Media Forum: Is Global's GCap bid a winner?

Should advertisers welcome a Global takeover of GCap, Alasdair Reid asks.

There's never a dull moment at GCap. Just days after Fru Hazlitt stepped up to become the chief executive of the company, succeeding Ralph Bernard, Global Radio tipped up with a takeover bid.

The approach was hardly a surprise. Global, a privately backed vehicle that was set up to become a major player in radio, had just failed in its bid to snap up Emap's radio interests. True, it did acquire Chrysalis radio back in July 2007; but to justify its existence, it really does need another major prize.

Likewise, it was hardly a shock to find GCap's chairman, Richard Eyre, rejecting the approach. Custom and propriety dictate that there's a limit to how far you should go on a first date - even in the City. But the assumption in many quarters of the financial markets is that the end game is upon us, and that GCap is merely posturing to tickle up a slightly more generous bid.

Although the £300 million bid from Global offers a premium on the current share price, Eyre would apparently like something closer to the value of the company (£700 million) before Hazlitt's predecessors went and messed things up.

In the meantime, Hazlitt has announced she will be ready to unveil her strategic vision for the company in February. She may not be given that chance. Global not only has money to burn, courtesy of Irish backers (the likes of JP McManus, John Magnier and Dermot Desmond), but can bring some management big guns to the party, not least the veteran radio programme director Richard Park and the former boss of ITV, Charles Allen.

But should advertisers welcome the prospect of a Global takeover? Probably, Jonathan Barrowman, Initiative's head of radio, suggests: "When you're a public limited company, you have to answer to the City, and the City can often take a short-term view. This means it can be difficult to be dynamic when it comes to investing in the likes of digital. I'm not sure how much more scope for consolidation there is in the radio sector, and Global might find itself having to make disposals, as GWR and Capital did when they merged, but Global would have better prospects when it comes to making GCap more of an industry leader once more."

But Mark Middlemas, a managing partner at Universal McCann, isn't so sure. He explains: "I know that Global offers the prospect of further consolidation, and radio needs to consolidate to generate further efficiencies and economies of scale. But I'm worried about the internal disruption a Global takeover might cause. That wouldn't be good for advertisers. The current management team is showing signs of leadership and gravitas, and Fru Hazlitt has the right qualities. It would be a shame if she didn't get the chance to do a job."

So, it's surprising Lorna Tilbian, the executive director of the Numis Corporation, is not unsympathetic to that analysis. She insists the City doesn't hold implacably negative views on the merits of the GCap management, in the recent past or under the Eyre-Hazlitt regime.

But time is running out. She adds: "The City view is about the premium it can get, and the Global bid offers a knockout premium calculated against the share price. I don't think GCap can hope to get a recovery valuation, and Global will be keener than ever having failed to get Emap's radio interests."

But that development might not be in the interests of advertisers, Malcolm Cox, a founding partner at Lunch Communications and the former marketing director at Emap Performance, responds. He concludes: "The new management at GCap needs a chance to set its stall out, and hiring Denise (van Outen) to co-host the Capital Radio breakfast show (with Johnny Vaughan, from 4 February) is a great move. Vaughan on his own is a great listen, but from a commercial perspective, it's too masculine a proposition. Denise and Johnny have a great chemistry. I'm sure it'll work. And from a business perspective, getting that show right is key. It is so important for profits, and for confidence across the group."

- Got a view? E-mail us at

YES - Jonathan Barrowman, head of radio, Initiative

"GCap's progress is shackled by the City, whereas Global can take a longer-term view on investment in programming and digital platforms.A consolidated entity could deliver strong leadership."

MAYBE - Mark Middlemas, managing partner, Universal McCann

"Perhaps what GCap needs is a chance to bed things in. Global has shown it can be single-minded, so if it were to come in, I'd want guarantees it would work to minimise disruption."

MAYBE - Lorna Tilbian, executive director, Numis Corporation

"Everyone wants to see the industry leader in robust shape. You don't want a situation where the leader is lagging behind. The GCap team is planning new strategies, but you'd have to say it is a big ask."

NO - Malcolm Cox, founding partner, Lunch Communications "I'm not sure what Global proposes to bring to the party. There's been nothing about how it intends to grow audiences for advertisers, nothing about integrating the strengths of radio and online. It seems to me that it's just talking about more of the same."