The Monopolies and Mergers Commission’s report on Capital Group’s
thwarted takeover of Virgin Radio has put the brakes on Capital’s plans
to expand in London.
The President of the Board of Trade, Margaret Beckett - who was bound by
the Fair Trading Act to publish the MMC’s findings despite Ginger
Group’s successful bid for Virgin - recommended that the Capital/Virgin
deal could have gone ahead only with the caveat that Capital either sold
off its Capital Gold station, which broadcasts in London, or did not buy
the London-only Virgin FM brand.
The ruling implies that it will be extremely hard for Capital to expand
in London - throwing into doubt the likelihood of a last-minute bid for
Hanson’s Melody FM.
It has more breathing space outside the capital, but any plans to own a
national station would necessitate scrutiny of the broadcaster’s London
Wider issues are thrown up by the report, which have ramifications
across the radio industry. Beckett said: ’The MMC found that radio
advertising, while being a type of display advertising, should be
regarded as a separate economic market for the purposes of competition
analysis.’ She added that it was likely that there would have been a
rise in advertising rates if the deal had been allowed.
Justin Sampson, director of operations at the Radio Advertising Bureau,
said: ’Radio operates in a bigger market - it’s all display advertising.
We have evidence that if we did take advantage of advertisers by pushing
up costs, we would lose the business to other media.’