Culture secretary issues intervention notice telling Ofcom to examine potential media plurality issues
Culture secretary Jeremy Hunt has ordered an investigation into Global Radio’s £70m deal to acquire GMG Radio, on the grounds of potential competition and plurality issues.
The secretary of state has issued an intervention notice ordering media regulator Ofcom to conduct an investigation into potential media plurality issues raised by combining the largest and third largest radio groups in the UK.
However, Global Radio’s deal to buy GMG Radio has been completed and cannot be de-railed by any potential regulatory issues.
Global – the parent company of brands including Capital, Heart and Classic FM – announced the deal to takeover GMG Radio’s Smooth and Real Radio brands in late June.
Global Radio has already applied for the deal to be put through a fast-track investigation process by the Competition Commission.
“On the basis of the information available to me, I have decided that under all the circumstances and, in particular the concentration of ownership which will occur in some parts of the UK, the merger may be relevant to the issue of plurality, particularly in those areas,” said Hunt. “Accordingly, I consider it appropriate to issue an intervention notice in this case, and I am therefore asking Ofcom to prepare a report advising me in greater detail about plurality.”
In addition the Office of Fair Trading will advise Hunt on competition and jurisdictional aspects of the deal, with both bodies reporting back to the Department for Culture, Media and Sport by 28 September.
Hunt issued the intervention, under section 42 of the Enterprise Act 2002, after receiving submissions and information he received regarding the proposals.
“The legislation requires that OFT produces a report on the competition and jurisdictional aspects of the transaction, notwithstanding that the merged parties have indicated they would like a fast-track reference to the Competition Commission,” said Hunt. “When I receive the Ofcom report I will consider their independent advice carefully before deciding whether the matter should also be referred to the Competition Commission for a more detailed investigation of the plurality concerns.”
Talksport-owner UTV Media and Bauer Radio, the second largest UK radio company, owner of brands including Kiss and Magic, which failed in an 11th hour bid to snatch GMG Radio from Global are both firmly against the deal.
“GMG completed the sale of GMG Radio in June this year and therefore any regulatory issues are a matter for the acquirer, Global Radio,” said a spokesman for GMG.
Hunt’s call for a plurality test raises some interesting questions, particularly given that in terms of radio news provision Global Radio and GMG Radio acquire news content from a third party, meaning there is no potential loss of originally produced news content.
However, industry sources believe that Hunt may be keen to push Global Radio for commitments about retaining, and even expanding, local content such as magazine shows to ensure that UK radio does not become dominated by nationally networked programming and station brands.
One of Hunt’s hot topics has been media provision at a local level. He has championed a new generation of local TV services despite many in the industry believing the plans are not viable.
And following his much-criticised role of the handling of News Corporation’s aborted takeover of BSkyB, which was the subject of a very public battle over media plurality issues, some believe that he is keeping an extremely vigilant eye on potentially market changing media mergers.
“GMG was asked for its opinion on the proper regulatory approach to the transaction by the secretary of state for culture, media and sport before he made this decision,” said the GMG spokesman. “We informed the secretary of state that, in our view, the standard merger control process, which assesses a transaction’s impact on competition only, would be sufficient for the assessment of the sale of GMG Radio to Global. Given that such a merger control review would have been assured in this case, we considered that intervention by the secretary of state on media plurality grounds would be unnecessary.”
He added: “We nevertheless respect the secretary of state’s decision to intervene directly in this case and we will provide any information that he requires. We note, however, that GMG Radio is no longer a business that we own any part of. As a result, we retain limited information on the business, and any decisions regarding its future are for Global Radio, its regulators and the secretary of state to take.”
Guardian Media Group is the publisher of MediaGuardian and until the recent sale was the parent company of GMG Radio.
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