Radio ad revenues lift at Chrysalis

RADIO advertising is picking up, according to radio and music publishing group Chrysalis, which today reported an uplift in revenues. The company, which reports half-year results in May, said that figures were in line with expectations, although they were downgraded after a profit warning in November.

Chrysalis was hit by a decline in audience figures and volatility in the national advertising market in the last quarter of 2004, caused in part by a shift away from radio by food, drinks and toiletries groups. Other radio groups warned subsequently of problems in the radio advertising market.

Radio sales are now likely to be flat in its September-to-November trading quarter and the group has cut forecasts for its financial year to next August from a projected 8%-9% to just 4%-5%. That compares with an industry average in the previous 12 months of 8.6%, when Chrysalis radio revenues grew by more than 20%.

Chrysalis has two major divisions, its radio stations including the Heart, Galaxy and LBC stations, and its music publishing business. The latter is performing well and its recording arm, Echo Label, has a number of high-profile albums set for release in the second half of the year.

The timing of these releases means that the results for Chrysalis Music will show a distinct second-half bias to the full-year accounts. Chrysalis Books, meanwhile, is also trading in line with budget, the company added.

Today's trading update will be welcome news for some of the company's hard-pressed investors. One major holder, City fund manager Schroder, is known to be pressuring Chrysalis to improve its financial performance. Big investors are keen for the company to play a leading role in industry consolidation because it will then benefit from greater economies of scale and a bigger slice of the online radio advertising market.

Two months ago Chrysalis made a tentative bid for the Guardian's radio stations, which include Jazz FM and a handful of regional stations. The bid, believed to have been worth £100m, was rejected as inadequate by Guardian Media Group.

Other speculation has linked Chrysalis with the male-oriented 25-44 age group Virgin Radio, currently owned by its rival SMG. Virgin is seen as a good corporate fit for Chrysalis, which would put it alongside its female-oriented Heart station, which vies with Capital Radio for market leadership in London.