Global out in front in three-way race to secure GMG’s radio business

By ERIKKA ASKELAND
Published on 13/06/2012 00:00

BRITAIN’S biggest commercial radio company is understood to be the front-runner in a £45 million three-way bidding war for the FM stations owned by the Guardian Media Group (GMG).

Global Radio, which owns Classic FM, Capital and Heart, is one of three potential bidders for GMG’s radio business.

Others include UTV Media, the owner of TalkSport, which is understood to have been in informal talks with GMG for up to 12 months, plus an as-yet undisclosed venture capital company.

GMG, publisher of the Guardian newspaper, has made significant operating losses in the last two years. Its chief executive, Andrew Miller, last year warned staff that the company “could run out of cash in three to five years” and repeated in February that its financial position was “not sustainable”.

The firm, which is owned by the 76-year-old Scott Trust, has not officially put GMG Radio up for sale, sources claimed, although it has “always made clear” that assets in its portfolio that were “non-core” would be sold if good offers were made.

In 2010, GMG sold its regional media business, which included the Manchester Evening News, to Trinity Mirror for a knock-down price of £7.4m.

GMG Radio was valued at £118.9m in the group’s most recently published financial report to 31 March last year, with the latest bid from Global rumoured to be in the region of £45m.

GMG is expected to make further significant write-downs on the value of its radio assets when it reports its next results for the year to the end of March.

However, an acquisition by London-based Global could lead to competition issues in certain parts of the UK.

The group, which has a 15.9 per cent share of UK radio listeners – and an estimated 42 per cent share of the commercial radio market – may have to sell some of GMG assets, which include the Real and Smooth brands, to appease regulators.

The Scott Trust-owned group is the third largest commercial radio operator in the UK.

Real Radio has an FM presence north of the Border, in central Scotland, with both it and Smooth available on digital and online here.

Global operates GMG Radio’s national advertising contracts, which could provide significant cost savings if the two businesses were combined.

It is thought that Global has sufficient financial clout to bid for GMG Radio.

Its owner, Ashley Tabor, 35, founded the radio group two years ago after buying GCap Media and Chrysalis Radio for a combined price of £545m. It is thought his father, multi-millionaire Michael Tabor, who built up then sold the Arthur Prince bookmakers chain and is now a major racehorse owner, backed the deal.

Revenues at GMG Radio fell 6 per cent year-on-year to £47.1m and it reported a £4.1m pre tax loss in the 12 months to the end of March 2011.

GMG Radio was created by John Myers in 1999 and launched its first station, Real Radio Wales, in October 2000. Myers was replaced as chief executive in March 2009 by Stuart Taylor.

GMG declined to comment on the issue. Global was unavailable for comment.