German media conglomerate Bauer Media has bought UK based Absolute Radio from the Times of India group, subject to regulatory clearance. While the amount of the transaction has not been disclosed, the acquisition is reported to be between £22-25 million (around $33.8-$38.5 million at current rates), according to multiple reports (see MediaWeek, The Guardian). The Times of India group, which had briefly considered putting the business on sale in 2011, has finally succeeded in offloading a business it had acquired for £52.5 million from SMG Plc in 2008 at a price that apparently half of what they bought it for. Interestingly enough, Ian Grace, the then President of Virgin Radio International, had valued the business at £25 million in an interview with ContentSutra in 2008.

Called Virgin Radio at the time, it remains an asset whose value has been declining: the Times of India group had bought it for less than a quarter of the £225 that SMG had bought it from the Virgin Group. It had subsequently rebranded as Absoulute Radio in partnership with an Irish company of the same name, and in the first month itself, they lost 500,000 listeners. The Times of India group had said then that it would spend £15 million in developing and re-launching Absolute Radio.

In an interview with ContentSutra.com, a copy of which is available on a forum here (doesn’t load on the site), Grace had said that the given the nature of the UK radio market, the two entities (Times of India and Absolute Radio) were slightly out of their depth: “There are a lot of stations. The BBC is very powerful; it’s the biggest state broadcaster in the world; commercial radio is highly developed, with Capital Radio, Heart, Magic, XFM… These are all big, big, smart operators. So I think there is probably an overconfidence aspect from India and I think from the English perspective, there is probably a slight naivete…I think the combined entities are out of their depth. Full stop.”

Another really interesting comment from the interview in on Online Radio, where Virgin Radio was a pioneer:

“There are other radio operators in the UK, and I ask you why are most of them shutting down their digital operations. There is no business model for digital radio. No one can sell it. Virgin was one of the first operators ever to get into digital radio. Back in the 1990s, Virgin had a massive online presence. The revenue-generating platform is the free-to-air terrestrial radio station. If you don’t have that operating first and foremost, all the rest of that is no use. Their only option to commercial success is not to explore digital revenues but to get listeners back to their main terrestrial station. But I have my doubts—I don’t think they really know how to do that. And it’s interesting, isn’t it, that a company can be totally dominant in one country and can still have serious, serious troubles in others?”

Absolute Radio had responded then, and a few months later, A.P. Parigi, who had taken ENIL (Radio Mirchi) to an IPO in India, and is believed to be the architect of the Virgin Radio acquisition, had told PaidContent.org that the group had planned for a year or two, where there would be a dip. Parigi left the Times of India group towards the end of 2009.

A business model is apparently emerging for online radio now, what with Spotify, and a number of alternatives in India, including the Times of India’s own Gaana.com, now monetizing through subscriptions.

If the Bauer Media press release is to be believed, things appear to have improved now: Donnach O’Driscoll, CEO, Absolute Radio, is quoted as saying “The Absolute Radio business has never been in better shape as we approach our fifth birthday.” In fact, things did appear to have improved last year – it reported 3 million listeners, up 15.6% year on year, which does indicate that the Times of India group waited for things to improve before selling.

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Timeline:

Jun 1 2008: Times Group buys UK’s Virgin Radio for Rs 448 cr (read)
Jun 1 2008: James Cridland, former head of digital of Virgin Radio writes about its battles (read)
Feb 2009: Virgin Radio President Grace Says New Owners ‘Out Of Their Depth’ In UK Market (read)
March 2009: TIML Urges Patience On Absolute Radio Performance (read)
Aug 2009: A.P. Parigi, Architect Of BCCL’s Virgin Radio Acquisition, Decides To Call It A Day (read)
Oct 5 2010: Absolute Radio’s losses rise to £4.3m (read)
Apr 6 2011: Absolute Radio review could lead to sell-off (read)
May 17 2012: Absolute Radio grooves total of almost 3 million listeners (read)
Jan 15 2013: Bauer Media favourite to buy Absolute Radio as ex-Virgin Radio chief pulls out (read)
Jul 29 2013: Bauer Media buys Absolute Radio for £22-25 M:  (MediaWeekThe Guardian)

Note: disclosures apply