Global/GMG final report
21 May 2013
The Competition Commission (CC) has decided that Global Radio Holdings Limited (Global) must sell radio stations in seven areas of the UK following its completed acquisition of Real and Smooth Limited (formerly GMG Radio Holdings Limited).
In its final report published today, the CC has concluded that the merger is likely to lead to higher prices for advertising in seven areas of the UK. This confirms the CC’s provisional findings which were published in February.
The CC has found that in areas where Global and Real & Smooth stations currently overlap and compete, 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.
Global will now be required to sell some of the acquired Real & Smooth stations, or its own stations, broadcasting to the following areas: the East Midlands; Cardiff; North Wales; Greater Manchester & the North-West; the North-East; the South and West of Yorkshire; and Central Scotland. The CC will have to approve the buyers to ensure they will be viable competitors to Global. The CC estimates non-contracted advertising revenue in the seven areas to be around £60 million.
The CC found that advertisers would not be adversely affected in London and the West Midlands. The CC has also concluded that advertisers using media agencies to buy airtime on a contracted basis and national sponsorship and promotion would not be adversely affected significantly.
Simon Polito, Chairman of the Global/GMG Radio inquiry and CC Deputy Chairman, said:
‘Radio advertising prices are negotiated and smaller and medium-sized companies in particular rely on the presence of competing commercial stations in their local areas to negotiate a good deal. 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. These smaller advertisers would stand to lose most from this loss of rivalry.
‘Requiring Global to sell stations to new owners in the affected areas will preserve competition and protect these advertisers’ interests.
‘Whilst for some campaigns 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.’
Global operates the Heart, Capital, LBC, Classic FM, Gold and Xfm radio brands across the UK, while GMG Radio operates stations under the Real, Real XS and Smooth brands.
The stations Global will be required to sell are as follows:
East Midlands: Smooth OR Capital
Cardiff and South Wales: Real OR Capital
North Wales: Real OR Heart
Greater Manchester and the North-West: Capital OR Real XS with either Real or Smooth
North-East: Real OR Smooth OR Capital
South and West Yorkshire: Real OR Capital
Central Scotland: Real OR Capital
All published documents and other information relating to the inquiry can be found here.
Notes for editors
1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.
2. The members of the Inquiry Group are: Simon Polito (CC Deputy Chairman and Inquiry Group Chairman), Stephen Oram, Alexander Johnston and Ian Jones.
3. The Office of Fair Trading (OFT) referred the case on 11 October 2012 and the CC has been asked to decide whether the acquisition may be expected to result in an SLC in any market or markets for goods or services in the UK. Following the addition of an eight-week extension (PDF, 28 Kb) , the statutory deadline for the publication of the CC’s final report is 22 May 2013.
4. The Enterprise Act 2002 empowers the OFT to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.
5. The CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.
6. Further information on this inquiry, including the terms of reference and other key documents, as well as on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from the CC website at: www.competition-commission.org.uk.
7. Enquiries should be directed to Rory Taylor or Siobhan Allen or by ringing 020 7271 0242.