Global and Bauer's Busy Week

Developments on a national and international scale

Both Global and Bauer were newsworthy last week for some recent corporate developments. Global’s family owners have purchased a share of the US iHeartMedia and Bauer plan to remove Absolute Radio from the London FM airwaves, replacing it with their new station Greatest Hits Radio (GHR).

Bauer

Bauer’s portfolio management continues to be ever-evolving. GHR replaced many heritage local radio stations late last year, building the network out to a significant size. It did, however, lack a sizeable outlet in London - historically important to ad agencies to demonstrate your station is a big player - as well as an opportunity to garner more audience.

This has been corrected with an application to Ofcom to swap out Absolute Radio from 105.8 and replace it with GHR.

I don’t imagine the Absolute Radio team were that impressed when the instruction came down from high. It’s never nice to lose a good piece of broadcast real estate. This choice, though, is perhaps due to Absolute being a victim of its own success. The station does well digitally across the country, including in the capital.

Whilst the hours data is a bit spotty (below) the general trend is that FM is accounting for less and less of its total hours in London. Now, whist it should be remembered the straight line below reflects no new RAJAR data, it still looks like around only 25% of its hours are coming from FM. It’s hard not to look at that and think they’ll probably be able to weather change without too much trouble.

I do think it’s another example of us seeing a glimpse of FM’s future - turning into a heritage waveband. It will also be an interesting case study when we hear more arguments against analogue switch-off in the coming year.

Bauer’s other FM in London - Kiss - is harder to judge based on its RAJAR figures, as the station has seen some volatility over the past few years. Reach on analogue does seem to be trending down, whilst hours are a little more evenly matched across the two platforms.

The other benefit for Greatest Hits in moving to London FM is the affect it may have on attracting talent to the network. The battle for well-known talent, especially in key day-parts has been tough for radio networks. The combination of an explosion in the number of stations, the fact radio is a 40-odd week a year job, often with early mornings and with performances facing significant scrutiny, has made it difficult to persuade some big names over - even when money wasn’t necessarily a problem.

Adding on ‘not broadcast on FM in London’ and you find that agents are less likely to return phone calls. I don’t think it’s a great surprise that this announcement coincided with Simon Mayo announcing a switch from Scala to GHR. It’ll be interesting to see if there are any more changes before a probable launch in May

Global

Meanwhile, over in Leicester Square, Global is certainly living up to its name with the Tabor family, who own it, making another foray into radio, by buying up 8.8% of the USA’s biggest radio group - iHeartMedia - for $117m through their new Honeycomb Investments subsidiary.

There’s a few things that could be at play here. I’ve been told that Global have run the ruler over iHeart before, particularly at points in their existence when its financial underpinning was starting to falter. iHeart had been saddled with debt from private equity owners which has caused the business woes.

Why now though? Probably something to do with another suitor for the business - SiriusXM and Pandora owner Liberty Media who also own F1, a third of Live Nation and a variety of other interests.

Liberty had a 5% stake in iHeartMedia for a long time, but were unable to extend it due to competition law. This, however, was removed in November when the US Department of Justice greenlit the ability for its stake to grow to 50%. It looks like their holding has risen to 9.9% and there’s talk here about exchanging share classes that mean it could grow further.

For Liberty, iHeart combined with SiriusXM and Pandora would make a very strong audio content, sales and distribution business.

With all this Liberty activity going on, the investment would seem like a more strategic move by the Tabor family, than just a ‘hey we like radio and have $117m in the bank doing nothing’.

iHeart and Global do have similarities - strong broadcast radio businesses who are building out large digital audio operations. If the iHeart business does become ‘in play’, having an 8.8% shareholding certainly puts you at the table for any talks.

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