The New York Times
Indian Media Giant Buys Virgin Radio From Scottish Firm
By HEATHER TIMMONS Published: June 2, 2008
NEW DELHI — An Indian media conglomerate that owns The Times of India, the world's largest-circulation English newspaper, has agreed to buy Virgin Radio Holdings for £53.2 million ($105 million) in its first foreign acquisition.
While the price tag for the deal, by the firm Bennett, Coleman & Company, is not huge in merger terms, it might be a sign of things to come from India and other emerging markets.
Traditional media companies in the United States, Western Europe and Japan have been struggling with falling advertising rates, a gloomy economic environment and competition from the Internet. But newspaper, television and radio companies in emerging markets, flush with cash as their audiences grow, are eager to expand.
"The opportunity to acquire a valuable radio asset couldn't have come at a better time," said A. P. Parigi, chief executive of a Bennett, Coleman unit, Times Infotainment Media, which made the deal, signed on Friday. Times Infotainment, which handles experimental marketing, film and radio rights, is developing a "powerful and exciting new brand," he said in a statement.
The future of radio is about increasing listeners through "Internet and mobile, and building a strong online community around music tastes," said Vineet Jain, managing director of Bennett, Coleman, in an e-mailed response to questions.
Virgin Radio reaches 2.7 million listeners a week through AM and FM stations that operate in England, Scotland and Wales, as well as a digital radio station that operates online at virginradio.co.uk. The company owns one of Britain's three commercial radio licenses.
Bennett, Coleman is buying the group from the Scottish Media Group, which has recently begun paring assets. Scottish Media bought the radio group from the Ginger Media Group, which was licensed to use the name Virgin by Richard Branson's Virgin Group.
Closely held Bennett, Coleman, which operates in India as the Times Group, is led by the family matriarch, Indu Jain, and run by her two sons, Samir and Vineet. When Forbes listed Ms. Jain on its 2006 list of the wealthy (ranking her 15th among India's richest), she sued the magazine on privacy grounds.
The deal for Virgin Holdings was made through TIML Golden Square, a subsidiary of Times Infotainment that is based in Britain.
The deal brings Bennett, Coleman listeners in Britain, but not the Virgin name. TIML will invest £15 million in rebranding the stations under a name to be disclosed later, the companies said in a joint release. The Virgin Group may continue to expand its international radio presence, Mr. Branson said.
Scottish Media said last year that it planned to spin off the business in a public offering, which analysts said could raise as much as £100 million. Since then, the appetite for media assets among investors in the West has deteriorated, and the idea of a public offering was shelved.
Scottish Media's board explored both a sale and an initial public offering, the company said in a statement, and found that "the prices being offered at the time would not have been in shareholders' interests."
As of July 31, Bennett, Coleman had a net worth of 34.1 billion rupees ($800 million) and operating margins of 30 percent. In May, Standard & Poor's Indian research arm, Crisil, gave Bennett, Coleman's debt a AAA rating, citing the company's strong market position, "robust financial risk profile, and sound operating efficiencies."
The Times group also owns The Economic Times, India's most-read business paper, and several radio and television stations.
High circulation and readership levels make Bennett, Coleman "better positioned than its peers to attract advertisers for marketing their products on a nation-wide scale," Crisil said in May.
The result, Crisil said, has been a "robust increase in advertisement revenues," which have registered a compounded annual growth rate of 24 percent over the last four years.
-- My humanity is in feeling we are all voices of the same poverty. - Jorge Louis Borges