The snag here is that Global's very bidding for the stations is what pushed the price up to what they paid. I would go further and argue that the £70 mil was only worth it to Global as only they could make the savings and synergies required to get a return on it.
It will be a different story if Global not only sell but HAVE to sell. By definition it would be a buyer's market.
Bauer's assertion that they could expect similar interest to what GMG got is therefore misleading. I think it unlikely Bauer would bid as they would likely face the same CC issues and this would at least mean RSL festering away in 'hold seperate' for another year, something that would of itself make it an unattractive prospect for Bauer .
Global initially offered £50 mil for GMG and would be very lucky to get that if they sell it as a whole. In fact I even wonder if GMG themselves might be potential purchasers? They sold the stations for £70 mill then 'ride to the rescue, buying back a much slimmer operation thanks to Global cuts for £50 mil? Far fetched?
Selling off bits off would, as Bauer point out, be very complicated as both RSL and Global's operations are individually so integrated and even at that may face some interesting dilemmas along the way. Take Smooth Glasgow. Say, Global have to sell it. Do the sell to Bauer who would likely offer a good sum for it but then put Clyde 2 on FM? Or sell it much cheaper to a bunch of local enthusiasts who might want to resurrect Q96?
Unless the CC vastly water down their initial findings we could well end up with a hell of a mess.
Capital Scotland: Low listeners, unlike Smooth/Heart Scotland it's housed somewhere else therefore costing money just to move equipment & hasstle of moving Smooth out (if Smooth Glasgow was to go). Most Likely that Kiss FM may replace the brand. Making Forth/Clyde focus more on aiming towards Heart/Smooth
Heart Wales: Frequency Swap? Main reason is because of the welsh output which would be more useful format for a local station.
Capital SW: Rebrand back to Red Dragon. But would Red Dragon Centre still keep the "Capital" fonts on its name?
Capital Scotland: Low listeners, unlike Smooth/Heart Scotland it's housed somewhere else therefore costing money just to move equipment & hasstle of moving Smooth out (if Smooth Glasgow was to go). Most Likely that Kiss FM may replace the brand. Making Forth/Clyde focus more on aiming towards Heart/Smooth
Heart Wales: Frequency Swap? Main reason is because of the welsh output which would be more useful format for a local station.
To throw a curve-ball, would Global sell the whole lot on for a profit?
Possibly, but at the time no other group thought that RSL was worth £70 million so I think Global are unlikely to realise a profit from a full divestment.
The divestments in Wales and Scotland are not the formality that some people think they are. The Scottish & Welsh Governments will be furious if the once in a lifetime chance of enhanced news coverage on the Real stations is tossed away with no good reason.
North Wales could end up with Jack or Nation Hits (automated for most of the day) plus Real without the enhanced news. I'm sure Global's rivals will be delighted to have got one over on them if this happens but it wouldn't enhance the quality of commercial radio in North Wales.
Possibly, but at the time no other group thought that RSL was worth £70 million so I think Global are unlikely to realise a profit from a full divestment.
Of course Bauer in particular are going to be bias when it comes to their view on this, why on earth would they want a successful brand like Heart creeping into their territory. However the CC won't just look at what Global's main rivals say and just go "yes we agree with them".
I am still convinced it wont be as bad for Global as many on here are assuming. It is possible that despite being able to keep the London licence they just decide to sell of Smooth as it is, that would at least ease some pressure on them.
This "Competitor B" suggesting they sell Capital in the East Midlands stinks of a company trying to eye up the "best" licences for themselves. Capital will not be sold in the East Midlands Global would be mad too when selling Smooth is really all they need to do there.
Of course Global will have to sell off stations and more than Real XS and Gold East Midlands but just because the likes of Competitor B say everything should be sold doesn't mean it will.
I know Gold was not included in the provisional CC report but it may be a sweetener in negotiations.
Certainly with something like Gold East Mids, if you could sell it to someone (Orion?) who could demonstrate critical mass alongside an existing licence, it might buy a small concession somewhere. If nothing else, the likes of Orion might weaken their opposition (as I said up-thread about Bauer getting some crumbs from the table).
