Clear Channel Circles As Radio Merger Talks Advance
The world’s largest radio operator Clear Channel is believed to be keeping a close eye on the £700 million merger talks between Capital and GWR, with a view to launching a possible take-over bid for the combined group.
Reports suggest that the American radio giant, which controls more than 1,250 commercial stations in the US, could enter the UK market with a knock-out bid for the merged broadcaster, if the deal passes regulatory hurdles (see Capital And GWR Confirm £700 Million Merger Talks).
Clear Channel has made no secret of its intention to acquire a major UK radio group and the company’s chief executive, Lowry Mays, recently said that nothing would give him “greater pleasure” than to bring a British commercial network into the Clear Channel family (see US Radio Group Could Move On UK Commercial Stations).
Merger talks between Capital and GWR are advancing steadily and the broadcasters will today present their proposals to Lord Rothermere’s Daily Mail & General Trust, which is crucial to the deal’s success because of its 29.9% holding in GWR.
The meeting, which was confirmed before Capital and GWR were forced to confirm their merger discussion over the weekend, will help both broadcasters clarify any issues that need to be resolved before a further announcement is made alongside Capital’s trading update on 29 September.
The City appears to be responding favourably to the merger talks, with Capital’s share price rising by 7% yesterday to close at 458p and GWR, which owns Classic FM, climbing 9% higher to finish at 287p. These increases mean the deal is now valued at around £767 million.
Daily Mail & General Trust has already expressed its openness to the idea of radio consolidation, but other key shareholders have reportedly warned they will not tolerate any confusion over who is to be in charge of the newly merged company.
The leading executives of both companies plan to continue in their jobs in a combined group. Capital Radio chief executive David Mansfield is expected to assume the same role at the enlarged company, while GWR chief executive Ralph Bernard will take on the position of chairman.
However, investors are understood to be worried that keeping both men on full time would lead to conflicts over the management of the group. The situation echoes the circumstances in the run up to the merger of Carlton and Granada, which saw shareholders demand the removal of Carlton boss Michael Green as chairman designate of the single ITV company (see Green Relinquishes Roles As ITV Chairman Designate).
Meanwhile, UK advertisers and media agencies have expressed concern that the potential 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 (see Advertisers Express Concern At Radio Merger Plans).
Capital Radio: 020 7766 6000 www.capitalradiogroup.com GWR Group: 020 7284 3000 www.gwrgroup.com
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