The back catalogue of the company's music publishing business now contains around 65,000 copyrights, with artists ranging from Billy Idol and David Bowie to Madonna and Damon Albarn.
The company is looking for growth of between five per cent and ten per cent a year from the publishing business.
Chrysalis chairman Chris Wright said: "Chrysalis Music is well placed to build upon and exploit its position as a leading international, independent music business."
Chrysalis Group chief executive Richard Huntingford added: "We believe that the sale of Chrysalis Radio as a complete entity meets the objectives of our strategic review of facilitating its participation in the longer term development of UK commercial radio and deriving good value for shareholders.
"This has been a thorough review process which has delivered a good result."
Prior to the sale some analysts predicted that the Chrysalis radio business could fetch around pounds 200 million.
However, reports claimed that the auction met with muted interest from buyers with several potential suitors, including broadcaster UTV and private equity firms, failing to meet the deadline for early bids.
In a research note, Bridgewell Securities said although the deal was at the bottom of the pounds 170-180 million range mentioned last week it compared favourably with other recent deals in the sector.
"We would expect that the UK radio sector is set for further consolidation and that Global Radio would be a participant in that process," said Bridgewell.
Shares closed down 1.25p at 2.25p.
Chrysalis Music is well placed to build upon its position as a leading international, independent music business
Chris Wright
John revill@mrn.co.uk
Copyright 2007 Birmingham Post & Mail Ltd , Source: The Financial Times Limited
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