Don't jump gun on mergers, radio stations told

The radio regulator will take a hardline approach towards any merger deals that attempt to anticipate the proposed new media ownership rules before they become law, it emerged yesterday as Capital Radio confirmed it had held takeover talks with its rival GWR.

Current law would not allow Capital and GWR to merge but the new rules, published in the Draft Communications Bill this month, probably would permit this combination.

However, GWR said it had been approached and pointed to the attitude of the Radio Authority, which would evaluate proposed mergers ahead of the new rules coming into law in mid or late 2003.

Ralph Bernard, chairman of GWR, said: "The Radio Authority has been very clear to us. They are saying that the rules are the rules. I speak to David Mansfield [Capital's chief executive] about once a fortnight about a whole range of things but we have not formally, or even informally, talked about a merger of our two companies," said Mr Bernard.

That statement appeared to be contradicted both by an announcement from Capital and by City sources, who maintained that Mr Bernard and Mr Mansfield had informally discussed a tie-up. Capital said: "We hold informal discussions from time to time with interested parties covering a wide range of potential opportunities in UK radio."

It is widely thought that devices such as "warehousing structures" will be used to enable companies to merge before the new media rules become law. However, Neil Romain, director of finance at the Radio Authority, said the regulator was concerned with both the letter and the spirit of the law as it stood now.