PERSPECTIVE: MMC needs better understanding of competing media

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.

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

competition.



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.



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