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

News
A scene from the video shows students mock rioting
newsEpic YouTube video features boundary-pushing staging of a playground gun massacre
Travel
travel
Voices
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations is an offensive act, says Simon Kelner
Arts and Entertainment
The cast of The Big Bang Theory in a still from the show
tvBig Bang Theory filming delayed by contract dispute over actors' pay
PROMOTED VIDEO
Sport
England celebrate a wicket for Moeen Ali
sportMoeen Ali stars with five wickets as Cook's men level India series
News
Morrissey pictured in 2013
people
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
News
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Travel
travel
News
Robyn Lawley
people
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
people
News
i100  ... he was into holy war way before it was on trend
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmThe film is surprisingly witty, but could do with taking itself more seriously, says Geoffrey Macnab
News
people
Life and Style
food + drinkVegetarians enjoy food as much as anyone else, writes Susan Elkin
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

1st Line Support Technician / Application Support

£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

Team Secretary - (Client Development/Sales Team) - Wimbledon

£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

Accountant / Assistant Management Accountant

Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star