I suppose, from Capital’s point of view, Tuesday’s news about the
Chris Evans/Virgin deal could only have been worse in one respect: if
the Monopolies and Mergers Commission had turned the deal down. This
way, even though we do not know what the MMC’s report said, the door is
still theoretically open for Capital to take over someone else. Who that
might be, of course, is another matter.
When Capital comes to look back on the year, there will surely be those
who will seek to blame David Mansfield’s predecessor, Richard Eyre, for
landing him with a hospital pass as he disappeared off to ITV. But that,
I suspect, is not how Mansfield will see it. A man of considerable
fortitude and resilience, he will sit patiently down to unpick the mess
before setting Capital off in a new direction. Nonetheless, one
suspects, he will feel aggrieved at the MMC. Had it not delayed its
report to Margaret Beckett, president of the board of trade, Evans would
not have had the opportunity to slip in with his last-minute bid.
This bears closer examination. The MMC’s request for an extension
suggests it was having difficulty understanding the monopoly arguments
for and against the merger. Those of us who can remember back to the
beginning of the decade will recall that this is not the first time the
MMC has struggled in this area. In 1991, the MMC overruled Mills &
Allen’s proposed takeover of Dolphin. M&A’s error, if that’s what we can
call it, was to miscalculate (ie overestimate) the MMC’s understanding
of the advertising market. In essence, M&A failed to make the argument
that advertising across the various media was substitutable - in other
words, that M&A not only competed against other contractors but also
against newspapers, radio, press and, to a limited extent, TV. As a
result, the MMC got hung up on M&A’s share of the roadside market
without realising that the game had moved on.
Today, one wonders whether the MMC is still struggling to come to terms
with the complex and shifting patterns of inter- and intra-media
If it is, as the delay over Capital/Virgin suggests, then this is a
point other media owners must bear in mind as more merger deals come -
and they surely will.
Still, Evans should restore some confidence to Virgin, which sounded
like it had lost its way and its confidence. Russ and Jono are marooned
in the evening drive-time slot playing the ridiculous Pronto game and
the other DJs are playing wall-to-wall Melissa Ethridge and Nathalie
Imbruglia: so much for Virgin’s ’classic rock and the best new music’
promise. The sooner he sorts out its positioning, the better.
On a wider scale, however, Capital’s failure to land Virgin may set
radio back a few years. Smaller media need a flagship brand and a
stronger Capital would have bolstered radio’s competitiveness against
other media, giving advertisers more choice, not less.