Sport Media calls in administrators

SPORT Media Group, the Manchester-based publisher of the Daily Sport and Sunday Sport newspapers, is to be placed into administration.

A statement from the company says that following the suspension of its shares from the Alternative Investment Market this morning, it “has today ceased trading with immediate effect”.

“The company is in the process of appointing administrators and will update the market once an appointment has been confirmed.”  

Earlier today, the company said that it had experienced “an insufficient recovery in trading since the adverse weather in December, with consequential pressure on the company’s working capital position”.

The firm has been labouring under a debt burden incurred as part of the £50m reverse takeover by mobile content firm Interactive World which gave Sport Media Group its stock market listing in 2007.

Founder David Sullivan helped to rescue the business in May 2009 through his subscription to a new share issue and the business had subsequently undergone a major restructuring.

In September, it agreed a deal with its bank, Royal Bank of Scotland, to defer debt payments in for six months in a bid to ease pressure on working capital.

However, it continued to face pressure both in terms of newspaper sales and in revenues from its digital division, whose revenues were hit by the widespread availability of adult content on the internet.

Interim results for the six months to June 30 showed that it had moved back towards profitability after declaring an operating profit of £838,000 and in a pre-close trading update issued last month Sport Media Group said that it expected to achieve ebitda of £1m for 2010, largely as a result of improving conditions in both its premium-rate telecoms and digital businesses.