Global must sell stations in midlands, but not London

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Mark
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Global must sell stations in midlands, but not London

Post by Mark » Sun Aug 10, 2008 10:15 pm

Global/GCap radio merger: OFT seeks remedies and relies on efficiencies for the first time
95-08 8 August 2008

The OFT is considering undertakings proposed by Global Radio UK Ltd (Global) in lieu of a reference to the Competition Commission following Global's acquisition of GCap Media plc (GCap).

Global has offered to divest a package of radio stations to purchasers approved up-front by the OFT. In principle, this would resolve the OFT's concerns by restoring competition to pre-merger levels in the Midlands.

Most of GCap's 71 local stations across the UK do not compete with Global for the same audiences or advertisers. In the Midlands, however, Global had a substantial pre-merger presence through its regional stations - Heart in the East Midlands and Heart and Galaxy in the West Midlands. Those advertisers trying to reach a regional radio audience in the East Midlands had a prime choice between airtime on Global's Heart regional station or a region-wide package of airtime based on local GCap stations - Leicester Sound, Trent and RAM. Similar circumstances applied in the West Midlands.

The OFT has meanwhile cleared the London aspects of the transaction. Although each party had a 20-30 per cent share of radio advertising, the OFT has concluded that there is no realistic prospect of harm to London advertisers or listeners because:

* neither Heart nor LBC (Global) were close competitors to any of Capital, Choice or X Fm (GCap), due substantially to differences in audience demographics
* Global will have to continue to compete hard against its closest competitor, Bauer - owner of Magic and Kiss - as well as others such as Virgin, Smooth and, for audience, the BBC, and
* the OFT expects the deal to generate significant efficiencies that will benefit advertisers and listeners, for example, by delivering cheaper prices for multi-station advertising packages and programming changes capable of attracting larger and more focused radio audiences, thereby enhancing rivalry in the London market.

In first-phase UK merger review conducted by the OFT, this is the first time that efficiencies evidence has made a material difference to the outcome in a 'horizontal' merger case between competitors.

Simon Pritchard, OFT Senior Director of Mergers said: 'Merger efficiencies benefit customers and put pressure on rivals. In this case, they tipped the balance in favour of clearance in London. This shows that with the right facts, efficiencies can make a difference, even at first phase, and even in a horizontal merger with high market shares. The divestment remedies in the Midlands, where efficiencies were not sufficient, are about restoring competition to make sure customers will not be harmed.'

NOTES

1. For reasons of confidentiality, the OFT will not currently disclose which stations Global has proposed to divest. Details will follow in the full text of the decision and in public consultation.

2. In the West Midlands, Global's Heart and Galaxy stations competed closely for regional advertising campaigns against GCap, which could offer packages based on its local BRMB Birmingham, Wyvern, Beacon and Mercia stations.

3. The reference test - the OFT has a duty to make a reference to the Competition Commission if it believes that it is or may be the case that a relevant merger situation has been created, and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

4. Under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate. The OFT is required to consult publicly before accepting any such undertakings.

5. Upfront buyer - the OFT considered in this case that a necessary requirement to suspend the duty to refer and consider undertakings is that the divesture of the radio station packages in the East and West Midlands should be to a suitable purchaser or purchasers approved by the OFT before the OFT accepts the undertakings. This means that the OFT will consult publicly on the suitability of the proposed purchaser(s), as well as any other aspects of the draft undertakings, during the public consultation period.

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Re: Global must sell stations in midlands, but not London

Post by Pete Thornhill » Mon Aug 18, 2008 5:28 pm

Great heres our chance!!! We'll all have to chip in and buy ourselves a radio station... Being serious whatever stations are sold and whoever buys them maybe we will get a bit of variation on the "ILR'S". What you get at the moment is 50 identical stations with the same format. There is really nothing local about local radio anymore!!! Maybe a new owner for some of these stations will address this issue which would be good.
I wonder if sunshine will try and buy wyvern again (they tried once before and failed).

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Re: Global must sell stations in midlands, but not London

Post by dave brum » Mon Aug 18, 2008 7:02 pm

If they did, they could put their new Smithy Rock brand onto 954 and 1530, while the three Wyvern fm channels become Sunshine. Or the other way around...

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Re: Global must sell stations in midlands, but not London

Post by Dave » Mon Aug 18, 2008 7:37 pm

yeah, right. Lazer cant afford to keep the stations they have on air - let alone buy more!