But on the flipside I get the feeling the CC/OFT operate more on hard numbers than a couple of gents' agreements.
Smooth is such a mixed bag; changing Reals to Hearts and extending their main brand was surely the top priority.
"In Scotland Competitior B suggets selling Smooth and Real or just Capital would be the best option."
Don't understand that logic - Real still has a lot more listeners than Capital, right? Capital and Smooth or just Real would make more sense...
I do get the feeling the Smooth Radio network should not have been created- it does have the whiff of the GWR/Capital merger where a larger entity suited nobody and stank of expansionist opportunism.
So, whilst cutting losses, rewinding a couple of years, breaking up the network and (in London and the West Midlands) a transitional rebrand to Gold might just suit more than just Global.
Whatever happens with Global's other assets, Heart North West is only a matter of months away.
Real is not on "Life support" as you put it, far from it. Irt is a excellent station, and it should be left as it is.
Infact, is it not the case that it is indeed a Heart that you would use life support on? It i about time that particular life support system was turned off.
That won't stop Global turning into Heart once CC/Ofcom clear it. Remember Global killed off another well-loved brand in Galaxy, so they won't give two thoughts about keeping Real.
Be assured Real Radio is almost defintely on its way out.
That won't stop Global turning into Heart once CC/Ofcom clear it. Remember Global killed off another well-loved brand in Galaxy, so they won't give two thoughts about keeping Real.
Be assured Real Radio is almost defintely on its way out.
Well there are alot of listeners hoping that the decision is that Real must be kept as it is. It is a far superior listen to Heart.
Heart is dreadful, amature radio, and that is being kind to it.
Real is alot bigger sounding, and all round more lively and vibrant. Real has personality, Heart has none.
The presenters on Heart have not got a clue how to engage and interact with the listener. You just don't feel part of it when you listen to Heart, you do when you listen to Real.
I will say it time and time again, it is the listener who will miss out if Heart is inflicted on us Real listeners.
Don't get me wrong, Real in the North West have made some massive mistakes, such as getting rid of the superb Ditchy & Salty, but it is still a better station.
For the benefit of Ledders, and one or two others:
When Global acquired GMG Radio Ltd (now Real and Smooth Ltd henceforth referred to as RSL) last June, something quite simply had to be done to stop the rot at Real.
Real had lost the plot by last year.
End of.
I know virtually nothing about programming a radio station, but even I knew that Real Radio had degenerated, musically, and therefore in terms of identifying its target audience, into a car crash.
Global aren't messing around with Real for the fun of it. These changes, with the music, the networking, etc, are being done because GMG didn't. But really should have done.
Because it needed to be done.
Global would have known that a protracted regulatory process would ensue, which is why some of their management were seconded to RSL to steady the boat over there.
There are some very, very, good reasons for this:
Global had paid a lot of money (possibly £60m+), perhaps more than they wanted to, and perhaps over the odds, for RSL, in the circumstances
They would not be able to realise the full potential of this acquisition for months, or possibly even another year or so
In the meantime, some, or all of the business (the various former GMG stations) were either haemorrhaging cash and / or listeners
It was sound business sense to stop the rot, put Real on "life support" SO THAT:
- RSL does not become too much of a drain on Global's resources
- Real isn't in as bad a shape as it would be if nothing were done, by the time the Heart rebrand arrives. Which would only hurt the new Heart stations, when they appear, if starting from a worse position. Heart needs to get off to the best start possible to ensure success as soon as possible.
- This is why the music policy has changed. Those of you advocating the long-term survival of Real clearly like the current format under Global's ownership, so clearly they're doing a good job.
IF Global then sells any (or all) of the RSL stations, once the regulatory process has run its course:
i) The stations won't be in as bad a shape as they might be otherwise
ii) Some of them might even be profitable
iii) They might still have an audience worth considering
iv) This will help Global's negotiating position over price when selling any of these stations.
iii) They might still have an audience worth considering
A lot of the fact that Real still has a 2.3 million 25-44 old audience when added to Heart's 7.4 million 25-44 old audience in a single brand makes it attractive to national ad agencies and will bring in more revenue.
