News story about criticisms made by UK media owner Chrysalis plc of competitor GCap Media plc for not having invited it to bid in the auction of 'Century FM' radio stations, written by Grant Goddard in November 2006 for The Radio Magazine.

1. NEWS: CHRYSALIS PLC
CRITICISES COMPETITOR GCAP
MEDIA PLC FOR NOT INVITING IT
TO AUCTION OF 'CENTURY FM'
RADIO STATIONS
by
GRANT GODDARD
www.grantgoddard.co.uk
November 2006

2. Chrysalis plc has strongly criticised GCap Media plc for not having invited it to
participate in last month’s auction of the two 'Century FM' radio stations that
were sold to Guardian Media Group plc [GMG] for £60m.
A subsequent report in 'The Independent' newspaper alleged that a Chrysalis
offer of £70m had been rejected because GCap considered GMG to be less of
a direct competitor. The sale contract allows GCap to continue selling
advertising on the two Century stations for at least a further five years, despite
Chrysalis handling national sales for all other GMG stations.
Chrysalis chief executive Richard Huntingford said: “The piece in ‘The
Independent’, at face value, was broadly accurate. We weren’t invited to
participate in an auction for those two licences. It was quite clear that GCap
wanted to do everything they could do to keep those licences out of our hands,
because clearly we would have done the same thing that we had done with
'Century East Midlands' in terms of re-branding them to 'Heart', and I have
[already] outlined the benefits we have been able to extract from that station.
We would have done exactly the same and clearly would have been much
more of a competitive threat to the overall GCap sales offering. So we weren’t
invited in to a formal auction process. We did, at the last minute, suggest to
them that we might be able to get a reasonably [indicative offer] for those
licences if we’d been invited to participate. We would obviously have had to
look closely at the funding of it. Yes, we could take a bit of further debt on, but
we might have had to look at the shape of our portfolio generally. But we didn’t
get anywhere near that stage because it was quite evident that GCap were
going to do everything they could to ensure that those licences didn’t end up
either in Chrysalis’ ownership or being sold by Chrysalis. We obviously sell
GMG’s other radio stations’ airtime, and the deal that has been struck is quite
a strange deal and not one that we would have agreed to.“
Chrysalis chairman Chris Wright added: “GCap seem to be the people most
trying to stop effective brand consolidation within radio, which seems to be the
most important way forward for radio to compete against the BBC. I’ve been a
great advocate for a long time now that consolidation within radio should mean
consolidation into brands, rather than just physical consolidation of different
stations in the same ownership. The more you can expand the Heart brand in
the UK, the more you’ve got an effective tool that can be positioned between
'BBC Radio One' and 'BBC Radio Two' as a real threat and competitor to the
BBC. We would have loved to have been able to have opened those two
stations. We always felt it was a route forward and we’ve been prepared to put
our oar in … If we can improve our brands, at the expense of somebody else
also improving their brands, then that’s great because we are all working
together. But GCap seem to have this view that it’s more important to stop any
minor competitive advantages that one of its rivals gets than to expand the
business generally, which I find very, very disappointing. I think that this was a
prime example of that. It was like: ‘whatever happens, we musn’t let Chrysalis
get these [stations] because it will give the industry a Heart brand which will be
more competitive.’ And, really, the BBC is as big a rival as anybody else. So I
find it very frustrating that they took that view. That’s my personal opinion.”
News: Chrysalis plc Criticises Competitor GCap Media plc For Not Inviting It To Auction Of 'Century FM' Radio
Stations page 2
©2006 Grant Goddard

3. News: Chrysalis plc Criticises Competitor GCap Media plc For Not Inviting It To Auction Of 'Century FM' Radio
Stations page 3
©2006 Grant Goddard
GCap declined to comment on the allegations made by Chrysalis, and referred
enquiries to its earlier press statement of 18 October.
[First published in 'The Radio Magazine' as 'Chrysalis Slams GCap Over Century Sales', #761, 8 November 2006]
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