On that basis, Lord Alli’s £100m bid for Virgin Radio is in limbo. SMG’s share price of 107p, on feeble volume, is a couple of pence lower than last week, when the market first saw the colour of 3i’s money.
Since then, there has been more spin than substance, not least because the media hacks were thrown together at a 3G conference on the Côte d’Azur, from which the fairy stories flowed.
The best was the suggestion that Sir Richard Branson had a veto on the use of the Virgin name, which he could use to block Alli’s bid. That must have come as a bit of a shock to the aggressive peer — after all, if Virgin Radio is worth £100m, what’s the price of Alli Radio minus the brand? Inquiries revealed that the French connection had it wrong; while Branson might — just — have a legal argument, the fact that the licence had already changed hands suggested that Virgin Radio was indeed SMG’s to sell.
Meanwhile, institutional pressure appears to be building, and the share price will eventually move. But at present the money says the market believes Alli is trying to get Virgin on the cheap.
Nor is it fair to portray SMG as a weak management caught in the headlamps. I bumped into Chris Masters, its chairman, last week in an Edinburgh restaurant and, while he would not talk, he did not look like a man under siege.
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Increasingly SMG looks to be playing a canny game of wait and see what the results bring in a couple of weeks or so. By then, dissatisfied shareholders will have broken cover, and Alli may be obliged to ask 3i for second helpings.
At that point, Masters and chief executive Andrew Flanagan should be able to point to a decent performance in television, recovering advertising markets and the continuing transfer of Virgin to digital to offset its losses on AM.
Cowcaddens still has a trump card. SMG has not approached the Takeover Panel, but it is certain the panel is monitoring Alli’s comments about there being more than one way to skin a cat. SMG’s legal advice will be that threats of a break-up bid for the whole company made to this and other newspapers will be enough to invoke the “put up or shut up” rule sooner or later. Only that soft price has kept the panel from picking up the telephone so far.
The Virgin saga is only just beginning, and SMG will fight hard. Meanwhile Scottish Radio Holdings’ independence, sadly, looks to be coming to an end, as EMAP completes the inevitable consolidation.
There are always claims and counter-claims. But if you’re confused by the spin, just follow the money.
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Congestion con
Scots businessmen are not unused to politicians and councils being anti-business; it seems to go with the territory. But I think Edinburgh retailers are shocked to the core that the city council is prepared to put at risk both their businesses and the jobs of their staff for the sake of political correctness and half-baked ideology.
I am referring, of course, to the congestion charge, which the electorate (far more sensibly than their political representatives) will reject later this week. The £8m cost of this futile exercise is bad enough, quite apart from the legal bills incurred by setting council against council.
But it’s the political cowardice that rankles. Not from Donald Anderson and Andrew Burns, who have taken the debate far beyond the point that their single-vote majority would merit. The cowards are in Leith and Whitehall. In London, Ken Livingstone won a mandate for charging despite Labour government fears; in Edinburgh, the council will be proved to have no mandate, and the Scottish executive are setting them up as scapegoats for a policy which ministers backed.
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So let’s not call for the heads of Messrs Anderson and Burns. The congestion charge in Scotland’s capital was part of a national, not local, transport strategy. Responsibility should land on the desks of the transport minister Nicol Stephen, First Minister Jack McConnell and the Scottish secretary Alistair Darling.
Desert song
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What a difference an oil strike makes. Cairn Energy’s update proved conclusively what investors always hoped — the company is better at finding oil than explaining its strategy.
The share price wobble at Christmas has been forgiven, if not quite forgotten, by investors. The exploration director Mike Watts has a strong track record, but even he must be quietly satisfied that the first well sunk in the desert in the new NV area struck oil in quantities that could be commercial. And he’s drilling two further wells ahead of April’s results.
Analysts are already suggesting the new find could be substantial, with ABN Amro calling Cairn a buy up to £15. The rising share price shows the markets are well aware that most of Cairn’s value is still in the ground.
And that’s worth remembering over the next few months, when lack of newsflow means Cairn may well fall out of the FTSE-100 despite its proven reserves. Bill Gammell is refusing to make forecasts for the new field — “only the drill bit will tell us that” — but I sense confidence has returned.
A high oil price, a strong partnership with state-owned ONGC, and India’s massive appetite for energy will continue to underpin Edinburgh’s oil explorer. And with two drills working overtime, it would be a brave investor who saw Cairn as other than a long-term buy and hold.