Smooth's 3.3 million older 35+ listeners is not so attractive to national ad agencies and might be more likely to be sold on..
Real is not on "Life support" as you put it, far from it. Irt is a excellent station, and it should be left as it is.
Under GMG, Real had lost the plot, but since Global bought it the music has improved massively and the dreadful Ryan Seacrest programme has gone, amongst other positive changes. It will be completed when they're able to roll out the Heart brand to the Real stations
Well there are alot of listeners hoping that the decision is that Real must be kept as it is.
The decision won't be that Real "has to stay as it is" that isn't the decision of the competition commission. They don't care about programming at all. They will make their decision in May and as I say I believe it will not be anywhere near as bad for Global as some here think (or hope) it will be.
The fact is Global want to expand Heart into the north. Real will become Heart with the possible exception of Yorkshire which it seems likely might have to be sold (probably to Orion) and the North Wales Real licence may also be sold or handed back.
That won't stop Global turning into Heart once CC/Ofcom clear it. Remember Global killed off another well-loved brand in Galaxy, so they won't give two thoughts about keeping Real.
Be assured Real Radio is almost defintely on its way out.
You have to also remember that Global doesn't fully run Real & Smooth yet under their name. Galaxy did survive 2 years I think before the Capital Rebrand. No doubt that if Orion gets a Capital station, they may rebrand it back. vice versa with Bauer (Kiss FM)
[*]IF Global then sells any (or all) of the RSL stations, once the regulatory process has run its course:
i) The stations won't be in as bad a shape as they might be otherwise
ii) Some of them might even be profitable
iii) They might still have an audience worth considering
iv) This will help Global's negotiating position over price when selling any of these stations.[/LIST]
That's an interesting perspective and I was actually contemplating that too. By nature, Private Equity companies buy over large businesses that may be underperforming, make them leaner and fitter then sell them on later at a profit. I would have to say PROBABLY no though due to the following.
Firstly, GMG Radio had already made significant cuts and cost savings. Global have made more since coming in but there is only so much you can cut while maintaining a competitive service/services at that level.
Secondly, the company was only worth the high fee Global paid as they could have then basically get rid of RSL's whole structure and integrated it with their one. No need for RSL's buildings, HR department, most of its presenters and all the rest. As a stand-alone business a lot of it (e.g. the buildings and presenters) would have to remain.
Finally, there simply isn't enough time. By the time the CC make the final decision in May, RSL will have been under Global control for less than a year and they will HAVE to begin any sale process then. The 'turnaround and sell' scenario is usually measured in years. Global will have no clear proven success that RSL might now be significantly more profitable.
That said, I wouldn't dismiss the possibility that a second competitive bidding process may yield a profit for Global. Stranger things and all that.
the North Wales Real licence may also be sold or handed back.
Not a point I've seen so far, would make sense though. Heart North Wales must have more listeners, but lets face it, more importantly more commercial clients than Real North and Mid Wales.
What WOULD Global be gaining for rebranding Real in North Wales to Heart? Not a lot. It's not like the different coverage area picks up any MAJOR population hubs.
Still leaves a problem in Cardiff however, sell Capital SW?
Comments
The snag here is that Global's very bidding for the stations is what pushed the price up to what they paid. I would go further and argue that the £70 mil was only worth it to Global as only they could make the savings and synergies required to get a return on it.
It will be a different story if Global not only sell but HAVE to sell. By definition it would be a buyer's market.
Bauer's assertion that they could expect similar interest to what GMG got is therefore misleading. I think it unlikely Bauer would bid as they would likely face the same CC issues and this would at least mean RSL festering away in 'hold seperate' for another year, something that would of itself make it an unattractive prospect for Bauer .
Global initially offered £50 mil for GMG and would be very lucky to get that if they sell it as a whole. In fact I even wonder if GMG themselves might be potential purchasers? They sold the stations for £70 mill then 'ride to the rescue, buying back a much slimmer operation thanks to Global cuts for £50 mil? Far fetched?
