UK Radio: Cross Media Synergies More Likely Than Consolidation, Say Analysts

However, the broker believes that the prospect of a small number of pure UK radio groupings now looks very improbable. Instead it believes that larger, cross-media groups are more likely. Synergies are expected with (in order of magnitude): television, newspapers and posters.

Overseas buyers The recent Communications Bill has unexpectedly removed restrictions to non-EU ownership of UK broadcasting assets. As a result, overseas interest in UK radio groups is now expected, particularly from US companies.

Clear Channel, which owns outdoor contractor Clear Channel UK (formerly More Group) in the UK and radio stations throughout the world, is thought to be a likely suitor to UK radio companies. Viacom, AOL Time Warner and Disney (which has a joint venture with Capital Radio) are also expected to be interested, according to Merrill Lynch. Capital, with its large station portfolio and key position in the London market is thought to be particularly attractive.

If foreign investors do make moves on UK radio companies, it may scupper consolidation within the radio industry itself. It is also likely, given the lack of strong cross-border synergies with UK radio, that overseas investors would use such acquisitions primarily as stepping stones to building a broader media portfolio in the UK, say analysts.

Over the last three months, the market capitalisation of UK radio-related media groups has seen a rise, with shares up by 24.5% on average over the period. Stock was particularly boosted following the publication of the draft Communications Bill last week, as it opened the way for consolidation in the industry.