UPDATE 1-Radio, cinema weak for SMG but outlook unchanged

LONDON, May 16 (Reuters) - Scottish media group SMG (SCSMG.L: Quote, Profile, Research, Stock Buzz) said on Friday its TV business had outperformed the wider ITV (ITV.L: Quote, Profile, Research, Stock Buzz) network, but it had seen weakness in its radio and cinema markets, sending its shares down 6.5 percent.

The group, in a trading update following its preliminary results in March, said it had seen volatility in radio, with first-quarter growth of 5 percent followed by a weaker second quarter that reflected the overall radio market.

In cinema, first-quarter revenues were down 10 percent, and this pattern continued in April and May due to a weak film market. However, the group said it expected a stronger summer film schedule to deliver growth of 18 percent in June.

Overall the group said its outlook for the year remained unchanged.

SMG announced a strategic turnaround in 2007, pledging to focus on its core business of TV and content production and sell off non-core assets.

In the update, SMG said the sale of Virgin Radio continued to progress, and it was continuing to pursue appropriate options for the Pearl & Dean cinema advertising business.

"The board and I remain totally committed to executing our strategy and delivering value for shareholders," Chairman Richard Findlay said in a statement. "In our core TV business, we are progressing well in the key growth areas that are our focus for 2008 and beyond.

"Broadcasting has 20-25 percent lower controllable costs than a year ago, which, combined with further efficiency improvements, provides robustness in the face of uncertain advertising markets."

Analysts at Numis said they did not expect to change their full-year estimates despite the comment on the radio and cinema markets.