City View - Radio players facing off as consolidation wave grips sector

The phoney war has ended. The real battle has begun. And now radio broadcasters look set to spar as consolidation in radio broadcasting gathers pace.

Last week, it was reported that Scottish Radio Holdings was intent on acquiring any of the radio assets to be spun out of the prospective GWR/Capital merger.

But SRH itself is a rumoured target for Emap, which already holds a 28% stake in the firm.

Indeed, SRH is thought to have appointed the investment bank Greenhill to provide advice on its defence of a looming bid from Emap.

Or, perhaps Greenhill – who advised WHSmith on its defence against Permira – is there to help out on the acquisition front? SRH, though, could find itself with some competition for spare radio assets: UBC Media has now thrown its hat into the ring.

“We’re interested in playing a part in consolidation of the radio industry – we’d look very carefully at anything that drops out of the radio mergers,” said chief executive Simon Cole.

He described UBC’s role as “tidying up the edges of radio consolidation”.

UBC Media, which owns Classic Gold Digital, is especially interested in chatting to the new GWR/Capital entity about Capital Gold.

“I’m keen to talk to the merged GWR/Capital about Capital Gold,” said Cole.

Peter Harris, finance director at Capital Radio, didn’t want to comment on any potential spinoffs, but he expects a decision from the OFT and Ofcom on whether to refer the deal to the European Commission to be made by the end of December.

“Concessions are something that will come out in due course, but we think we’ve provided a solid argument to why this merger is in the public interest,” said Harris.

Ironically, Cole stated that UBC Media would not be interested in acquiring anything that came out of any SRH/Emap tie-up. “That wouldn’t be of interest,” concluded Cole.

City sources were not so sure that Capital Gold would be dumped by the new GWR/Capital entity. “I don’t think many assets will be sold off by GWR/Capital,” said one analyst who covers the stock.

A disposal of one of the GWR/Capital local radio stations – either Century, Ramor Leicester Sound – in the East Midlands region is thought to be enough to satisfy competition authorities.

“But if any assets do come out, there will certainly be a lot of competition for them,” said the analyst.

While UBC Media is keen on new radio assets, it doesn’t plan to go out on a relentless buying spree in 2005. Cole explained that after several years of making acquisitions, the company plans to stop bolting on businesses.

“We now have a set of good digital radio businesses and we plan tomake them work,” said Cole.

By Ben Harrington

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