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Global competitors to raise competition objections to GMG deal

By | Published on Tuesday 26 June 2012

GMG Radio

Three of Global Radio’s rivals have called on the competition regulator to block the UK radio major’s bid to expand further by acquiring The Guardian’s radio company, which operates the Real and Smooth radio brands.

As previously reported, it was confirmed yesterday that Global had successfully bid for GMG Radio, after weeks of speculation that the Guardian publisher was in talks to sell its radio business. Initial reports suggested Global had paid in the region of £50 million to buy its rival, but Media Guardian suggests the final figure was closer to £70 million, after a bidding battle between Global and its biggest competitor in the UK radio sector Bauer.

Bauer are now among those who are thought to be already lobbying against the proposed Global/GMG merger, arguing that the deal will give the company more than 50% of the UK radio advertising market, and that that would make the company too dominant. TalkSport operator UTV, which was also bidding for GMG Radio, and the Absolute Radio company will also object to the deal.

Speaking to The Guardian, UTV’s Scott Taunton said: “This merger would leave the enlarged Global Radio controlling more than 50% of commercial radio revenues, and more than 50% of listening in key markets like London and Manchester. The competition authorities should see this for what it is, an attempt to achieve an unassailable position of market dominance. Simply put, the proposed merger must not go ahead. We are consulting with our legal advisers to prepare our engagement with the Office Of Fair Trading’s investigation”. Statements from Absolute and Bauer, while not quite so forthcoming, communicated similar sentiment.

UTV also raised concerns about the other part of yesterday’s announcement from Global, that the current boss of GMG Radio, Stuart Taylor, will resign with immediate effect, and the company will be run by a Global Radio exec, Mark Lee, on secondment while the regulators investigate the deal. UTV said it was “seeking urgent clarification” as to how that would work, and whether Global could ensure that GMG Radio continued to operate as a standalone company while any competition investigation is going through the motions, as the law demands.

If the merger does get the go ahead it will mean that what were three big British radio firms just over five years ago – Chrysalis Radio, GCap and GMG Radio – will have become one mega-major, in control of a significant portion of the country’s commercial radio listeners and advertisers. Global is certain to stress that in terms of listeners it also competes with the BBC, which commands even bigger audience share overall, and on the commercial side the company now also competes head on with online audio and music services, and faces ever tougher competition from that domain as the internet finally reaches the kitchen, bathroom and car, key locations for radio listening.

Though pluggers at the big record companies will tell you that, despite the internet revolution, for mainstream releases radio remains a key platform for promoting artists and music, and they too may worry about a Global in control of so much of the UK radio sector. Especially given Global’s known ambitions in the music publishing and talent management space (fears of programming bias towards the firm’s own acts may be unjustified, but they are fears nonetheless), and the recent petty ban of One Direction at flagship pop station Capital after a silly slip by one of the boy band’s members during an awards acceptance speech.

Competition regulators will likely consider the implications of the Global/GMG deal on a region by region basis, and may force the offloading of frequencies in those areas where the combined company would be particularly dominant. A similar approach when Global acquired GCap in 2008 forced the sale of various stations in the Midlands, which were bought by a Phil Riley-led consortium to create Orion Media. According to Absolute Radio’s CEO Donnach O’Driscoll, Global/GMG would be most dominant in Glasgow, Birmingham and especially Cardiff.

Though it’s thought Global will argue that, given the new competition it faces from online media, competition regulators should be more generous than in 2008, even though this deal will give the company unprecedented dominance in the British radio market.

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