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Global Radio may be close to £50m deal for Guardian Media Group Radio Global Radio close to £50m deal for Guardian Media Group Radio
(40 minutes later)
Global Radio is close to securing a £50m deal for Guardian Media Group's radio business, which includes the Real Radio and Smooth Radio networks, which could lead to its rivals lodging complaints with the competition regulator.Global Radio is close to securing a £50m deal for Guardian Media Group's radio business, which includes the Real Radio and Smooth Radio networks, which could lead to its rivals lodging complaints with the competition regulator.
The UK's largest commercial radio group is understood to have tabled the most substantial of several offers for GMG Radio, as revealed by MediaGuardian.co.uk earlier this week, with protracted negotiations understood to have significantly accelerated in the last few days.The UK's largest commercial radio group is understood to have tabled the most substantial of several offers for GMG Radio, as revealed by MediaGuardian.co.uk earlier this week, with protracted negotiations understood to have significantly accelerated in the last few days.
While GMG has not committed to offloading its radio assets, which have been built into the third largest radio group in the UK since launch in 1999, sources say that at an internal meeting at the radio division earlier this week it was said to be "highly probable" that the sale will happen.While GMG has not committed to offloading its radio assets, which have been built into the third largest radio group in the UK since launch in 1999, sources say that at an internal meeting at the radio division earlier this week it was said to be "highly probable" that the sale will happen.
A deal could be announced as soon as next week, although the talks have been slow going to date and GMG has toyed with selling before.A deal could be announced as soon as next week, although the talks have been slow going to date and GMG has toyed with selling before.
However one source with knowledge of the negotiations said they would be "amazed" if GMG's plans to sell fell through again.However one source with knowledge of the negotiations said they would be "amazed" if GMG's plans to sell fell through again.
GMG also publishes the Guardian and MediaGuardian.GMG also publishes the Guardian and MediaGuardian.
If an agreement is reached, rivals including Talksport-owner UTV Media which is understood to have submitted a bid, Absolute Radio and Bauer Radio, which owns Kiss and Magic, will lodge complaints with the Competition Commission that Global Radio will have too much market dominance.If an agreement is reached, rivals including Talksport-owner UTV Media which is understood to have submitted a bid, Absolute Radio and Bauer Radio, which owns Kiss and Magic, will lodge complaints with the Competition Commission that Global Radio will have too much market dominance.
"Global's rivals will be fuming if this goes through, they will go straight to the [Competition] Commission on it," said one source with knowledge of the talks. "This gives enormous power to Global, Bauer, for example, would pretty much have to buy UTV Media and Absolute Radio to compete.""Global's rivals will be fuming if this goes through, they will go straight to the [Competition] Commission on it," said one source with knowledge of the talks. "This gives enormous power to Global, Bauer, for example, would pretty much have to buy UTV Media and Absolute Radio to compete."
Global Radio could have to sell some parts of GMG Radio, or its own stable, to deal with competition issues.Global Radio could have to sell some parts of GMG Radio, or its own stable, to deal with competition issues.
Observers point out two areas of potential issue in Cardiff, where Global's Capital FM and GMG's Real Radio are the two biggest players, and in the Midlands.Observers point out two areas of potential issue in Cardiff, where Global's Capital FM and GMG's Real Radio are the two biggest players, and in the Midlands.
When Global Radio took control of GCap in 2008 it was forced to sell off some stations in the Midlands to Orion Media, headed by former Chrysalis Radio boss Phil Riley, to appease regulators.When Global Radio took control of GCap in 2008 it was forced to sell off some stations in the Midlands to Orion Media, headed by former Chrysalis Radio boss Phil Riley, to appease regulators.
However another observer points out that it appears that competition regulators are starting to take a more benign view of local media ownership rules.However another observer points out that it appears that competition regulators are starting to take a more benign view of local media ownership rules.
The government and regulators came in for heavy criticism after blocking the sale of seven local newspapers by DMGT's Northcliffe Media to the KM Group last year, a move which subsequently resulted in two of the titles being closed.The government and regulators came in for heavy criticism after blocking the sale of seven local newspapers by DMGT's Northcliffe Media to the KM Group last year, a move which subsequently resulted in two of the titles being closed.
Earlier this month Northcliffe managed to gain approval to buy the weekly Nottingham freesheet The Topper, after extremely protracted negotiations, despite already owning The Nottingham Post, which meant it had a "high combined marketshare" of the local market.Earlier this month Northcliffe managed to gain approval to buy the weekly Nottingham freesheet The Topper, after extremely protracted negotiations, despite already owning The Nottingham Post, which meant it had a "high combined marketshare" of the local market.
Some have viewed the deal as a landmark in allowing the merger of two assets even if it breaks traditional rules about market control.Some have viewed the deal as a landmark in allowing the merger of two assets even if it breaks traditional rules about market control.
"There is a realisation that radio and local newspapers have really become a small piece of advertising in what really is a very large pie," said one industry source. "It is not as straightforward as Global having to sell off assets to do a deal."."There is a realisation that radio and local newspapers have really become a small piece of advertising in what really is a very large pie," said one industry source. "It is not as straightforward as Global having to sell off assets to do a deal.".
Speculation emerged on Thursday that John Myers, who launched GMG Radio in 1999 and left the business a decade later, might either be involved in a mystery third bid or being drafted in to a deal with Global Radio to perhaps run some of the assets, such as the Smooth stations.Speculation emerged on Thursday that John Myers, who launched GMG Radio in 1999 and left the business a decade later, might either be involved in a mystery third bid or being drafted in to a deal with Global Radio to perhaps run some of the assets, such as the Smooth stations.
This was prompted by his sudden resignation as chief executive of the Radio Academy, revealed to trustees at a meeting on Wednesday night, to focus on a "personal project".This was prompted by his sudden resignation as chief executive of the Radio Academy, revealed to trustees at a meeting on Wednesday night, to focus on a "personal project".
"People are seeing it as two-plus-two-equals-five situation but it is inaccurate," said Myers. "No one has asked me to do anything of the sort. The timing is just a coincidence.""People are seeing it as two-plus-two-equals-five situation but it is inaccurate," said Myers. "No one has asked me to do anything of the sort. The timing is just a coincidence."
GMG Radio is valued on Guardian Media Group's balance sheet as worth £118.9m in the group's most recent published financial report to 31 March last year.GMG Radio is valued on Guardian Media Group's balance sheet as worth £118.9m in the group's most recent published financial report to 31 March last year.
However the assets are expected to see a write-down in the order of more than £40m when the latest results are revealed.However the assets are expected to see a write-down in the order of more than £40m when the latest results are revealed.
Revenues at GMG Radio fell 6% year-on-year to £47.1m in the 12 months to the end of March 2011, according to the most recent publicly available figures.Revenues at GMG Radio fell 6% year-on-year to £47.1m in the 12 months to the end of March 2011, according to the most recent publicly available figures.
GMG Radio reported a £4.1m pre-tax loss with earnings before interest, tax, depreciation and amortisation of just over £2m.GMG Radio reported a £4.1m pre-tax loss with earnings before interest, tax, depreciation and amortisation of just over £2m.
The performance of the company is thought to have improved over the last year. Revenues are thought to be up slightly in the year to the end of March 2012, with ebitda growing to more than £3m.The performance of the company is thought to have improved over the last year. Revenues are thought to be up slightly in the year to the end of March 2012, with ebitda growing to more than £3m.
GMG and Global Radio declined to comment.GMG and Global Radio declined to comment.
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