The move by Capital Radio to acquire Xfm (see today’s Capital To Buy Xfm) will be dependent on approval from both the Radio Authority and the Office of Fair Trading.
Capital plans to buy 90.1% of the London alternative music station for £15.9 million, though under the 1996 Broadcasting Act a company cannot hold two licences on the same waveband in the same area unless the Authority determines that the holding of those licenses could not be expected to operate against the public interest.
While it is rare for the Authority to stop mergers, Capital will perhaps be nervous about the involvement of watchdogs: the last time it tried to acquire a station (Virgin, at the end of last year) the deal would not have been allowed to go through. The Monopolies and Mergers Commission ruled that the resulting increase in Capital’s London market share “might have been expected to diminish competition.” The MMC was particularly concerned at the effect the move might have on the London radio advertising market (see MMC Report Could Curtail Capital’s Expansion Plans). While Xfm is obviously not in the same league as Virgin in terms of listening or advertising shares, Capital’s bid for another London station is sure to cause some concern in the industry.
There has, however, been criticism that Xfm’s playlist has taken its “alternative” remit too far. At last week’s Radio Academy Music Radio ’98 conference the station was accused of marginalising itself with obscure indie tracks and poor presenters. Capital Radio’s proposed ownership could mean the station moving towards a more ‘mainstream indie’ playlist.
Xfm’s recent RAJAR performances certainly suggest that it has so far failed to find the right mix. Yesterday’s results showed a weekly reach drop of 6.4% to 219,000 listeners while share of listening also fell slightly, by 0.1% points to 0.6%.
Under the Capital proposal Chris Parry, Xfm’s co-founder, would retain a 9.9% shareholding in the station. There is a clause however which would allow him to sell this remaining stake to Capital at a later date for £2.09m. Other shareholders in Xfm include radio group CLT, the Cure’s Robert Smith and Harvey Goldsmith, the concert promoter.
Ad sales for Xfm are currently handled by Katz though it is likely that if the deal goes ahead Capital will be keen to move the operation in-house to Capital Advertising.
Newsline reports on yesterday’s RAJAR figures are available to subscribers by clicking here.
Capital Radio: 0171 766 6000
