News story adding Australia's Macquarie Bank to a growing list of possible buyers of failing UK commercial radio group GCap Media plc, written by Grant Goddard in October 2005 for The Radio Magazine.

1. NEWS: AUSTRALIA'S
MACQUARIE BANK JOINS
GROWING LIST OF POTENTIAL
BIDDERS FOR AILING RADIO
GROUP GCAP MEDIA PLC
by
GRANT GODDARD
www.grantgoddard.co.uk
October 2005

2. Australia's Macquarie Bank is the latest name to be added to the growing list of
potential bidders for GCap Media plc. Having already submitted applications
for new local commercial radio licences in Swansea, Ipswich and Warwick,
Macquarie could become the biggest player in the UK radio industry with a
single acquisition that is well within its means.
Paul Richards, media analyst at Numis, said: "Macquarie have been very
aggressive. If venture capitalists are getting involved in GCap, then Macquarie
is the type of firm we'd expect to be interested. And Tim Schoonmaker is the
obvious candidate to run a radio company ... he really knows the radio
industry."
Richard Menzies-Gow, media analyst at Dresdner Kleinwort Wasserstein,
commented: "[Macquarie] has just launched a media fund to invest, principally,
in Europe and it owns radio in Australia where it has done very well. Macquarie
is very aggressive and we would fully expect that they would have a look at
[GCap] ... GCap is a mess internally at the moment, but Macquarie has radio
experience and would have strong views on structural issues."
Schoonmaker denied involvement with a Macquarie bid for GCap, saying: "I
am heading up the bids for new licences from Ofcom and that's all".
Other potential bidders for GCap mentioned during the last week have
included venture capital group 3i that, at the beginning of the year, launched
an unsuccessful bid for 'Virgin Radio'. Ashley MacKenzie, former radio
executive at his father’s company The Wireless Group plc, is thought to be
linked with 3i’s bid. There is also speculation in the City that Malcolm Wall,
former chief operating officer of United Business Media, is heading the bid by
private equity group Cinven. Other possible City buyers include Candover,
KKR and Apax, or even a group of smaller private equity houses.
Last week’s poor RAJAR radio ratings made it even more likely that GCap will
fall prey to a buyout over the coming months. Lacking even one positive
ratings result about which to congratulate itself, GCap issued a statement by
chief executive Ralph Bernard that admitted: “These are disappointing but not
unanticipated results. Addressing audience issues is a key focus for GCap.”
A GCap spokeswoman added: "It is fair to say that getting the audience back
on analogue stations is key for us. Our 16.6 million listeners are our priority.
Changes always take a while to work through. This is just one quarter, we will
wait and see what the next one holds. Our plans are for next year and the next
couple of years."
Industry insiders question why GCap is only now admitting to the steep decline
in its stations’ audiences, which was apparent before the merger from several
years of published RAJAR data. GWR Group local radio’s share of listening
had slid steadily from 21.5% six years ago to 15.2% last year while Capital
Radio’s local station share had fallen from 14.0% five years ago to 11.3% a
year ago. Until now, the groups themselves and city analysts had appeared
complicit in sidestepping the issue of long-term declining audiences for
News: Australia's Macquarie Bank Joins Growing List Of Potential Bidders For Ailing Radio Group GCap Media plc
Page 2
©2005 Grant Goddard

3. News: Australia's Macquarie Bank Joins Growing List Of Potential Bidders For Ailing Radio Group GCap Media plc
Page 3
©2005 Grant Goddard
analogue radio, in the belief that profits from new digital stations were just over
the horizon. But with mounting evidence that DAB will remain a secondary
medium for quite some time, the spotlight has suddenly turned back to the
failure of radio groups to maintain listening shares of their heritage stations.
[First published in 'The Radio Magazine' as 'Macquarie Joins Bidders For Ailing GCap', #708, 2 November 2005]
Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of
experience in the broadcasting industry, having held senior management and consultancy
roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at
http://www.grantgoddard.co.uk