There is plenty for buyers to get their teeth into: more than 150 local radio franchises and three national ones. By contrast, independent television is divided into 15 regions. The scope for consolidation in radio is enormous.
But it has been an awfully long time coming. Local radio has spent most of its first 20 years firmly wedged at the unfashionable end of the media spectrum. Sneered at for its downmarket audiences, shunned by advertisers for its amateurish connotations, ignored by investors as too small and badly run to be profitable, local radio scarcely looked like a promising phenomenon.
In the past six months, however, there has been a change in attitudes. Commercial radio is now the in-place to advertise and a fashionable investment. In part this shift has been generated by the razzmatazz surrounding the launch of the first three national stations - Classic FM, Virgin 1215 and soon Talk Radio. The success of Classic, which has more upmarket ABC1 listeners than read all the broadsheet newspapers combined, and the sheer weight of publicity around the (not-so-successful) launch of Virgin have opened advertisers' eyes. That in turn has benefited local stations. Instead of diverting advertising from local radio, national radio appears to have attracted new customers, tempted by its profile and its cheapness.
More lies behind the recent surge in interest in radio than just the arrival of the Branson publicity machine. Changes in the ownership of local licenses have made an enormous difference to the way the industry is run. The more waspish arrivistes call it the 'ring road syndrome', where the traditional franchise owner would be a group consisting of a local celebrity (to get the publicity), a local business (to raise the funds and advertise) and a bunch of radio and community enthusiasts.
Take Cambridgeshire's Mid Anglia Radio, snaffled by GWR on Monday. Its shareholders included Trinity and Jesus College, Cambridge, and local notables such as the Earl of Dalkeith, Mary Archer, Andy's Records and a regional newspaper group.
This approach sometimes produces great local radio. But it has also tended to limit a company's ability to see beyond the boundaries of the town to capitalise on business and investment opportunities. As control has gradually shifted into the hands of bigger groups - a process likely to continue until most licences are owned by half a dozen big companies, such as Capital, East Midlands Allied Press (Emap), Metro, GWR, Scottish Radio and Chiltern - radio has started to sell itself much more effectively.
A turning point came in 1992, when the bigger groups clubbed together to set up the Radio Advertising Bureau. Bigger groups have also introduced new technology, making it possible for advertisers to place the same advertisment across a number of stations with one telephone call. The result has been booming revenues: up by 27 per cent last year.
Radio is also taking a bigger slice of the available cake. Traditionally, British radio has taken barely 3 per cent of total display advertising spend, a third of the share it attracts in countries such as France or the US. But the proportion is edging up, and some say it may reach 5 per cent within the next few years. Small increases in advertising make a big impact on radio profits: on average, a 25 per cent rise in revenues produces a 177 per cent increase in profits.
All of this has underpinned the recent spate of mergers and stake building - and soaring share prices for those few radio groups with stock market listings. A pound invested last December in the FTSE100, an index of the UK's 100 biggest companies, would now be worth 96p. Invested in London's Capital Radio, it would have reached pounds 1.86.
Yet the consolidation process has only just begun. The would-be radio barons have reached the point, well known to Monopoly players, when all the sites have been acquired, but nobody can start building until they have a complete set. Under the current rules, if a publisher such as Emap owns local newspapers it cannot own more than 20 per cent of any overlapping local radio licence. A group that owns a national newspaper may not own more than 20 per cent of any local radio station. And no group can own more than 20 individual local radio licences or more than 15 per cent of the total 'pool' of radio licences. So, rather than miss out on the game altogether, many companies have taken strategic stakes in a variety of different companies to ensure that they have something to bargain with when the Government relaxes the rules, as seems probable within the year.
Even for those not encumbered by other media interests, minority stakes can be useful bargaining chips. Hence, Capital Radio owns 20 per cent of GWR. GWR owns 17 per cent of Classic FM. Harmsworth Media, part of the Daily Mail empire, also owns nearly 20 per cent of GWR. Havas, the French media group, indirectly shares in the ownership of 20 per cent of Capital. The list of cross holdings is endless.
It is a situation ripe for deal-making. Although the Radio Authority, the regulator, keeps a close eye on licence requirements for local content, there is still considerable scope for jointly owned stations to share editorial staff by 'networking' the same programmes. This can make a big difference to overheads - staff costs are typically half the costs of running a station. Joint advertising sales promotions are another way in which revenues can be boosted by licences in pooled ownership.
Nevertheless, many of the nascent regional groups have holes in their geographical coverage. London-based Capital, for instance, owns 30 per cent of Essex Radio, whose licences would fit nicely with GWR's burgeoning regional spread. Control of GWR's stations in Reading and Bournemouth would put Capital in an agreeably dominant position in the south. Sooner, rather than later, trading will begin in earnest.
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