Manning Gottlieb OMD’s latest expert industry insight
The commercial radio market is going into a very busy Easter period, especially across the core heritage stations.
Overall spends for January are up around £2m year on year to £48.5m, driven mainly by increased COI spend, the motor industry and also retail advertisers.
In February Fru Hazlitt (Chief Exec, GCap Media) shared her plans designed to reverse GCap’s fortunes and to persuade shareholders to reject a second bid from riva l group Global Radio, fronted by former ITV chief Charles Allen.
Hazlitt’s cost cutting plans include:
- Withdrawal from DAB in favour of FM and broadband
- Distribution platforms, including the sale of GCap’s stake in the Digital One multiplex
- The closure of two of their best performing digital stations, Planet Rock and the Jazz
- The sale of the regional Xfm stations in South Wales, Scotland and Manchester
- Reversal of Capital Radio’s 2 ads in a row policy in favour of a flexible supply capped at 9 mins per hour
The city’s Takeover Panel set a deadline of March 5 for Global to make a further offer, after which they would have to stand down for 6 months. By March 4, Global made what they refer to as a final proposal at 225p per share, valuing the company at £371m.
The offer has come in at the upper end of what analysts expected and may just convince shareholders that it offers them better value than Hazlitt’s cost cutting plans.
The problem with the latter is that it feels more like crisis management rather than a profitable long-term strategy, and major shareholders DMGT and Schroders’ commitment will now be put to the test now as we wait to see whether Global’s latest offer is sufficient to sway them, or whether they are going to hold out in the hope of a return to the heady days of their initial investment when they bought into Capital or GWR as was at over 500p per share.
Should Global be successful in this bid we will see the first radio super-group, taking almost 50% of radio revenues.
A potential consequence of the move is that it may prompt GMG Radio to re-think their sales arrangements, having only just switched these from Global into GCap.
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