TalkSport’s owner shrugged off an ad decline around Brexit thanks to a boost from Euro 2016, but profits fell due to losses on the launch of three new digital radio stations.
Wireless Group, which also owns a dozen local stations in Great Britain, a number in Ireland and free weekly magazine Sport, is in the process of being acquired by Rupert Murdoch’s News Corp for £220m.
The business was called UTV Media but changed its name after selling off the franchise for channel 3 in Northern Ireland o ITV in February for a profit of £79.2m.
The company admitted that the uncertainty around the EU referendum vote had seen a softening of advertising spend but that the Euro 2016 had lifted its flagship TalkSport operation.
“In our local stations [in GB] and in Ireland, advertising trends were softer as we moved towards the referendum in the second quarter,” the company said reporting its financial results for the first half. “[The] advertising slowdown in the second quarter in both the UK and Ireland impacted local radio performance.”
Stripping out the impact of the sale of assets such as its TV channel, the company said group like-for-like revenues were slightly up year on year to £38.2m.
However, group operating profit fell from £6.1m to £4.7m year on year and pre-tax profits dropped from £5m to £4.5m year-on-year.
This was because of running up £1.8m in losses backing the launch of three new digital stations earlier this year: Virgin Radio, brought back to the airwaves under a 12-year licensing deal with Richard Branson’s Virgin Group; TalkRadio, a talk-led service focused on current affairs and entertainment; and TalkSport 2, a complementary service to TalkSport covering live action across a broader range of sports.
The company said the early listener response has been encouraging and that the losses are broadly in line with forecasts.
It expects the three stations to make a small loss next year and “grow profitably beyond this”.
“Encouragingly, 70% of our forecast 2016 revenue for the stations has already been achieved,” the company said.
The company reiterated that TalkSport, whose forthcoming owner News UK is aiming to leverage heavily with the Sun readers and advertisers, remains its engine of growth.
Wireless Group said that a major football tournament such as Euro 2016 will typically drive a hefty 10% increase in ad sales in any year.
It added that despite these tournament specific boosts the station is also generally growing its business, in part by growing its sponsorships and partnerships.
“Wireless Group – and especially TalkSport – has performed well in the first six months of the year,” said Richard Huntingford, chairman of Wireless Group.
“Whilst it is still unclear what impact the uncertainty created by Brexit might have on advertising revenues in the all-important fourth quarter, including in Ireland, the group currently anticipates a full-year outturn broadly in line with expectations.”
