Capital Radio's pounds 87m Virgin bid may fall foul of MMC advertising objections

Capital Radio may have to outsource Virgin Radio's advertising sales if the deal to merge the two groups is to get clearance from the Monopolies and Mergers Commission, according to City sources. Cathy Newman assesses the chances of the merger being cleared, and the threat from a rival bid launched yesterday by Chris Evans, the DJ.

Capital is known to have spent some time discussing the effect of its pounds 87m bid for Virgin on the London advertising market. According to City sources, the MMC investigation is likely to recommend that the Virgin and Capital advertising sales operations are kept separate in the interests of competition.

Capital's group chief executive, David Mansfield, would not comment yesterday on discussions with the MMC.

However, he confirmed that Capital's share of the advertising market would inevitably be one of the main points under scrutiny.

Mr Mansfield added that he expected the Department of Trade and Industry to pronounce on the merger early next year, some weeks later than expected.

Capital already has the biggest share of national radio advertising, with 35 per cent of the market. Virgin has a further 8 per cent.

Chris Evans, the celebrity DJ known as the "ginger whinger", has approached Virgin with a rival bid. Although Mr Evans is believed to be offering less than Capital, he is backed by Apax Partners, the venture capital company, and Virgin said yesterday it was taking the offer "seriously".

A Virgin Radio spokesman said Mr Evans' offer would enable Richard Branson to get a foothold in British television. "The deal with Evans, which we're still not too clear about, involves a merger which would give Branson some control over Ginger [Productions, Mr Evans' broadcasting company]."

Mr Mansfield said he was "not concerned" about the rival bid, and added that Mr Branson had "a lot of respect" for Capital. "He wants to join us round the Capital table," he said.

Capital is unlikely to get into an auction with Mr Evans, and is keen to tie up an exclusive agreement with Virgin in order to foil the DJ's counter offer.

The news coincided with changes to the terms of Capital's offer for Virgin, although Capital denied yesterday that the two events were related. The alterations, prompted by the decline in Capital's share-price, will see Mr Branson's shareholding in the company capped at under 10 per cent, and - although the pounds 87m price remains fixed - more cash than shares will be offered in order to avoid diluting earnings per share.

Mr Mansfield, who became chief executive after Richard Eyre left for ITV Network Centre, yesterday reported headline profit before tax of pounds 35m, up 9.2 per cent. The dividend increased 10 per cent to 13.75p. He said that since the acquisition of the My Kinda Town restaurants business last year, Capital had evolved into a "music-based entertainment company".

He added that the Radio Cafe concept would be expanded, with many more in the London area and one each in Birmingham and Southampton. There is presently just one Radio Cafe in London's Leicester Square. Mr Mansfield sought to assuage City concerns about the expansion into catering with news that the development would be funded by restaurants disposals. Despite this, though, Capital's shares slid 11.5p to 472p.

Evans' bid for Virgin, page 3

peopleStella McCartney apologises over controversial Instagram picture
Arts and Entertainment
Hayley Williams performs with Paramore in New York
musicParamore singer says 'Steal Your Girl' is itself stolen from a New Found Glory hit
Ronaldinho signs the t-shirt of a pitch invader
footballProof they are getting bolder
William Hague
people... when he called Hague the county's greatest
indybestKeep extra warm this year with our 10 best bedspreads
ebooksAn unforgettable anthology of contemporary reportage
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete today
voicesBy the man who has
Arts and Entertainment
Ed Sheeran performs at his Amazon Front Row event on Tuesday 30 September
musicHe spotted PM at private gig
Arsene Wenger tried to sign Eden Hazard
footballAfter 18 years with Arsenal, here are 18 things he has still never done as the Gunners' manager
people'I’d rather have Fred and Rose West quote my characters on childcare'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?
Why do we like making lists?

Notes to self: Why do we like making lists?

Well it was good enough for Ancient Egyptians and Picasso...
Hong Kong protests: A good time to open a new restaurant?

A good time to open a new restaurant in Hong Kong?

As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

Paris Fashion Week

Lagerfeld leads a feminist riot on 'Boulevard Chanel'
Bruce Chatwin's Wales: One of the finest one-day walks in Britain

Simon Calder discovers Bruce Chatwin's Wales

One of the finest one-day walks you could hope for - in Britain
10 best children's nightwear

10 best children's nightwear

Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

Manchester City vs Roma

Five things we learnt from City’s Champions League draw at the Etihad
Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

Trouble on the Tyne

Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?