- Thursday April 12 2007
Rob Woodward, the new SMG chief executive, has criticised the company's previous strategy as "flawed" and said the sell-off of Virgin Radio would allow it to focus on its key Scottish television interests.
Mr Woodward, who was parachuted into the Scottish-based media company in February following a boardroom coup, added that it was time for a new start at the troubled group.
"My belief is that the legacy of SMG is that it had a flawed strategy that was very badly executed," he said.
"It led to a whole host of problems for the company including the very heavy debt burden. Now we want to draw a line under that.
"You can't run a media company on a back foot and the only way to get on a front foot is to have a very clear focus," Mr Woodward added.
"We now have that focus. We have a stable leadership team and are starting to attract top talent to the leadership team.
"I have only been in place for a month but we have already made some quite major strategic decisions."
He said the debt package secured with its banks earlier this week, which gives it a banking facility of £193m until September 2008, would help provide a "period of financial stability".
Mr Woodward added that floating Virgin Radio in a separate stock market listing had always been the firm's intention and that it was "unlikely" SMG would retain a stake in it.
"It was not a hard decision to make and it was always part of our plan," he said.
"It depends on the value we are able to attract but we probably won't retain a stake.
"Virgin Radio is a very successful business and we have made a considerable investment in it in the last year and we believe that now is the right time to IPO [float] it.
"It will enable SMG to address our debt structure and refocus around a television core."
As well as the two Scottish ITV franchises, STV and Grampian - rebranded as STV onscreen in May last year - the company also owns programme-making arm SMG Productions.
SMG Productions' two key programming brands, ITV dramas Rebus and Taggart, have both been recommissioned.
Mr Woodward said he would publish more details on the company's TV strategy at the end of June, but it is likely that it will be refocused around the STV brand.
SMG Productions has also poached Alan Clements, the creative director of RDF-owned independent producer IWC Media, to become its director of content, although contract wrangles mean he may not actually start for some time.
Mr Woodward confirmed the appointment, but said he could not comment further on it.
He denied that the concentration on SMG's Scottish-based television interests was a retrenchment from the company's national UK ambitions.
"It is not retrenchment," he said. "It is about being honest and clear about who we are and what we want to be.
"We want to be a producer of great content and expand our relationship with other broadcasters.
"We are going to be a dominant national broadcaster in Scotland.
"We are an aggregator brand focused on delivering content to a Scottish population.
The company also announced today that it was halting the proposed sale of its outdoor advertising subsidiary, Primesight, with the company conceding it had a "historically weak" position as a seller.
Mr Woodward, along with new chairman Richard Findlay, was installed in February following a boardroom coup by disgruntled SMG shareholders.
The City this morning reacted favourably to SMG's new strategy, with the group's share price up 2.72% to 66p at 10.20am.
SMG's float of Virgin Radio is to be handled by LongAcre Partners and Hoare Govett.
Virgin Radio had revenues of £21.7m in 2006, down by 3% year on year - outperforming the UK commercial radio market as a whole, according to SMG.
The radio business's operating profit fell 53% year on year to £2.3m in 2006.
SMG said costs had increased by £2.6m last year compared with 2005, with extra investment in new presenters, engineering, marketing, online and digital distribution.
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