Capital/GWR Merger Could Face Competition Enquiry
Capital Radio’s proposed £711 million merger with GWR could be delayed by up to six months if advertisers and rival radio groups call for a Competition Commission enquiry into the deal.
Influential advertising groups ISBA and the IPA are concerned that the merged entity, which would control more than 40% of national radio advertising revenue, would dominate the industry and could push up the cost of airtime (see Capital And GWR Name Team For Single Sales House).
A number of submissions are understood to have been made to the Office of Fair Trading ahead of Tuesday’s deadline. These include calls for restrictions on any future expansion of the merged group, which would own of 55 local analogue radio stations, 93 digital stations and one national radio station (see Capital And GWR Agree £711 Million Merger Terms).
Reports suggest that Emap is one of a number of rival commercial radio groups asking the regulator to prevent a merged Capital/GWR from acquiring any new radio licences for the next five years. Some groups also want restrictions on the combined group expanding its digital radio interests.
According to the Observer, other conditions being requested by respondents include the sale of some of Capital/GWR’s licences in areas where they overlap and where market dominance would be especially acute. The East Midlands would be an area of particular concern.
It is understood that if Ofcom and the OFT are unable to impose these conditions, some advertisers and radio groups will call for the planned merger to be referred to the Competition Commission for a full investigation. This could delay the deal for many months in what would be a costly setback for both companies.
The proposed £711 million merger of Capital and GWR is being seen by many as a test case for the newly relaxed radio regulations. If the deal goes ahead, a number of rival broadcasters are expected to consolidate in an attempt to compete with the newly created behemoth.
Speculation that Scottish Radio Holdings is on the brink of being take-over by Emap has already intensified and reports suggest the company is looking for advisors in anticipation of a potential deal that could be completed early next year (see Emap May Move On Scottish Radio Holdings Next Year).
Capital Radio: 020 7766 6000 www.capitalradiogroup.co.uk GWR Group: 020 7284 3000 www.gwrgroup.com
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