Norman Grindley/Deputy Chief Photographer
Lester Spaulding chairman/managing director of Radio Jamaica Limited addresses shareholders at the media company's 59th annual general meeting held at the Hilton Kingston hotel, New Kingston, Wednesday.

Sabrina N. Gordon, Business Reporter

Radio Jamaica Limited (RJR) is divesting its 20 per cent share in GV Media Limited, the U.K.-based company in which it is a minority partner with The Gleaner Company.

Chairman, Lester Spaulding formally told RJR shareholders of the decision at the group annual general meeting on Wednesday, but said that the agreement was arrived between the partners back in April.

(The Gleaner is publisher of the Financial Gleaner).

"While the agreement has been formally recognised by the two parties, no documents have been signed," said Spaulding.

On Thursday, Gleaner chairman Oliver Clarke confirmed the North Street-based company would buy back the shares in GV, whose main title is the Voice, a 25-year-old weekly newspaper that caters to Britain's black population.

GV Media also publishes Young Voices and the weekly U.K. edition of The Gleaner.

U.K. investment losses

RJR at its financial year-end March 2007 reported impairments of £775,000 (J$90 million), saying a £769,000 writedown was linked to losses on its U.K. investment - an estimate that included the £222,762 cost of the acquisition made back in April 2005 and associated fees of £56,000.

For the year, group revenues grew 16 per cent, from $1.25 billion to $1.45 billion. But, from $93 million of profit at the end of March 2006, RJR group posted a net loss of $32.4 million.

"This was due to the board's decision to impair the full investment in GV media group limited which resulted in a one-time charge against profit," noted Spaulding.

He said the decision was made against the background of losses incurred during the past two years and projections of continued cash injections into the entity ahead of a recovery by GV.

Spaulding said he indicated to The Gleaner that his company could no longer make a contribution to GV Media, and cut support to the company at the start of RJR's new financial year.

Pro-rata basis

That support, per the acquisition agreement, involved loans to GV Media, on a pro-rata basis with the Gleaner Company, to finance the ongoing reorganisation of the Voice Group which was acquired in 2004.

"The continuing loss of the operation required continuous cash injections over and above what is required for the investment to make a return after two years," said the RJR chairman.

Looking ahead, Spaulding said anticipated returns from cable company acquisitions JNN and RETV, a combined $1.5 million deal, alongside eliminated losses from GV Media should see a lifting of the bottomline.

"We anticipate better results, with the investments and profits that will be made," he said.

"We have a confident feeling about the future."

The company has also decided not to proceed with plans to acquire a cable company but instead to focus more on content provision for sale to existing cable providers.

sabrina.gordon@gleanerjm.com

Source: Financial Gleaner, Friday, November 16, 2007