This coming week will probably be the last for GCap Media as Global Radio agrees the final terms to acquire the “belegaured radio group” (copyright every newspaper).
Whilst traditionally it’s the acquiree that feels the brunt of any changes or cuts, the unique nature of the takeover creates some interesting questions. First and foremost, GCap is a much larger entity than Global and not only in audience ad revenue terms but in numbers of staff and broadcast locations.
Global Radio is quite a compact radio group, two main analogue brands – Galaxy and Heart – with some key operations co-located like Heart and the LBCs in London and Galaxy and Heart in the West Midlands. GCap on the other hand is spread across over 40 different locations with large group functions based in London, Bristol, Reading and Nottingham. Indeed, whilst some of GCap’s systems are a little confused, they are at least geared up to operate across multiple stations and radio brands and will probably find it easier to add the Global stations onto, rather than try and shoe-horn 50 stations into the ex-Chrysalis systems.
Unsexy as it is, fixing systems and operations quickly is of vital importance. The biggest problems with the GCap merger was that it took far too long to combine everything. This meant that money was constantly being lost because efficiency savings just couldn’t be realised and two different systems lumbered on for ages. Indeed, speed became the main problem for a number of issues. Mergers sadly mean that you have discussions with both sides before decisions are made, this takes ages and is genuinely pointless. It provides no direction for staff and delays generating benefits (financial and creative) for the new group. This inertia stops you benefiting from all the reasons you merged in the first place.
I believe that the most important thing for Global is it needs to decide HOW it wants to run the business. It has to work out the best systems and locations. This is where most of the savings will be made. But before it does this it needs to decide WHAT its business will be. This is mainly about deciding what its brand strategy will be once they’ve overcome the regulatory issues.
Regulation-wise, London will probably be fine, there may be some West Mids issues from a competition angle and the East Mids are likely to be very troublesome. The main options will be to save EITHER Trent/Ram/Leicester Sound or Heart 106. So, which do you do? Trent/Ram/Leicester probably makes more money than Heart, but for how long? Plus if you have a national brand strategy it would seem odd to get rid of Heart. Additionally, because of profit/turnover you’re more likely to get a better price for Trent/Ram/Leicester than Heart. I think we could see therefore see Bauer’s Big City Network moving southward to acquire with the cash helping pay down some of Global’s new debt. If they did decide to dispose of Heart, I’m sure GMG would be a willing buyer to add to its Real/Century network.
In the West Mids if they’re pushed to dispose of something (and assuming that the OFT are not going to accept a Gold disposal) I think it’s Galaxy Birmingham that could be on the block. It’s a smaller City licence, with its own special format requirements (though these are more removable now than ever) so I think that it could see itself being disposed of. A sale to Bauer for a Kiss re-brand (co-located at Kerrang) would make sense.
However, with a number of Bauer-related disposals, maybe rather than a sale for cash maybe there’s a deal to be done that allows Kerrang to join the XFM stable. Perhaps at that point swapping BRMB for Kerrang is the best thing to do from a brand and competition perspective. This would give Global an OFT-friendly Heart, Galaxy and Kerrang (to be rebranded XFM) nicely co-located together and leave Bauer with BRMB (to potentially add to Trent/Leicester/Ram) for a re-enforced Big City Network and maybe even a Gold for Magic
This, of course, pre-disposes that Global will want to keep the XFM network, something that I think would be sensible.
A retained XFM means co-location with Galaxy in Manchester and XFM South Wales staying with the brethren at Red Dragon.
Now, the size and nature of the One Network stations will make it difficult to do much more co-location than there already is. What we are likely to see is a networked daytime programme across the network, reducing the number of local programmes to three in the weekday. At this point however I think it raises some interesting questions about the role of the management teams at the local sites and whether we’ll start to see certain roles pooled across multiple stations.
London will throw up quite a few questions, the first about location. I believe that Global have to move out of Bramley Road soon, so they’re going to have been on the look out for somewhere new to stay. You could argue that GCap’s Leicester Square would make the perfect home, but I think whilst you could fit a Heart in, no problems, that and two LBCs might be pushing it somewhat. Now, whilst building new studios for all of GCap’s London station will cost a few quid, I think the cost savings from moving out of Leicester Square will more than pay for them in a couple of years. In addition bringing everyone together into somewhere new will be good for morale and the idea of building a new company together. I hear a certain location in Hammersmith is under consideration.
I think the main change we’ll see in London is the change of Choice into Galaxy. A London base for Galalxy will be good for the network and give them a better national proposition to sell.
With digital there are a number of issues. Firstly I don’t think well necessary see reprieve for Planet Rock and theJazz. I think Heart, Galaxy, XFM, Classic FM, One Network and Gold are enough to be getting along with for any radio company. I think Jazz FM will occupy the place theJazz did and Planet Rock will be acquired by someone else – it’ll be good to have a new operator with a good station and audience to build on.
Digital One, however, raises an interesting question. Surely if your business is growing into one with strong national brands, then having some good national capacity will be very important. I think D1 might stay in the Global family.
So, overall, more changes with the saddest thing is more uncertainty for staff. However, it’s important for the radio industry to have a strong leader and I think after the changes in Global it will finally have that.