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Global Radio and GMG Radio's Merger To Be Scrutinised By The Competition Commission

Alex Olive

01 November 2012
On 11 October 2012 Maria Miller, the Secretary of State for Culture, Media and Sport, announced that she would not be referring to the Competition Commission (CC) the merger between Global Radio, which operates the Heart, Capital, LBC, Classic FM, Gold and Xfm radio brands, and the Guardian's radio arm, GMG Radio, which operates under the Real and Smooth brands. This accorded with the finding in OFCOM's report that the merger did not raise any media plurality concerns. However, on the same day the Office of Fair Trading (OFT) referred the merger to the CC on competition grounds.

Media Plurality

OFCOM's analysis of media plurality concentrates on ensuring;

  • firstly that there is a diversity of viewpoints available and consumed across and within media enterprises; and
  • secondly that no one media owner or voice has too much influence over public opinion and the political agenda.

OFCOM's advice in this merger makes it clear that it is the provision of news and current affairs that is at the heart of media plurality analysis, as that is what most directly supports "informed citizenship." OFCOM approaches the news and current affairs market on a cross-media basis, meaning that news provided on all platforms is taken into account. In this broad market OFCOM states that this merger does not raise substantive plurality concerns, at the local or national level.

At the national level the report states that "there is a wide range of material providers of UK-wide news, among which Global Radio and GMG Radio are relatively small." OFCOM also notes that both groups of radio stations source their news from the same provider, Independent Radio News, and so "at the wholesale level, the number of providers of UK-wide news has not changed."

At the local level though conceding that in some areas plurality will be reduced, OFCOM maintains that in all of them there are no substantive plurality concerns, as "there will continue to be a variety of other platforms, including TV (which audiences rate as by far the most important platform) and newspapers (between 1 and 3 owners), with online being increasingly important." In relation to online news it is interesting to note that OFCOM is paying attention to the development of hyperlocal websites, which are "online news or content services pertaining to a town, village, single postcode or other small geographically-defined community," and states that they are "evolving rapidly in the UK," and so increasingly contributing to plurality at the local level.

Competition Concerns

The parties had previously submitted a request to the OFT for a fast track reference to the CC, demonstrating that they accepted the merger raised substantive issues, but the Secretary of State's intervention prevented the fast track procedure from being applied. However, the speed with which the OFT has referred this merger, and its approach to the analysis, show that the OFT has taken the fast track request into account. The OFT did not complete an exhaustive analysis of all the relevant markets, as it was content to refer the merger to the CC on the basis it considered the merger may cause a substantial lessening of competition in one product market; the market for non-contracted advertising (i.e. advertising booked directly by the advertisers). In geographical terms it came to the firm conclusion it might cause problems in North Wales, the East Midlands, South Yorkshire and Cardiff, whilst also noting a number of other possible trouble-spots.

The CC must now examine the OFT's conclusions as well as determine whether there are issues in the market for contracted advertising (i.e. advertising booked by agencies) and the market for sponsorship and promotion. It aims to publish its final report by the 27 March 2013.

Any parties wishing to submit comments or observations to the CC about this merger must do so before the 8 November 2012.

Alex Olive

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