A Smooth takeover? It has been anything but

After the latest setback for Global Radio following its purchase of GMG Radio, Maisie McCabe predicts the next step.

Smooth: Global Radio’s 2012 acquisition of the station raised competition concerns
Smooth: Global Radio’s 2012 acquisition of the station raised competition concerns

The saga of Global Radio’s purchase of Smooth and Real Radio from Guardian Media Group is one that many in the radio in­dustry will be keen to forget. Unfortunately, with the process ongoing, there is no chance of that happening any time soon.

Earlier this month, the Competition Appeal Tribunal unanimously dismissed Global Radio’s appeal against the May ruling that it should sell stations in seven out of nine markets.

Global Radio had challenged the commission’s decision on two grounds. It questioned whether the Competition Commission had correctly interpreted the meaning of "substantial lessening of competition" and its approach to remedies in Greater Manchester and the North-West of England. The owner of Classic FM and Heart decided to drop its challenge on a third ground relating to the survey evidence.

Even though Global Radio’s barrister at one stage invoked the Human Rights Act during proceedings, the CAT committee said it "preferred" the Competition Commission’s submissions and ruled against Global Radio on both counts. The CAT rejected the idea that "substantial" meant "large" and accepted the commission’s case that Global Radio’s offer to sell Gold, Real XS and Xfm would not be effective in addressing the substantial lessening of competition in Greater Manchester and the North-West.

It is difficult to know exactly how many of GMG Radio’s 250-plus staff at Real and Smooth Limited remain. In London and the West Midlands, where the deal was approved, there have been changes.

Last month, the Smooth programming team moved into Global Radio’s Leicester Square office along with RSL’s direct sales team for London. A similar scenario transpired in the West Midlands. In the seven regions where the deal was blocked, however, the depleted programming and sales teams plough on.

Global Radio could appeal the decision. It would first have to go back to the CAT to ask permission and, even if that is denied, could take the matter to the Court of Appeal. Industry sources suggest that this is unlikely, however, and think Global Radio will present another option. It is expected that the group has lined up a buyer or is looking to install a friendly executive into a new company to buy the assets. Global Radio will retain the national sales and very little will change.

Normal procedure would be for the Competition Commission to issue a legal order for Global Radio to sell the assets (or undertakings that it has agreed to do so) in the next few weeks. Although there would not be a deadline for the sale, sources suggest that Global Radio would be in a position to move quickly.

The Competition Commission has to approve any buyer, to ensure it has the necessary capability, is committed to competing in the market, is independent from any parties and will not prompt any competition issues.

Everyone will hope that the next stage will progress quickly. Especially the staff at the Real and Smooth stations in the East Midlands, Cardiff, North Wales, Greater Manchester, the North-East, the South and West of Yorkshire, and Central Scotland.

A Global Radio spokeswoman declined to comment beyond the statement that it provided at the time of the judgment: "Obviously, this is a disappointing outcome. We share the concerns of many within our industry, who believe the basis on which the Competition Commission formed their decision to be outdated."

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