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ftm Radio Page - May 24, 2013

Authorities approve media deal with expensive caveat
Think: due diligence

Last year Guardian Media Group decided to exit the UK radio broadcasting business. Stations operating the Real Radio and Smooth Radio brands were put up for bid. Global Radio, the biggest UK commercial broadcaster, offered most in the auction, about GBP 70 million. The acquisition, obviously, would make Global Radio even bigger.

Those outbid, Bauer Media, owner of the Magic franchise, and UTV, owner of the TalkSport franchise, were not pleased for all the expected competitive reasons. Advertising people weren’t especially thrilled with the possibility of fewer choices and higher spot rates. And so the UK Office of Fair Trading referred the transaction to the Competition Commission late last year. Anybody watching carefully sensed this gamble might go badly for Global Radio, which had offered to sell off three stations this past March to appease the authorities.

But it didn’t. The Competition Commission (CC) approved (May 22) the transaction with a very big caveat. Global Radio needs to sell stations in seven of nine regions, perhaps the Real or Smooth stations or the Capital or Heart stations. Stations in London and the southwest could be kept but, well, Global Radio needs to find buyers for those stations largely in the north of the UK and Wales. Pending the appropriate approvals the Real and Smooth stations have been operated as a separate company owned by Global Radio.

“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,” explained the CC. “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.”

“The CC's insistence on the sale of stations in seven regions won't be popular with Global,” said ad association ISBA media director Bob Wootton, quoted by Media Week (May 22), “but it will go a long way in reassuring advertisers who buy commercial spots, and pay for sponsorship and promotional airtime. Especially the smaller and more local ones that may perhaps not be able to look after themselves so well.”

Be that as it may, Global Radio chairman Charles Allen has a problem and it could be expensive. The stations in those seven regions provide the lions-share of cash flow to pay the banks on the deal. And, too, for radio deals in the UK it’s a buyers market. A bit of due diligence goes a long way. (JMH)

Shortwave makes a comeback?
Lots of available frequencies

Public broadcaster Czech Radio may have a new broadcast platform. Actually, it’s an old platform: shortwave. Members of the Czech Parliament media committee have put forward an amendment to allow domestic use of shortwave frequencies, reports mediar.cz (May 20). Czech Radio is promoting the idea because new talk channel Czech Radio Plus has been relegated to medium wave.

”The reason for the amendment is to extend public service broadcasts to very short waves,” said the media committee statement on the Czech Parliament website. “Due to the relatively large availability of this spectrum…this process will take place gradually, depending on whether the frequencies will be released by some users. (Czech) radio previously announced that it intends to use their own frequencies.”

The proposed amendment would prohibit advertising and teleshopping from the shortwave frequencies. Czech Radio could, it seems, broadcast other channels on shortwave. The National Council for Radio and Television Broadcasting (RRTV) will study the possibilities. (JMH)

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