Guardian mulls £500m bid for Capital Radio

Guardian Media Group yesterday confirmed its interest in buying Capital Radio as it signalled that it was determined to pull off a major acquisition to make it a leading player in the radio sector.

Capital Radio shares closed up 11 per cent at 490p, valuing the company at £403m, though analysts said that GMG, owner of The Guardian newspaper, would have to pay £500m or £550m to secure it. John Myers, who runs GMG's radio business, said Capital was an attractive target but added that no decision had been made on whether to bid for it yet.

He said: "We are looking at all the big groups and running the rule over them. Of course Capital is one of these. That doesn't mean we've settled on one company."

GMG has about £120m of cash and no debt. Mr Myers said the company was "quite able" to raise the funds necessary for a large radio acquisition.

"The market will come down to three or four players in the UK and we want to be one of them.... Clearly that means that we have to acquire as well as win licences. To get to the top three, we would have to invest substantial sums," he said.

GMG's focus on Capital and the radio sector follows a brain-storming session held by company management a week ago in Glasgow. The company had planned to spend about £500m buying out its co-owner in the Autotrader business, BC Partners, but that deal appears to have turned sour.

Analysts said Capital was the obvious bid target, as it is the market leader, it is a pure radio group and has no blocking shareholder. Emap, one of the two other big groups, also has a large magazine business, while GWR has a 29 per cent stake held by Daily Mail & General Trust.

GMG is currently a minor player in radio and it relies on another operator to sell its advertising. Over the last two years it has spent about £70m buying Scot FM and Jazz FM. That means it will not have major regulatory problems acquiring a major radio group and it can move ahead of new legislation in the Communications Bill, now passing through parliament. This will liberalise the radio ownership rules, allowing mergers among the big players and permit non-European groups to buy stations for the first time.

Mr Myers said: "By and large, we don't have to wait for the Bill. But that doesn't mean to say that we'll rush out and do a deal tomorrow."

Capital is still the UK market leader, with a 15.2 per cent share of the adult commercial audience, compared with 12.5 per cent for GWR, 12.1 per cent at Emap and 9.9 per cent for Chrysalis. However, Capital's flagship 95.8 FM London station has recently lost substantial numbers of listeners, dropping below 10 per cent of the London market, and many believe the company is in structural decline.

Richard Menzies-Gow, analyst at Dresdner Kleinwort Wasserstein, said: "Capital would instantly give them [GMG] a big infrastructure and a big position with advertisers but they would also get all Capital's problems."

Start your day with The Independent, sign up for daily news emails
News
election 2015The 10 best quotes of the campaign
News
A caravan being used as a polling station in Ford near Salisbury, during the 2010 election
election 2015The Independent's guide to get you through polling day
News
people
Voices
David Blunkett joins the Labour candidate for Redcar Anna Turley on a campaigning visit last month
voicesWhat I learnt from my years in government, by the former Home Secretary David Blunkett
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA celebration of British elections
  • Get to the point
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 Media

Ashdown Group: Marketing Manager (B2B) - Romford - £40,000 + car

£35000 - £40000 per annum + car and benefits: Ashdown Group: Marketing Manager...

Guru Careers: Senior Account Manager / SAM

£30 - 35k: Guru Careers: A Senior Account Manager / SAM is needed to join the ...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Recruitment Resourcer / Recruitment Account Manager

£20 - 25k + Bonus: Guru Careers: Are you a Recruitment Consultant looking to m...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

Pan Am Experience: A 'flight' back to the 70s

Tim Walker checks in and checks out a four-hour journey with a difference
Humans aren't alone in indulging in politics - it's everywhere in the animal world

Humans aren't alone in indulging in politics

Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

Crisp sales are in decline

As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

Barcelona vs Bayern Munich player ratings

Lionel Messi scores twice - but does he score highest in our ratings?
Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

Explosive batsman who sets the range for Kiwis' big guns

Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'