It’s been a funny old month for the radio industry. Funny peculiar,
that is - they’re certainly not laughing down at Capital Radio. First,
Richard Branson scuppers its plans by selling Virgin Radio to Chris
Evans, then the President of the Board of Trade, Margaret Beckett, rubs
salt in the wound. Academic it may be, but Beckett was duty bound to
publish the results of a Monopolies and Mergers Commission investigation
into a possible Capital-Virgin deal - and she did so last week.
The report not only angered and confused Capital, it mystified a large
part of the radio industry, too. It states, of course, that the Virgin
acquisition could not have gone ahead in its proposed form - the deal
would have given Capital a 65.9 per cent share of the London radio
advertising market and a 44.2 per cent share of the national radio
Unacceptable, says the MMC. Unacceptable? The 1996 Broadcasting Act,
after all, cleared the way for the big radio groups to own more than one
FM station per licence area. The Government recognised that
consolidation of ownership would benefit the radio and advertising
industries. Are we now back at square one?
The radio industry has argued that radio revenue should not be regarded
as just a small part of the whole display advertising revenue pot. There
is now evidence that if radio raises its prices it loses out to other
media. There are, in effect, no advertising monopoly situations that it
can possibly abuse.
Not only has the MMC ignored those arguments but it has failed to give
any clear guidance on where it believes market-share limits should be
drawn. In its wisdom, the MMC seems to have decided that radio
advertising is a discrete market - not just nationally but regionally,
too. But we can’t be sure. Emap Radio, for instance, has 66 per cent of
the market in Manchester. Should it now be subject to investigation? Or
is Manchester not big enough to qualify as a discrete radio advertising
Capital’s commercial director, Paul Davies, argues that the potential
muddle is a setback for the industry. ’Our competition in London comes
from LWT, Carlton and the Evening Standard and we argue the bigger you
are, the better placed you are to make a case for radio per se. A merger
between Capital and Virgin would have given us a greater opportunity to
take audience from the BBC,’ he says.
Pessimists say it would be ironic if TV companies - who might have no
brief to expand the radio industry - saw this ruling as an opportunity
to enter the market.
Justin Sampson, director of operations at the Radio Advertising Bureau,
says it is too early to assess the general implications for the radio
business but he does condemn the muddle. ’It’s not healthy to box in
companies in their core business and it’s an odd signal to send out when
we are preparing to invest in digital,’ he argues.
Gains in the Broadcasting Act came as a result of effective lobbying in
both Houses of Parliament. Is it time to have a quiet word in some ears
at the MMC? Moves to co-ordinate a new campaign are underway at the
industry’s trade body, the Commercial Radio Companies’ Association, but
some sources say that little is likely to happen before the next
Broadcasting Bill, due at some point within the current Parliament.
Tim Schoonmaker, chief executive of Emap Radio, says that the industry
is now determined to widen the debate. ’It’s important for people to
compare what we have to deal with and the situation at the BBC. It has
five national radio networks and can launch anything from digital TV
channels to projects on the Internet, as long as it makes calls to a
couple of civil servants. It’s clear that that question needs to be