GWR poised to take control of Classic FM

GWR, the quoted commercial radio company, is ready to take control of Classic FM, one of four national radio stations in the UK, sources close to the company said last night.

A deal that would see GWR buy a 33 per cent stake in Classic, currently owned by Time Warner, the US media giant, could be announced as soon as tomorrow. GWR already owns 17 per cent of the station.

John Spearman, the head of Classic FM, cut short his holiday, and returned to London yesterday. His position is rumoured to be in danger, as sources indicate he may step down following the buyout.

There is a possibility that GWR will also buy out minority shareholdings in Classic FM, owned by Capital Radio and Daily Mail & General Trust, both of which hold substantial stakes in GWR.

The moves are linked to growing dissatisfaction, particularly at DMGT, about Classic's ill-advised foray into Europe, notably in Sweden.

It is believed that DMGT has been behind the moves to position GWR as the controlling shareholder. The media group, which publishes the Daily Mail and the Mail on Sunday, has recently decided to concentrate on radio as a prime acquisition target, following a relaxation of the rules governing cross-media ownership. It is also a player in local television, as owner of Channel One, the cable-exclusive "City TV" station in London.

Classic FM has been a success in the UK, and is one of four national services - the others are Virgin, Atlantic 252 and Talk Radio - to win licences from the Radio Authority. But the international expansion has proved disastrous, undercutting the contribution to earnings from the core UK service.

GWR is one of the fastest growing regional radio groups, and most recently took management control of London News Radio from Reuters, the financial information giant.

It has never been awarded a licence by the Radio Authority under the new licensing round, despite many attempts, but has been growing by acquisition, at home and abroad. Its chief executive, Ralph Bernard, is tipped to take a senior position at Classic FM. If the deal goes through, GWR will control a national licence for the first time.

Capital Radio, now thought to be a takeover target following the passage of the liberalising Broadcasting Bill, had no comment on the plans to restructure shareholdings at Classic FM. Speculation has been growing that Capital, which owns the leading commercial radio station in London, could be taken over by DMGT, which publishes London's Evening Standard newspaper.

The new broadcasting rules would allow DMGT to take over Capital, despite the fact that they share the national advertising market in Greater London.