Games over, but the battle begins
Fresh from the Olympics, Sir Charles Allen tells Gideon Spanier that over-zealous regulators are holding back commercial radio
Sir Charles Allen ought to be in ebullient mood after his leading role as chairman of the nations and regions for Olympics organiser Locog. The multi-tasking former chief executive of ITV even got a name-check during the speeches at the Paralympic closing ceremony last Sunday, having been involved in London 2012 for a decade, from the pre-bid days right up until the Games as "mayor" of the athletes' village.
But while a tanned Sir Charles should be revelling in the after-glow – a framed photo of Usain Bolt crossing the finishing line in the 100 metres hangs on the wall above his desk – he has returned to regular life with a bad-tempered bump.
He is sitting in the central London offices of Global Radio, Britain's biggest commercial radio group, which owns Capital, Heart, Classic FM and LBC, and explaining his frustration with the state of media regulation.
"After the Olympics, you think, 'How can we capture this can-do attitude?'" he enthuses, referring to the surge of positivity and patriotism that has been generated by the Games. "There's that whole messaging we take about trying to build British companies – and then you come back to the day job and this," he says, clutching a fat, ring-bound book of documents prepared by his legal team at Global.
The reason the lawyers have been so busy is that Sir Charles, chairman of Global, faces big problems with the £70m purchase of GMG Radio, owner of the Smooth and Real stations.
The deal, first announced in July, faces a double headache: not one but two separate investigations by the Office of Fair Trading (OFT) and Ofcom on the grounds of competition and media plurality.
Sir Charles, 55, whose understated white-washed sixth-floor office overlooks Leicester Square, says he recognises that regulators have to look at the radio market, but that the scope of the investigations is excessive.
"Why do you need to go through all this compliance and plurality for 12 small radio stations?" he says, his gentle Scottish brogue suddenly sounding more steely. "Rather than letting companies get on and grow, we have this level of regulatory involvement for such a small deal," he adds, complaining that the inquiries are "wasting millions" in legal fees."
It was Jeremy Hunt, the then culture secretary, who referred the takeover to regulators in early August – as the Olympics were in full swing. Mr Hunt had received protests from rival radio groups, including Bauer, which complained about how Global's share of radio advertising would jump from 36 per cent to around 44.5 per cent.
While a competition inquiry was not a total surprise, Sir Charles describes the referral on plurality grounds as "odd". News is the key issue when it comes to plurality and he points out that GMG Radio stations carry just "two minutes of news an hour".
Some observers think Mr Hunt may have been over-zealous in the wake of the furore over News Corporation's £7.5bn bid for BSkyB that he appeared so willing to approve. Sir Charles won't comment on that.
In any case, Ofcom will give its verdict on plurality by 28 September when it will be up to Mr Hunt's successor, Maria Miller, to decide.
Competition is the thornier issue and that could lead to a lengthier investigation. The worst-case scenario might be that the OFT and Competition Commission demand that Global sell some radio stations to satisfy competition concerns. Sir Charles is still hopeful, perhaps optimistically, that it won't have to come to that.
He reckons there is a lot of "misinformation" about Global's supposed dominance. For a start, BBC national and local radio have around 55 per cent of all listening. So that means Global's listening share is more like 20 per cent.
In terms of radio advertising, Global's enlarged 44.5 per cent share would be worth around £250m a year, he concedes. But Sir Charles points out that radio represents just 3.3 per cent of the total UK ad market. "When you think of Google, its turnover is £250m a month [in Britain] — we do that in a year. We're competing not in radio but in other media, too. That's quite different from a few years ago."
So Sir Charles feels that rivals – and indeed regulators – who focus on Global's share of just radio are being short-sighted.
He is particularly angry with Bauer, owner of Kiss and Magic, which also bid for GMG Radio and has been vocal in criticising Global's takeover. "We find it supremely ironic that a €3bn [£2.4bn] German conglomerate is arguing about this when they were bidding for the same assets. If they had won, they would have had more assets in the north [of England] than us."
For Sir Charles, there is another dimension. He believes Global deserves credit for helping to rebuild the commercial radio industry, which was in a parlous state in 2008 when he and global group founder and executive president Ashley Tabor, son of the hugely wealthy ex-bookmaker Michael Tabor, set up the radio group. "Without Global Radio, the business probably wouldn't be here," claims Sir Charles, referring to the woes that GCap, former owner of Capital and Classic, faced as listeners turned to the internet and the ad market dived in the credit crunch. "It was a business with declining revenues, declining audiences and declining investment and we've been able to turn that around."
The younger Mr Tabor and his family have also taken a financial hit, as Global had to take a signif-icant writedown.
Global's strategy has been to turn some of its brands such as Capital, once just for London, into a national station and to rebrand some of the local and regional stations.
While Sir Charles is focused on Global, he's also an adviser to Goldman Sachs, chairman of Big Brother production company Endemol, and a director of pay-TV firm Virgin Media and of 2 Sisters Food Group, purveyor of frozen pizzas and chicken.
Endemol is perhaps the most troublesome, with one big shareholder, Silvio Berlusconi's Mediaset, exiting after a protracted debt-for-equity swap. The rumour is Endemol is for sale despite an approach from Warner Bros being rejected by shareholders, but Sir Charles insists "this is not something that they're hawking around".
What Endemol, Virgin and Global share is the challenge they face from the technology giants such as Google, Apple, Amazon and Facebook.
Returning to the GMG Radio takover, Sir Charles says: "We've got a set of rules that are being applied to traditional media, but when it comes to real plurality, they're not the same rules in that new media world. You've got global juggernauts able to control it end-to-end and no one is doing anything about it."
But he adds: "I'm not a great advocate of regulation. Particularly, in fast-moving industries, the rulebook is out of date as soon as it's printed." He makes the point that even a soaraway tech company such as Facebook can come crashing back down.
As befits the man who used to run ITV until 2006, Sir Charles is adamant about one thing: "Broadcast media has a real future. It's all about the content, stupid." But are the regulators listening?
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