Chrysalis GMG Merger Could Force Galaxy Sell Off
Chrysalis Radio’s admission earlier this week that it had held preliminary discussions over the acquisition of GMG Radio could lead to one of the companies being forced to up root its Manchester-based operations in order to push through any consolidation.
The companies both operate radio stations across the country, and in many cases operate in the same areas. However, while most of their station’s overlapping TSAs do not pose a regulatory problem, this is not the case in Manchester.
GMG’s Mancunian operations include Smooth FM (North West), targeting 25-54 year olds with a mix of R&B, jazz and blues music. The station currently commands a weekly reach of 437,000 and has enjoyed massive success over recent months, adding 43.3% to this figure year on year.
Chrysalis currently operates Galaxy 102 in the area, playing a mix of dance and R&B music, with the majority of adults (97.6%) able to receive its signal and also able to pick up Smooth FM. Galaxy’s recent performance has been less impressive, with a current weekly reach of 396,000, down 9% year on year.
The stations’ similar output could lead to one station being sold in order to satisfy competition laws. The lower weekly reach, and declining audience, of Galaxy may mean that it is ripe for a sell-off by Chrysalis.
Such a sell off would be similar to that made by Capital Radio as part of its merger proposition with GWR earlier this year. Capital was forced to sell off its East Midlands radio station, Century 106 FM, in order to meet the Office of Fair Trading’s conditions to enable the merger to go ahead (see Capital Sells Century 106 FM).
Such a sell off could be replicated by Chrysalis, although it would mean that the broadcaster’s Galaxy network would lose one of its four FM stations.
The sale of Galaxy 102 would also enable Smooth FM to pick up the station’s listeners, potentially scoring a massive rise in weekly reach. GMG has invested heavily in Smooth FM recently, announcing that its Jazz FM station in the capital would be rebranded as Smooth later this year (see GMG Drops JazzFM Brand To Smooth Over Audience Woes).
The rebranding was made possible by Ofcom’s decision to drop Jazz FM’s programming restrictions, allowing the station to broadcast a range of music and broaden its appeal to advertisers (see Jazz FM To Increase Advertiser Appeal With Mixed Playlists).
The broadcaster has also secured airspace via Sky Digital, enabling listeners nation wide to tune in to its service (see Smooth FM To Broadcast Nationally).
The broadcaster’s other stations, while partially operating in the same areas, do not represent significantly conflicting interests. For example, although GMG’s Real Radio Yorkshire operates in and around Leeds and Sheffield, it does not target the same audience as Chrysalis’ Galaxy 105 in the same area. Likewise, Chrysalis’ LBC 97.3 and LBC News stations in London do not provide the same type of content as GMG’s Jazz FM, soon to be Smooth FM, and a merged company operating both stations would therefore not be anti-competitive.
Meanwhile, the consolidation between Capital and GWR now looks set to be completed in May, with the two companies deciding to name the venture GCap Media, and clearing all the regulatory hurdles required of them by the OFT (see Capital And GWR Name Merged Group).
The combined Capital and GWR business will create the UK’s largest single radio operator, with GCap Media worth around £711 million and controlling more than 40% of the nation’s radio advertising market.
Chrysalis: 020 7221 2213 www.chrysalis.com Guardian Media Group: 020 7713 4452 www.gmgplc.co.uk/
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