Ministers to lift ownership restrictions on radio companies

The Government is poised to lift ownership restrictions on radio companies in a move that will allow the major groups to take each other over for the first time.

A government consultation paper on media ownership rules, due by the end of this month, is understood to look favourably on a proposal from the industry that would allow even the biggest radio groups to double in size. The Department for Culture, Media and Sport and the Department of Trade and Industry will jointly publish the document.

It would, for instance, allow Capital Radio to takeover Emap's radio business or the market leader GWR to buy any of the other players. Radio ownership is currently restricted by an arcane points system.

Phil Riley, head of Chrysalis, said: "The new rules will mean that most radio groups will be able to get into bed with most others, with little required in terms of disposals."

Capital has three London licences, the maximum allowed under current rules. This is likely to be doubled to a new limit of six London licences – making possible a bid for Emap, which owns two London licences. Capital's chief executive, David Mansfield, recently stated that he was interested in acquiring Emap's radio assets.

Announcing the consultation paper last month, Tessa Jowell, the Secretary of State for Culture, said: "We will try to be as deregulatory as possible, and intend to allow what market consolidation we can."

It is thought that Ms Jowell and the DTI have concluded they do not want to pick a fight over the new radio rules when there are far trickier issues to tackle. The media mogul Rupert Murdoch is hoping for a freeing up of cross-media ownership rules from the exercise and the Government will need to concentrate on this controversial issue.

Paul Richards, an analyst at Numis, said: "It's crazy to have ITV run by two businesses, whereas a smaller medium such as radio has so many players. I expect that to consolidate to three groups."

It is thought that the Government is drawn to the industry proposal that a radio group should be allowed to own stations that give it 45 per cent of the listeners in any one area.