AGM Statement

SMG PLC
04 June 2004


SMG plc Chairman's AGM Statement

At today's Annual General Meeting of SMG plc, outgoing Chairman, Don
Cruickshank, said:

I am very pleased to provide you with an encouraging report on the operations
and prospects of SMG.

The last couple of years have been a challenging time for SMG. However, in the
last year the Communications Act finally received Royal assent, reforming many
of the regulations that govern media ownership in the UK; Carlton and Granada
announced and achieved their plans to merge and change the ITV landscape for
ever; and we completed the sale of our publishing business, at an excellent
price, reducing the Group's debt substantially.

Since the end of 2003, things have been even busier for SMG. The Communications
Act had created the possibility for SMG and Scottish Radio Holdings to come
together but it rapidly became clear that their Board would not agree. We
therefore concluded that it was in shareholders' best interests to dispose of
our stake in Scottish Radio Holdings in January. An indirect benefit of this was
to reduce our debt further.

The merger of Carlton and Granada was conditional on the smaller independent
companies being granted additional protection and last month we announced a very
significant series of agreements with ITV plc. These sales and licensing
agreements with ITV plc place the television franchises of Scottish and Grampian
TV in a uniquely strong position. With our Network programme costs capped by
inflation, and our share of national television advertising revenues effectively
underwritten by ITV plc, I am pleased to report that our position relative to
ITV plc has never been more secure.

The merger of Carlton and Granada also meant that we would be in a continuing
minority position in GMTV - Channel 3's breakfast franchise. We therefore took
the opportunity to sell our stake to ITV for a very attractive price of £31
million. Again, this strategically sound disposal reduces the Group's debt which
in total has reduced by over 70% in 18 months.

With the position of television, our largest business, so strengthened, and with
continuing signs of advertising recovery, it is sensible for us to invest in our
businesses, equipping them to capitalise on the upturn as it feeds through.

Having doubled our inventory of outdoor advertising panels since acquisition, we
plan to continue to expand in this area across the remainder of 2004 and beyond.
The renewal of our largest single cinema advertising contract with Vue Cinemas
puts Pearl & Dean in an excellent position as we look forward to the next
contract opportunities. In television, having reviewed all our property options
for Scottish TV, we plan to move this business to brand new, bespoke studios on
Glasgow's Pacific Quay in 2006, replicating - albeit in larger form - the
similar move of Grampian TV last year. And in Radio, the announcement of a range
of new licence opportunities means that we will continue to selectively make new
radio licence applications.

Our overall prospects for 2004 across the Group are encouraging. There are
continuing signs of a sustained advertising recovery but, as with previous
upswings in advertising, the early stages are characterised by variability.
Advertising markets remain cautious and short term and certain sectors are
performing extremely well while others are more subdued. This is impacting on
our businesses in different ways. In television, advertising revenues - both
national and regional - are showing good year on year growth, well ahead of ITV
plc as a whole. The prospects for June are excellent with the benefit from Euro
2004, and early signs for the summer look good. Outdoor has been our star
performer over the last year or two and this year is again showing double digit
growth, partly through our investment in additional panels which have recently
passed 12,000, but also from a robust outdoor market for 6 sheets. The cinema
advertising market depends heavily on the film product and this year the quality
films have been held back for the summer and autumn schedule. This means our
revenues will be second half weighted, whereas in 2003 the reverse was true.
This should result in significant growth later in the year compared to a
relatively slow first half. Radio is the most short term of our media and
therefore tends at this early stage of the recovery to be more volatile. An
encouraging first quarter has been followed by a softer second quarter. However,
we are encouraged that our audiences, as measured by Rajar, have picked up and
we look forward to a good second half.

With the financial strength of the company now restored and the prospects of a
sustained recovery in advertising now under way, the Group can look forward to a
promising future. We are now almost wholly focused on national advertising
markets which stand to gain most from the recovery, while the rapid conversion
of advertising revenues to profit and cash, plus the prospects for renewal of
the financial terms of our TV licences at the end of 2004, provides the
opportunity for good growth over the coming years.

Further enquiries:

Callum Spreng
Corporate Affairs Director
Tel: [phone]



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