British media company Chrysalis Group Plc still aims for flat 2007 revenues in its radio business after turnover dropped 9% in the first half amid a sluggish UK radio advertising market.
“Current trading is very encouraging,” chief executive Richard Huntingford said in a telephone interview, adding that forward bookings in the fourth quarter were growing at a double-digit rate, after third quarter revenues were flat.
“We are confident that Chrysalis radio will achieve a flat revenue performance for the whole year,” he said. According to Investec analysts, this target implies a sales growth of 16 to 17% in the fourth quarter.
Chrysalis, the third-largest commercial radio operator in Britain, said group revenues fell by 15% to £58.3 million ($115.4 million) in the six months to Feb. 28 with radio revenues dropping 9.1% to £30.1 million.
Pretax profit slumped to £200,000 from 2.2 million last year. The results were in line with analysts’ forecasts and the shares traded up 2% at 133.75 pence, valuing the firm at £224.5 million.
Huntingford is confident that Chrysalis’ strong radio station brands Heart 106.2, Galaxy and LBC radio will help to outperform a sluggish U.K. radio advertising market.
“We have got very attractive demographics with a high concentration of 25 to 44 year olds for Heart and that’s a key demographic for advertisers,” he said.
Chrysalis is currently carrying out a strategic review that could lead to the sale of its radio unit, and Huntingford said he was very encouraged by the way the review was going.
“In contrast to recent media reports we are very encouraged by the considerable amount of offers we have received and we are currently evaluating all options,” he said, adding a conclusion should be reached later this summer.
The firm’s music business benefited from releases of hit albums from Gnarls Barkley and the Dixie Chicks in 2006 as net publisher’s share (NPS) rose by 7.6%.
Huntingford is confident this trend will continue, being underpinned by recently signed deals with artists like Daman Albarn, who is known for his work with Blur and Gorillaz.
However, Lasgo Chrysalis, the firm’s wholesale distributor of CDs, DVDs, books and vinyl, disappointed analysts with revenues slumping by 35% to £13.2 million.
“Lasgo operates in a very tough market,” Huntingford said.
Some analysts expect full-year forecasts to be cut due to Lasgo’s weakness.
