View from City Road: Radio rules - not OK

Minority shareholders in the local radio group Trans World find themselves in a dismal position, as their board crisply outlined yesterday.

Emap's putative offer is 181p a share; the media group has already said it will not increase it. Nor is there any possibility of a higher offer from someone else since Emap already has the irrevocable support of Trans World's second biggest shareholder, Owen Oysten. It would thus be able to declare its bid unconditional at once.

Minority shareholders thus find themselves in a position where they will probably have to accept what is clearly an inadequate offer. The premium of 5 per cent over Trans World's share price on the day before Emap declared its hand is little short of pathetic. Nor does the multiple - 31 times 1994 earnings - look generous, given the many potential bidders panting to enter the fray as soon as the current review of media ownership liberalises the rules.

What makes it worse is that Emap benefits from the present limited market for radio licences (the rules prevent large numbers of other interested companies from making competing offers) whilst using a largely cosmetic device to circumnavigate the rules as they apply to Emap.

Buying Trans World means Emap would have more licences than the rules permit. So it intends to put some of them 'off balance sheet' into a cipher company. This flagrant attempt to avoid the legislation - bizarrely abetted by the regulator, the Radio Authority - sets an unfortunate precedent. Such a device not only in effect nullifies virtually all of the radio ownership rules, it could probably also be used to get around terrestrial television ownership restrictions as well. Hopefully this piece of legalistic sleight of hand will get short shrift, when, as looks likely, the issue reaches the courts.

But that is cold comfort to Trans World's shareholders. Before that happens they will probably have to choose between selling their shares on the cheap or becoming minority shareholders in an Emap-controlled company whose uncertain future will hang on the court's decision.