’He’s like our Uncle Richard. He’s going to give us all his
wisdom,’ burbled Chris Evans, the morning after he struck the deal with
Richard Branson to buy Virgin Radio.
Branson, training for his next Boy’s Own adventure, popped up to say
that he had opted to throw in his lot with the maverick candidate. But
what are the media realities behind this undeniably eye-catching
development?
Capital Radio, which fixed up an engagement with Virgin this summer, has
been struck a serious blow. Quite how serious will become apparent
during 1998. It gave up its national radio sales house to further this
merger, now it suddenly looks vulnerable, shorn of a strategy, which an
expansion into restaurants can hardly fix. Virgin, remember, actually
consists of two licences, a coveted London FM frequency and a less
attractive national AM frequency.
If Capital had pulled off the deal it would have been the first operator
to exploit the liberalised broadcasting rules, allowing a company to own
three of the 15 commercial licences in London: Capital FM, Capital Gold
and Virgin FM, and all with a national station attached. This would have
restored its audience share in London to around 25 per cent, back where
it was in the late 1980s. It would also have taken a major role in the
switch to digital audio broadcasting.
Instead, Capital, if Evans’ Ginger Media Group gets it right, will have
a very serious competitor on its hands. For example, in return for
investing in digital the holders of national radio licences get an
automatic valuable renewal.
Now, the Radio Authority, as regulator, had already waved through the
Capital/Virgin deal on the issue of plurality - three out of 15 licences
can hardly be said to constitute a danger. But the Monopolies and
Mergers Commission dragged out its competition inquiry, above all on the
issue of whether the merged group would unfairly dominate the London
radio advertising market, where the combined share would be well in
excess of 50 per cent. The MMC only handed its report to the Department
of Trade and Industry last week. It would be fascinating to know what it
recommended.
And finally, where does this leave both listeners, and the sector?
Virgin has been an undistinguished national franchise. Under the Capital
option it would have been better managed. Under this deal, the star
talent is locked into the station. Despite the propaganda being pumped
out by Radio 1, Evans has certainly raised Virgin’s breakfast audiences
and profile.
The discipline of having a stake in the business could do wonders for
his time-keeping. This is a sector with room for both Owen Oyston and
Mohamed al Fayed as licence holders. I’m rather pleased Evans is getting
the chance. If he has entrepreneurial skills to build a proper media
group, good luck to him. The sector needs him.
