Should Global Radio be forced to offload stations?

campaignlive.co.uk, Thursday, 10 October 2013 08:00AM

Some GMG Radio assets may go on sale when the anti-trust process finally draws to a close, Maisie McCabe writes.

 

NO Matt Deegan, creative director, Folder Media

"While radio advertising is clearly the most effective, advertisers can easily use other platforms to reach local audiences. It’s this very active threat of substitutability that keeps media owners ‘honest’ and pricing at the right level."
 

YES Bob Wootton, director of media and advertising, ISBA

"ISBA expressed concerns that Global Radio’s acquisition of GMG’s radio assets would lead to excessive media ownership concentration, compromising certain advertisers that are heavily dependent on radio."
 

NO John Myers, chairman, TeamRock

"Global, Bauer and others were in the running for this group of stations. All of them should have been able to acquire these without the CC putting its feet into the mix. Global will simply license these and work around the problem."
 

NO Tim Bleakley, chief executive, Ocean Outdoor (former radio sales chief)

"Significant commercial control of licences may lead to better-quality programming and audience segmentation by each radio brand, which allows the sector to compete more effectively with the BBC. This is good news for advertisers."

The investigation into Global Radio’s £70 million purchase of the radio assets of Guardian Media Group limped a little closer to a resolution last Thursday as the Competition Appeal Tribunal heard from both sides.

Global Radio is contesting whether the Competition Commission was right to rule that the merger would lead to a "substantial" lessening of competition as well as the process it took.

In May, the CC blocked the deal in seven out of nine regions across the UK. It ruled that, in the regions where Global Radio and Real and Smooth (as GMG Radio is now known) overlap, advertisers buying space in the £60 million market for non-contracted airtime and sponsorship would face higher prices.

The Office of Fair Trading referred the deal to the CC in October 2012 after the then culture secretary, Maria Miller, approved it on the grounds of plurality. Miller endorsed the merger despite lengthy petitions from Global Radio’s rival, Bauer Media.

The owner of Magic and Heat has been very vocal in its opposition throughout the process, despite having made a last-ditch effort to buy the assets itself.

Global Radio already manages the national advertising sales contract for GMG Radio stations. However, critics of the deal claim that actually owning the stations, and taking on the local and sponsorship and promotion sales, will give Global Radio an unfair advantage.

Unsurprisingly, Global Radio disputes this and insists radio advertising cannot be seen as a separate market from other media.

Parties expect the CAT to make a decision by the end of November, but that might not be the end of the matter. There could be appeals or the CC might have to assess the deal all over again, using updated criteria.

Meanwhile, Global Radio is said to have friendly investors lined up to buy the stations if it is ultimately unsuccessful (possibly for a nominal fee) – so it could all but own them anyway.

Whatever the outcome of this long, fraught process, the main winners will be the lawyers and financial advisors who have sucked millions out of the industry in fees.

This article was first published on campaignlive.co.uk

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