Watchdog outlines concern over radio merger

The competition Commission yesterday outlined its potential concerns over a proposed radio deal that is being viewed as a key test case for consolidation in that sector.

The competition watchdog sent out an "issues letter" for the £12.5m acquisition of Bristol-based Galaxy 101 by Vibe Radio from Chrysalis Group. Vibe is a joint venture between GWR, owner of Classic FM, and Scottish Radio Holdings.

The industry was shocked when the proposed transaction was called in by the commission last month because of its tiny size. It is believed that, should the deal be blocked, it may dash hopes of consolidation.

Paul Richards, analyst at Numis, said the deal had implications for the big radio mergers that are thought to be on the cards following new legislation, now passing through parliament. He said: "If the Vibe deal gets turned down, Emap will have to reconsider any plans it has to take over Chrysalis, for instance.... This will show the way the [competition] authorities are thinking."

At issue is the fact that GWR already has a market-leading station in Bristol and the acquisition of Galaxy will increase its local dominance.