Selling off bits off would, as Bauer point out, be very complicated as both RSL and Global's operations are individually so integrated and even at that may face some interesting dilemmas along the way. Take Smooth Glasgow. Say, Global have to sell it. Do the sell to Bauer who would likely offer a good sum for it but then put Clyde 2 on FM? Or sell it much cheaper to a bunch of local enthusiasts who might want to resurrect Q96?
Unless the CC vastly water down their initial findings we could well end up with a hell of a mess.
Responces from Global's takeover. I say that Capital Scotland will go alongside with the current Heart Wales & Ex Red Dragon/Capital South Wales.
Capital Scotland: Low listeners, unlike Smooth/Heart Scotland it's housed somewhere else therefore costing money just to move equipment & hasstle of moving Smooth out (if Smooth Glasgow was to go). Most Likely that Kiss FM may replace the brand. Making Forth/Clyde focus more on aiming towards Heart/Smooth
Heart Wales: Frequency Swap? Main reason is because of the welsh output which would be more useful format for a local station.
Capital SW: Rebrand back to Red Dragon. But would Red Dragon Centre still keep the "Capital" fonts on its name?
So Reals staying is it
It does highlight a problem for the piecemeal sale of Smooth: any buyer wil have to invest in a studio and staff, which will put off some groups.
Possibly, but at the time no other group thought that RSL was worth £70 million so I think Global are unlikely to realise a profit from a full divestment.
The divestments in Wales and Scotland are not the formality that some people think they are. The Scottish & Welsh Governments will be furious if the once in a lifetime chance of enhanced news coverage on the Real stations is tossed away with no good reason.
North Wales could end up with Jack or Nation Hits (automated for most of the day) plus Real without the enhanced news. I'm sure Global's rivals will be delighted to have got one over on them if this happens but it wouldn't enhance the quality of commercial radio in North Wales.
http://www.digitalspy.co.uk/tech/news/a202210/sky-incurs-gbp348m-loss-on-itv-stake-sale.html
It might come to Global keeping most of Real to rebrand as Heart, but selling Smooth and Real XS, although the CC are looking at region to region, so it gets more complicated? It maybe possible to work out who may bid if a sale is forced?
I am still convinced it wont be as bad for Global as many on here are assuming. It is possible that despite being able to keep the London licence they just decide to sell of Smooth as it is, that would at least ease some pressure on them.
This "Competitor B" suggesting they sell Capital in the East Midlands stinks of a company trying to eye up the "best" licences for themselves. Capital will not be sold in the East Midlands Global would be mad too when selling Smooth is really all they need to do there.
Of course Global will have to sell off stations and more than Real XS and Gold East Midlands but just because the likes of Competitor B say everything should be sold doesn't mean it will.
Whatever they have to do including selling the odd Capital station or ditch the Gold am licenses will be a price worth paying to achieve this.
I know Gold was not included in the provisional CC report but it may be a sweetener in negotiations.
Certainly with something like Gold East Mids, if you could sell it to someone (Orion?) who could demonstrate critical mass alongside an existing licence, it might buy a small concession somewhere. If nothing else, the likes of Orion might weaken their opposition (as I said up-thread about Bauer getting some crumbs from the table).
But on the flipside I get the feeling the CC/OFT operate more on hard numbers than a couple of gents' agreements.
Would be absolutely fantastic if it does stay.
It's just a brilliant station.
Smooth is such a mixed bag; changing Reals to Hearts and extending their main brand was surely the top priority.
"In Scotland Competitior B suggets selling Smooth and Real or just Capital would be the best option."
Don't understand that logic - Real still has a lot more listeners than Capital, right? Capital and Smooth or just Real would make more sense...
Right now it is.. That's if Bauer or Orion keeps their hands off and a possible management is on the cards
I do get the feeling the Smooth Radio network should not have been created- it does have the whiff of the GWR/Capital merger where a larger entity suited nobody and stank of expansionist opportunism.
So, whilst cutting losses, rewinding a couple of years, breaking up the network and (in London and the West Midlands) a transitional rebrand to Gold might just suit more than just Global.
Real's on life support.
Whatever happens with Global's other assets, Heart North West is only a matter of months away.
Real is not on "Life support" as you put it, far from it. Irt is a excellent station, and it should be left as it is.
