Sir Richard Branson emerged yesterday as the most likely buyer for Virgin Radio after its owner, SMG, the Scottish media group, announced plans to float the £105 million station.

Analysts said that Virgin Radio could return to the Virgin Group, which founded the station 14 years ago, after the SMG announcement effectively triggered an auction.

The station, whose disc jockeys include the former pop star Suggs and the breakfast show host Christian O’Connell, was bought by SMG from Chris Evans, the former breakfast disc jockey, in 2000.

The move to hive off Virgin Radio was one of several strategies unveiled yesterday by Rob Woodward, SMG’s new chief executive, to try to turn around the troubled television, radio and advertising group.

Mr Woodward, who was appointed to the job only last month, also pulled the sale of Primesight, the group’s outdoor advertising unit worth up to £65 million, and said that he would strengthen the “local” focus of STV, its television arm, to try to boost ratings. Mr Woodward said: “SMG was suffering from a bad strategy and we wanted to do something bold and positive.”

The new chief’s turnaround strategy was unveiled as SMG announced a 50 per cent fall in its 2006 pre-tax profits to £10 million after boardroom strife that included the ousting of Andrew Flanagan as chief executive. SMG’s woes have continued this year, when a potential merger with UTV collapsed and investors ousted Chris Masters, the former chairman.

SMG said that Virgin Radio, which has 2.5 million listeners in the competitive morning slot, had continued to outperform the commercial radio market at a time when the industry is facing poor advertising sales. Mr Woodward said: “Virgin Radio is well run and an iconic brand.”

However, the proposed flotation confounded City expectations. Analysts said that it was probably aimed at starting an auction. Paul Richards, of Numis Securities, said: “It is reasonably unlikely that we will even see the flotation and it seems that SMG are effectively putting the station into play.”

Virgin Group is thought the likeliest bidder because a brand rights ownership clause created when it sold Virgin Radio to Evans in 1997 for £85 million would make it hard for rivals to bid. Mr Richards said: “We expect Virgin Group or Virgin Media to bid for it as it makes sense strategically. The station would be a good brand fit because of its 25 to 44-year-old male target audience.”

Despite dropping plans to sell Primesight, SMG said it would proceed with selling Pearl & Dean, its cinema advertising business. Mr Woodward did not rule out putting Primesight, which has received two bids, back up for sale “when market conditions became clearer”.

Virgin Group last night refused to say whether it was considering a bid for Virgin Radio. Other potential bidders include the radio groups GMG, Chrysalis and GCAP, which also refused to comment. Lord Alli, who bid for SMG in 2005, was unavailable for comment.

SMG's stable

STV National broadcasting channel watched by 80 per cent of Scots for 11 hours a week. Turnaround plan to make channel “more local” to be announced in June

Virgin Radio Pop-rock station to be floated on the stock exchange. Revenues of £21.7million in 2006, down by 3 per cent year-on-year. 2.5 million listeners aged 20-44 years Primesight Outdoor advertising division no longer for sale. Two bids previously rejected. Could be up for sale in the future “if conditions are right”. SMG implementing new sales process

Pearl & Dean Cinema advertising division is still for sale but in need of rejuvenation

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