Competition regulator raises concerns about Global’s GMG Radio acquisition

By | Published on Thursday 14 February 2013

Global Radio

The Competition Commission has thrown some spanners in the works for Global Radio’s acquisition of the former GMG Radio company, which operates the Real and Smooth networks.

An initial report by the competition regulator says that the merger of the former Guardian Media Group owned stations with Global’s existing operations could decrease competition in the radio advertising market in a number of regions to sufficiently hinder smaller and local advertisers, and especially those that buy ads direct rather than via an agency.

Affected regions include East Midlands, Cardiff, North Wales, Manchester, The North East, South & West Yorkshire and Scotland – nearly everywhere the former GMG stations operate. The merger would not impact on the local advertising market in London and the West Midlands, the Commission reckons.

The regulator’s provisional report, to be published tomorrow, is likely to propose a number of remedies open to Global Radio that could deal with the concerns raised. These include simply selling the Real and Smooth networks in their entirety, or all their operations outside London and the West Midlands, or proposing specific sales to alleviate issues in each region.

Quite how extreme the sell-offs will have to be to placate the Competition Commission – assuming Global doesn’t go for option one – isn’t clear. When the competition regulator investigates takeovers of this kind, its final report may differ considerably from the initial provisional document, depending on how the acquirer responds. Though either way it’s a blow for Global, which had been pushing for its entire acquisition to be green lighted with minimal or no remedies.

Commenting on the provisional report, Commission Deputy Chairman Simon Polito said: “The advertisers most likely to lose out from this deal are those who do not use national media agencies, and so includes smaller and medium-sized companies. These advertisers rely on the presence of competing commercial stations in order to negotiate a good deal”.

He added: “Whilst in many cases advertisers do have alternatives through other media, radio is often an integral part of a wider media campaign and there remain campaigns for which radio advertising is important. We will now look at ways in which we can preserve competition and look after the interests of advertisers in these areas”.

In a short statement, Global noted the publication of the provisional report, but added: “It is important to note that as provisional findings, these do not represent the CC’s final report, and as such, it would not be appropriate to comment further on these provisional findings”.

Real and Smooth were spun off into a standalone company after Global’s acquisition of GMG’s former radio business pending the competition investigation, and will remain separate for the time being.