Infact, is it not the case that it is indeed a Heart that you would use life support on? It i about time that particular life support system was turned off.
That won't stop Global turning into Heart once CC/Ofcom clear it. Remember Global killed off another well-loved brand in Galaxy, so they won't give two thoughts about keeping Real.
Be assured Real Radio is almost defintely on its way out.
Well there are alot of listeners hoping that the decision is that Real must be kept as it is. It is a far superior listen to Heart.
Heart is dreadful, amature radio, and that is being kind to it.
Real is alot bigger sounding, and all round more lively and vibrant. Real has personality, Heart has none.
The presenters on Heart have not got a clue how to engage and interact with the listener. You just don't feel part of it when you listen to Heart, you do when you listen to Real.
I will say it time and time again, it is the listener who will miss out if Heart is inflicted on us Real listeners.
Don't get me wrong, Real in the North West have made some massive mistakes, such as getting rid of the superb Ditchy & Salty, but it is still a better station.
When Global acquired GMG Radio Ltd (now Real and Smooth Ltd henceforth referred to as RSL) last June, something quite simply had to be done to stop the rot at Real.
Real had lost the plot by last year.
End of.
I know virtually nothing about programming a radio station, but even I knew that Real Radio had degenerated, musically, and therefore in terms of identifying its target audience, into a car crash.
Global aren't messing around with Real for the fun of it. These changes, with the music, the networking, etc, are being done because GMG didn't. But really should have done.
Because it needed to be done.
Global would have known that a protracted regulatory process would ensue, which is why some of their management were seconded to RSL to steady the boat over there.
There are some very, very, good reasons for this:
- RSL does not become too much of a drain on Global's resources
- Real isn't in as bad a shape as it would be if nothing were done, by the time the Heart rebrand arrives. Which would only hurt the new Heart stations, when they appear, if starting from a worse position. Heart needs to get off to the best start possible to ensure success as soon as possible.
- This is why the music policy has changed. Those of you advocating the long-term survival of Real clearly like the current format under Global's ownership, so clearly they're doing a good job.
i) The stations won't be in as bad a shape as they might be otherwise
ii) Some of them might even be profitable
iii) They might still have an audience worth considering
iv) This will help Global's negotiating position over price when selling any of these stations.
Smooth's 3.3 million older 35+ listeners is not so attractive to national ad agencies and might be more likely to be sold on..
Under GMG, Real had lost the plot, but since Global bought it the music has improved massively and the dreadful Ryan Seacrest programme has gone, amongst other positive changes. It will be completed when they're able to roll out the Heart brand to the Real stations
The fact is Global want to expand Heart into the north. Real will become Heart with the possible exception of Yorkshire which it seems likely might have to be sold (probably to Orion) and the North Wales Real licence may also be sold or handed back.
That's an interesting perspective and I was actually contemplating that too. By nature, Private Equity companies buy over large businesses that may be underperforming, make them leaner and fitter then sell them on later at a profit. I would have to say PROBABLY no though due to the following.
Firstly, GMG Radio had already made significant cuts and cost savings. Global have made more since coming in but there is only so much you can cut while maintaining a competitive service/services at that level.
Secondly, the company was only worth the high fee Global paid as they could have then basically get rid of RSL's whole structure and integrated it with their one. No need for RSL's buildings, HR department, most of its presenters and all the rest. As a stand-alone business a lot of it (e.g. the buildings and presenters) would have to remain.
Finally, there simply isn't enough time. By the time the CC make the final decision in May, RSL will have been under Global control for less than a year and they will HAVE to begin any sale process then. The 'turnaround and sell' scenario is usually measured in years. Global will have no clear proven success that RSL might now be significantly more profitable.
That said, I wouldn't dismiss the possibility that a second competitive bidding process may yield a profit for Global. Stranger things and all that.
Not a point I've seen so far, would make sense though. Heart North Wales must have more listeners, but lets face it, more importantly more commercial clients than Real North and Mid Wales.
What WOULD Global be gaining for rebranding Real in North Wales to Heart? Not a lot. It's not like the different coverage area picks up any MAJOR population hubs.
Still leaves a problem in Cardiff however, sell Capital SW?