The widely anticipated consolidation of the commercial radio industry suffered a set-back this morning, with confirmation that the Competition Commission has blocked GWR’s bid to buy Chrysalis Radio’s Galaxy 101 and merge it with Vibe FM.
GWR, which jointly owns Vibe Radio Services with Scottish Radio Holdings, announced its intention to buy the Bristol-based dance music station in September last year (see
Chrysalis Takes GWR’s LNR And Sells Galaxy 101).
However, the Competition Commission has ruled that the acquisition should not go ahead, as it could reduce competition in local advertising services in the Bristol, Bath, Taunton and Yeovil areas (see GWR Questions Competition Referral Of Vibe’s Galaxy Acquisition).
The Commission also concluded that the proposed merger of Galaxy 101 and Vibe FM could disadvantage other radio stations, as it would increase GWR’s market share of advertising revenue and broadcasting coverage in the area.
Competition Minister, Melanie Johnson, said: “I agree with its conclusion that the merger may be expected to operate against the public interest. I am therefore inviting the Office of Fair Trading to negotiate with the parties to secure undertakings to remedy the adverse competitive effects of the deal.”
In order for the acquisition to go ahead, the Competition Commission is proposing that GWR reduce its stake in Vibe Radio Services, or discontinue the arrangement whereby its sales house, Opus, handles airtime sales for Vibe 101.
If GWR refuses to give such undertakings, it will be required to divest its shareholding in Vibe Radio Services.
The news will come as a blow to Chrysalis, which recently announced its intention to play a leading role in the formation of the deregulated UK radio landscape, that will emerge after the Communications Bill comes into force later this year (see INSIGHTanalysis: Chrysalis Looks To Lead In Consolidating Radio Landscape).
The company, which acquired LBC and NewsDirect from GWR last September, in a deal worth £23.5 million, is just one of a number of radio groups hoping to take advantage of the relaxed media ownership rules.
Daily Mail & General Trust holds a 29.9% stake in GWR and may look to bid for the remainder. Emap and Capital could either be approached by Chrysalis, or perhaps make a move for it themselves.
Meanwhile, Glasgow-based SMG, owner of Virgin Radio, last year steadily increased its stake in Scottish Radio Holdings to 29.5%. Following the introduction of the new ownership regulations it may decide to make a full-on bid for the company.
