Global buy GCap

As expected Global Radio have bought GCap for £375m thus meaning that not only has the UK’s newest radio group has bought the biggest but also that the majority of UK Commercial Radio is now in private hands. This might be really interesting as private owners won’t have to slash cost to keep the city happy, although the investors will want their money back.
This might be interesting for other reasons as well. As reported here the new group may well have to dispose of some of the stations to satisfy competition rules. In London and the the Midlands both GCap and Global have stations, which means the new group will have more than one station. For example, Heart, Galaxy and BRMB in Birmingham. The rules say that in any given market no-one group should have unfair dominance of the ad business, which is interpreted as ‘2 + the BBC’. Which in Birmingham and London is the case, as both H Bauer and GMG have stations. GMG also operate Smooth Radio in the East Midlands but the speculation is that the new group will divest the older stations formerly part of Gcap in the east and west midlands. These would be a good fit for Bauer, as they could roll out the Big City Format on FM and expand Magic on AM. This would put Bauer on a better footing as they could sell advertising across a larger footprint.
Of course, this could all spark lots of consolidation in the sector as this one group will now have such a huge dominating effect that the other groups will be minnows by comparison and so will lose the bargaining power they once had with big advertisers, which of course means that one of them might want to pick up anything that the Global/Gcap want rid of or that they merge with each other and so further consolidate the industry.

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