Capital GWR Merger Escapes Competition Inquiry
The proposed merger between GWR and Capital Radio was given the go ahead today, with news that the Office of Fair Trading will not be referring the two companies’ consolidation to the Competition Commission, instead accepting undertakings to address competition concerns.
The broadcasters will now be required to address concerns over local radio advertising in the East Midlands, where both companies have a presence, in order to avoid a competition commission inquiry.
Commenting on the decision, Vincent Smith, the OFT’s director of competition enforcement, said: “Except in the East Midlands, the radio stations of Capital and GWR do not strongly overlap at a local level. So for national advertisers putting together a radio advertising package they are largely complementary rather than competing alternatives. However, the merger would result in a substantial lessening of competition in the East Midlands.”
The OFT revealed that, in answer to the move, Capital Radio has offered to divest its interest in Century 106 FM, which operates in the East Midlands, in order to address the competition effects of its merger.
Elsewhere media super-regulator Ofcom has announced the completion of its role in the statutory process for the proposed merger. Under the Communications Act the watchdog is required to undertake certain assessments of any merger.
Ofcom has stated that it intends to vary two GWR licences as a result of its assessments, in order to safeguard local programming. The changes will see the provision for separate weekday breakfast services provided by GWR Bristol and Bath FM as well as the provision for a separate weekday breakfast service on the MFM/Buzz Wrexham and Chester FM licences.
Elsewhere Ofcom concluded that the ownership rules designed to protect plurality in relation to local analogue radio licences, local digital multiplex licences, and local digital sound programme service licences would not be breached if the merger were to go ahead as currently envisaged. The watchdog also stated that the Secretary of State has not issued an Intervention Notice on the merger, and as such a notice can only be issued before the OFT makes a decision on whether or not to refer the merger to the Competition Commission there will now be no assessment of public interest considerations imposed upon the merger.
Speculation had surfaced last month that the proposed £711 million merger could be delayed by up to six months if advertisers and rival radio groups called for a Competition Commission enquiry into the deal (see NewsLine).
However, the latest move will see the creation of the most powerful radio broadcaster in the country, with a combined Capital and GWR controlling national station, Classic FM, and 55 local stations across Britain.
Commenting on the OFT’s decision, Ralph Bernard, executive chairman of GWR, said: “When we announced our merger we set out the benefits for listeners, advertisers and shareholders. This is a merger of two complementary businesses that will strengthen the UK radio industry and we are very pleased that OFT and Ofcom are satisfied that it can proceed.”
David Mansfield, chief executive of Capital Radio, added: “We are delighted with this decision, which follows a constructive dialogue with the OFT and Ofcom. This is good for listeners and for the radio industry. We look forward to working with our new colleagues at GWR to effectively integrate our businesses and create a commercial radio champion for the digital age.”
Capital Radio: 020 7766 6000 www.capitalradiogroup.com GWR Group: 020 7284 3000 www.gwrgroup.com
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