Thursday, May 23, 2013

Global Radio told to sell stations

The Competition Commission has told Global Radio it must stations in seven UK regions. Photograph: Linda Nylind for the Guardian
Global Radio, owner of network radio brands including Capital, Heart and Real, must sell stations in seven areas of the UK to appease the competition regulator's concerns over its £70m acquisition of GMG Radio.
The UK's largest radio operator has been told by the Competition Commission that it must sell some of GMG Radio's Real and Smooth stations, or its own services such as Heart and Capital, in seven areas: the East Midlands, Cardiff, North Wales, Greater Manchester and the north-west, the north-east, central Scotland, South Yorkshire and West Yorkshire. The competition regulator cleared the deal in London and the West Midlands.
However, the Competition Commission said it would allow Global to do deals to potentially license its radio brands to whoever buys the stations it must sell off.
Tuesday's final Competition Commission ruling is a blow for Global Radio, which had offered to sell off just three radio stations in response to a provisional finding in February, which found the GMG Radio deal could lead to advertising and competition issues in a number of regions.
The competition regulator's final report found that in regions where there is an overlap of stations owned by Global Radio and GMG Radio – which is now known as Real and Smooth Limited, the names of its two main brands – there is likely to be higher prices for advertisers.
"Advertisers buying airtime on a campaign-by-campaign basis, directly or through smaller agencies (non-contracted advertising) could face higher costs for both airtime and sponsorship and promotion activity," the Competition Commission stated in its 139-page report.
"We concluded that, subject to reviewing the detail of any agreement, a partial divestiture of one or more stations involving a brand-licence arrangement between the acquirer and Global was a credible divestiture mechanism and was capable of being effective in addressing the substantial lessening of competition."
Simon Polito, chairman of the inquiry at the Competition Commission, said: "In each of the seven areas, the merger would mean the loss of either the only main competitor or one of the three main alternatives. Requiring Global to sell stations to new owners in the affected areas will preserve competition and protect these advertisers' interests."