NewsTalk investor opts out of €2m rights issue

Tensions between investors and management at NewsTalk106, Dublin's struggling current affairs radio station, emerged publicly yesterday when one of the chief shareholders announced it was declining to participate in a €2 million rights issue.

Capital Radio Productions, owner of FM104, said it would not take part in the issue as it feared NewsTalk lacked a cohesive strategy to lift itself off the bottom of the ratings.

Capital chief executive Mr Dermot Hanrahan believes further short-term investment would be wasteful and counterproductive in the absence of a management shake-up.

NewsTalk chairman Mr John Purcell downplayed the announcement, revealing two principal shareholders, 98FM and the Setanta media group, have stepped into the breach and will cover the shortfall created by Capital's withdrawal.

Capital's shareholding is predicted to fall from 23 per cent to 12.5 per cent, though it stressed its long-term commitment to NewsTalk was not in doubt.

NewsTalk, which employs 60, has failed to meet listenership targets since its launch last March. With ratings languishing at 2 per cent, Capital has run out of patience with management, feeling it has not worked hard enough to distinguish itself from RTÉ1 and Today FM, its principal rivals in the niche news and current affairs market.

Capital also feels that, following a €1.6 million issue in October, a second issue is premature. At a board meeting last week Mr Hanrahan called on directors to take a more hands-on role in the day-to-day administration of the station.

Management's reluctance to implement a number of remedial measures that he had recommended was decisive to Capital's decision to pull out of the rights issue, he said.

"In spite of a high-quality team of broadcasters, the station continues to perform poorly, and on a business-as-usual approach the outlook is difficult," Mr Hanrahan added.

"We are concerned that in the absence of a new approach, the station will continue to lose money in the medium to long term."

NewsTalk said it was unfortunate that Capital had chosen "not to follow its money" but said that, after the latest rights issue, the station was now fully funded for the rest of the year.

In a statement the four investors - 98FM, Setanta, Louth-Meath FM and Hypertrust, owner of Kilkenny-Carlow Local Radio - which collectively hold 80 per cent in NewsTalk, pledged their long-term commitment to the station.