MMC report frustrates Capital growth

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 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

revenue performance.



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.’



Become a member of Campaign from just £46 a quarter

Get the very latest news and insight from Campaign with unrestricted access to campaignlive.co.uk ,plus get exclusive discounts to Campaign events

Become a member

Looking for a new job?

Get the latest creative jobs in advertising, media, marketing and digital delivered directly to your inbox each day.

Create an Alert Now

Partner content