PERSPECTIVE: MMC view on radio merger fails to see integrated market

I have no idea what the people running the Monopolies and Mergers Commission are like, and would admit to having scant knowledge of their investigative procedures. What’s more, I’m sure they could produce a mountain of evidence to support their decisions. But I have no qualms about describing the MMC’s announcement last week that Capital’s thwarted attempts to merge with Virgin would have been ruled out as painfully misguided.

I have no idea what the people running the Monopolies and Mergers

Commission are like, and would admit to having scant knowledge of their

investigative procedures. What’s more, I’m sure they could produce a

mountain of evidence to support their decisions. But I have no qualms

about describing the MMC’s announcement last week that Capital’s

thwarted attempts to merge with Virgin would have been ruled out as

painfully misguided.



In its wisdom, the MMC decided that the merger could never have gone

ahead unless Capital reduced its radio assets, despite the fact that the

Institute of Practitioners in Advertising and the Incorporated Society

of British Advertisers (both bodies, I suspect, with more practical

knowledge of the media industry than the MMC) had given the proposed

merger the thumbs up.



The problem rests on one question: is radio (or outdoor, or TV, or even

press) a media market in isolation, or merely a small section of the

total display advertising market?



Those who believe the latter argue that advertising monies can easily

transfer between media if a supposed lack of competition pushes prices

too high in one particular sector. No amount of concentration of media

ownership in the smaller media sectors is going to create the sort of

monopoly that brings advertisers to their knees (though the

concentration of sales is another matter).



In this context, the MMC’s decision to reject the radio merger appears

at best naive, particularly as it coincided with the IPA’s call for a

single regulatory body to govern the broadcast media and, possibly, all

media.



Why, the IPA argues, should commercial TV and radio channels be subject

to stringent rules and regulations when the BBC is making hay in the

commercial world unfettered by the same restrictions?



And why, for example, are cable and satellite channels subject to

different rules to terrestrial TV even though they are all chasing the

same viewers and advertising revenues?



While the BBC is the main concern, the issue throws up the need for a

consistent approach across commercial and public service media,

particularly when the boundaries between the two are increasingly

blurred. And it’s an approach which must accept that increasingly the

display advertising market is not discrete from one medium to the

next.



It is surely time for the Government to accept the need for a level

regulatory playing field for all media.



A single regulator, establishing regulations and editorial guidelines

for all commercial and public service media, may sound like the stuff of

fantasy, but with agencies, advertisers and media owners increasingly

speaking with one voice on the issue, it’s a fantasy the entire

communications industry should work to make a reality.



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