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Re: Global must sell stations in midlands, but not London

Post by Martin Davies » Mon Aug 18, 2008 7:56 pm

dave brum wrote: they could put their new Smithy Rock brand onto 954 and 1530...
Maybe I'm just an internet geek, but the domain names for smithyrock.com and .co.uk are still available, if you have a few quid to spare on some domain squatting there's an opportunity.

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Re: Global must sell stations in midlands, but not London

Post by dave brum » Mon Aug 18, 2008 10:14 pm

Smithy Rock should have been on the air this autumn, but the DAB multiplex operator MuxCo that won the franchises for both the Worcs and Glos multiplexes (and other new plexes where Laser had interests) have ran into some delays. Now they're expecting to launch in 'early 2009' but as yet they can not be specific about exact launch dates. One thing's for certain, I'll never get them here in Cymru.

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Re: Global must sell stations in midlands, but not London

Post by Dave » Tue Aug 19, 2008 10:22 am

Smithy Rock is Muff Murfin (MMI)
Sunshine is Laser...

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Re: Global must sell stations in midlands, but not London

Post by dave brum » Tue Aug 19, 2008 8:28 pm

I thought Muff Murfin had sold his radio interests, ie Sunshine, to Laser anyway.

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Re: Global must sell stations in midlands, but not London

Post by midlandsfirst » Tue Aug 26, 2008 8:00 pm

From Birminghampost.net

Consortium ready to 'reclaim' Midland radio stations
Aug 25 2008 By Anna Blackaby, Media & Marketing Editor


A local consortium which aims to “bring radio back to the region” is gearing up to put in a bid for Global Radio’s Midland stations.

Radio industry veteran and former BRMB programme controller and operations director Mike Owen is drawing together a group of interested parties to make an offer for the Midland radio businesses up for sale following Global Radio’s acquisition of GCap.

The stations, which include BRMB in Birmingham, Beacon Radio in Wolverhampton and Mercia in Coventry, are being put on the market by Global Radio to quell competition fears.

Mr Owen said the bid, which is in its early stages, is being led by “significant players” in the Midland radio industry, but said he could not reveal names at this stage.

“My phone has been red hot with people ringing to express interest in creating a locally based consortium that would bring radio back to the region,” he said. “The audience has shown that they are not interested in networked commercial radio programming from London.

“We want to return each of the stations back to their own characteristics. We would try to make them as strong in the market as they were several years ago by reinforcing their local profile, with programmes made locally with local presenters and a local management team.

“People take pride in a radio service based locally. Even with commercial advertising under tremendous pressure, it’s our belief we can still deliver a better product, make money and reach bigger audiences.”

He added: “It would be brilliant to recreate stations in the Midlands that dominated the market 25 years ago.”

Mr Owen, who spent 18 years at BRMB before leaving in 1997 to set up media consultancy business Mike Owen Media, said the consortium is currently talking to investors to back the bid.

He has over 30 years experience in the broadcast industry and has won a number of major awards including the Politzer award for outstanding services to publishing, two Sony awards and a Prix Italia nomination.

The awards were granted during his time at BRMB in Birmingham as programme controller and operations director up to 1997, having joined Birmingham Broadcasting in 1978 to produce Ed Doolan.

The sale of the Midland stations was sparked by Global Radio’s agreement to buy GCap in a cash deal worth around £375 million in March, which raised fears that competition would be diluted in the region.

Global Radio offered to sell a number of its Midland radio stations earlier this month to prevent the deal being referred to the Competition Commission.

The Office of Fair Trading (OFT) said the move would, in principle, resolve its concerns by restoring competition to pre-merger levels in the Midlands.

The OFT said most of GCap’s 71 local stations across the UK do not compete with Global for the same audiences or advertisers.

But in the Midlands, Global Radio had a substantial pre-merger presence through its regional stations - Heart in the East Midlands and Heart and Galaxy in the West Midlands.

In the West Midlands, Global’s Heart and Galaxy stations competed closely for regional advertising campaigns against the former GCap stations, the OFT said.

But the OFT cleared the London aspects of the transaction, saying there was no realistic prospect of harm to London advertisers or listeners.

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Re: Global must sell stations in midlands, but not London

Post by Pete Thornhill » Tue Aug 26, 2008 8:59 pm

How dare they!!! I am saving up to buy at least wyvern and her they come to spoil my fun. My plan was to buy wyvern and relaunch it as Exile!!! The problem is it will take me years to get the cash!!! Being serious if the money was there scot could you actually be involved with that now given your convictions, I mean are they all spent now? It would be funny though to relaunch Exile and stick two fingers up to ofcom/dti - shame we cant afford it!!!

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