Ad Downturn Prompts Rethink On UBC’s News Sell-Off

The gathering advertising recession is now forcing a re-consideration of some media M&A activity. US-based Global Traffic Network’s (GTN) £15 million purchase of UK radio outfit UBC Media’s traffic, news and entertainment division, announced in May, was due to complete on October 20 – but GTN has now sought an extra two weeks’ due diligence “because of recent changes in the commercial radio industry in the UK”. That’s code for ad spend that’s in freefalldown 10.2 percent from last year between April and June

UBC COO john Quinn told paidContent:UK: “There’s been a marked downturn in commercial radio revenues from the second quarter and that’s coincided with the sale process; they just want to get a better handle on how that’s going to affect the future of the commercial division going forward. When they first talked to us, commercial radio in the first quarter had a record level of revenue – but, very quickly, the effect of sub-prime and the credit crunch began to bite with it and overall UK commercial radio revenue began to plummet.”

UBC gives its news updates to radio stations for free but sells ads in adjacent time slots gifted by the networks, exposing it to the advertising downturn. Clients include Bauer, Global, GMG Radio, UTV and UKRD, many of which have been reconfigured through recent acquisitions.

Will the deal still go ahead? Quinn said “that’s the assumption and the process we’re working towards” but “there’s a little bit of a way to go until the deal is complete“. GTN’s CEO and CFO are in London now, meeting with UBC. GTN’s CEO William L. Yde III:

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