Advertisers Express Concern At Radio Merger Plans
Advertisers and media agencies have expressed concern that the potential £700 million merger of Capital and GWR to form the UK’s most powerful commercial radio group could substantially lessen competition in the market for airtime sales.
The Incorporated Society of British Advertisers and the Institute of Practitioners in Advertising say they are analysing the “exact” implications of the planned deal, which would lead to the creation of a single broadcaster controlling a massive 40% of the national radio advertising market (see Capital And GWR Confirm £700 Million Merger Talks).
The industry bodies are concerned that the merged entity could use its dominant position to push up prices for advertisers. The creation of a single Capital/GWR sales house could also prompt rival broadcasters to merge in a move that could distort competition in the market for airtime sales
A spokesman for ISBA, which represents UK advertisers, told NewsLine: “We are studying with interest the emerging news of plans for a merger between radio groups Capital and GWR. As the industry is aware advertisers tend to be concerned over any moves which might reduce levels of competition in the media markets for their budgets.”
He added: “ISBA notes that combined Capital and GWR would control some 40% of the national radio advertising market. This is a significant market share in radio, which is a very important strategic medium for advertisers. ISBA will be analysing in detail the exact implications of such a merger and would undoubtedly be keen to input the views of its members into any Office of Fair Trading/Competition Commission enquiry as and when this came about.”
Speaking on behalf of UK advertising agencies, the IPA said: “As a trade body dedicated to preserving open competition in the media market, the IPA is always concerned to ensure that any consolidation in media ownership does not result in a significant reduction in competition and/or potentially adverse consequences for our members and their clients.”
Similar concerns were raised last year when Carlton and Granada announced plans to create a single ITV capable of competing more effectively with the BBC and BSkyB. The deal was scrutinised by the Competition Commission, but the two companies were cleared to merge without selling off their sales houses.
However, a series of tough behavioural remedies were introduced to limit the power of the newly combined entity. These included the controversial Contract Rights Renewal requirement that advertisers can renew their ‘share deals’ on the same terms as their previous contracts (see ITV Cleared To Merge With Sales Houses Intact).
Capital and GWR have a total of 55 UK radio stations between them and merger plans will almost certainly attract regulatory scrutiny from the Government’s competition watchdog. However, shareholders have expressed their initial support for the tie-up and rival radio groups have reportedly indicated that they are unlikely to disrupt the deal.
ISBA: 020 7499 7502 www.isba.org.uk
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