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It’s Smooth Sailing?

22 May

In the late 1990s and early 2000s there was a renewed optimism in commercial radio in the East Midlands. At last, the dominant Trent FM had some proper competition, in the shape of not one but two regional competitors. Smooth and Century were giving the heritage station a run for its money, with significant investment in local news and content.

But like any industry, radio evolves. And a combination of events – which ultimately comes back to the subject of competition – means that some big changes could be on the way to the local listening market. Or maybe not.

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Yesterday the Competiton Commission published its report into the merger of Global Radio and Guardian Media Group – now known as Real and Smooth Limited (RSL). And it went much further than many observers had expected.

In simple terms, Global will not be allowed to own both Capital and Smooth Radio in the East Midlands, as it would adversely affect competition for advertising revenue. The Commission has also recommended significant “divestments” of stations in other regions. So what could that mean around here?

Well history might provide some clues. Back in the 1990s the then dominant GWR Group faced similar issues, and came up with a simple solution. It “warehoused” it’s Classic Gold network to an outside company, UBC. Essentially, UBC operated the licences with exactly the same output as before, but as a wholly separate company.

The big difference is that this was an AM radio network with just one brand. Today’s dilemma is somewhat different, including a combination of regional and local licences across the country, and a total of three brands. And marriages of convenience aren’t always harmonious.

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Take Orion Radio, the other main commercial player in the East Midlands. When Gcap (the forerunner of Global Radio) was forced to sell its Heart 106 licence, Orion snapped it up – but only operated it as Heart for as long as the contract dictated – before relaunching as a brand new station Gem 106. It took many by surprise, including Global’s executives.

What this perhaps demonstrates is that Global – so used to getting its own way from the regulator OFCOM – had suddenly been told that its no special case, at least in the eyes of the Competition Commission.

The likely outcome is that Global will sell Smooth Radio. It’s already ploughed significant money into relaunching the former Trent, Ram and Leicester Sound stations into Capital – just 18 months ago – so selling that licence is unlikely. And as we’ve seen, any “warehousing” arrangements could end up in tears. What’s more, Orion probably won’t be able to buy a second East Midlands licence, as it creates the same competition issues.

It could be an opportunity for the Bauer group to launch Magic FM in the area – the kind of easy listening station that Smooth always wanted to be, but was restricted from becoming because of format issues. Or – looking at the larger picture for Global – a brand new investor could emerge.

Perhaps based offshore.

Definitely not connected to Global.

Who just happen to want to opt into the Heart network.

One thing’s for sure – this name won’t be returning to a full time FM licence anytime soon.

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Posted by on May 22, 2013 in Radio Stuff, The Training Zone

 

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