There was much disappointment – and even a little anger – last week when the chance to buy EMAP Radio was snatched away from radio-specific bidders by consumer magazine group H Bauer.
Bidders included former Chrysalis chief executive Phil Riley, who led a bid for buyout group Veronis Suhler Stevenson, and Tim Schoonmaker, the former EMAP Radio chief, who is also thought to have led a private equity group. But it is Global Radio that is understood to have been most aggrieved by Bauer’s last-minute £1.14bn bid.
Bauer already has radio interests in Poland and Germany, and the deal will see it burst on the UK radio scene, immediately leapfrogging Global (previously the radio division of Chrysalis Group) and Guardian Media Group Radio into second place behind frontrunner GCap Media.
A letter written by Global chief executive Ashley Tabor to the group on the day of the sale describes its failure as “frustrating”. He reiterates the group’s long-term commitment to radio but ends with the words: “It’s a long game played slow, folks.” But what Global needs is scale, says Howard Bareham, head of radio at MindShare. He adds: “It was looking to increase its share of the market and this is a blow. Its options are limited now.” GCap accounts for more than 40% of the market, and has benefited from Guardian Media Group’s decision to hand it its radio sales contract after ending its deal with Global. New entrant Bauer will have about a 26% share, leaving Global languishing with 13% – a smaller share than it had as Chrysalis due to the loss of the GMG deal.
Global could yet make a bid for GCap, the owner of Capital 95.8 and Classic FM. GCap was valued at £710m at the time of its merger – with Capital Radio Group and GWR – in 2005, but it has now dropped to just £250m. Given that EMAP Radio accounted for £500m of the total price tag, industry observers believe Global must have the cash to make an offer but expect it would be a hostile move. Virgin Radio, one of the three national commercial stations in the UK, is also facing an uncertain future. Owner Scottish Media Group has halted a sale and flotation in the short term. It is understood the station itself is keen to go independent but it is also thought to have had talks with Virgin Group about developing closer links with its overseas radio stations.
Virgin Radio territory
One senior industry expert says: “Virgin Group is interested in radio as [Virgin founder] Sir Richard Branson is concerned it is moving too far from its music roots. Since the sale of the music retail arm, radio has become very important to him.” Global could seek to acquire the UK station and strike a deal with Virgin Group for the licence and international stations. As the expert says: “It would catapult Global to a new level.” Meanwhile, Bauer has still to reveal its hand. There is already much speculation that it may license the radio brands to established operators with existing sales infrastructures, or even sell off some brands. The Kiss network would fit nicely with Global-owned Galaxy, for example.
But it is understood Global has internal issues to resolve before making any move. Industry insiders say there are job cuts planned at the group, with the sales team being a particular target. Global denies any talks with sales staff, but it has already made redundancies at digital-only station The Arrow after axing live DJs.
For the moment Global is keeping quiet about present or future plans, but it is clear the operator has to act before it is dwarfed by its rivals.