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Roinn Cumarsaide, Gnfomhaithe arson na hAeraide & Comhshaoil Department of Communications, Climate Action & Environment

Bay Broadcasting Limited & Classic Rock Broadcasting Limited

Phase One Examination Report

27/ 02/ 2018 Table of Contents

Table of Contents ...... i

1. Background ...... 1

The Purchaser: ...... 1

The Target: ...... 1

Media Sector ...... 1

The Purchaser: ...... 3

The Target: ...... 3

2. Application of the Relevant Criteria & s. 28D (2) of the Competition Act 4

Significant Interests ...... 4

The Purchaser: ...... 5

The Target: ...... 5

The Views of the Part ies: ...... 6

Impact : ...... 6

Relevant M edia Assets ...... 7

The Purchaser: ...... 7

The Target: ...... 8

Impact : ...... 8

Ownership and Control ...... 9

Relevant Media Assets: ...... 9

Regulat ory Oversight: ...... 9

Proposed Changes: ...... 9

Impact : ...... 10

Market Share ...... 10

The Purchaser: ...... 11

Media Merger - Bay & Classic Rock; Review - i - The Target: ...... 12

Brand & News Reach: ...... 12

The Views of the Part ies: ...... 13

Impact: ...... 14

Governance and Editorial Management ...... 14

Compliance and Ethics ...... 15

Editorial Ethos ...... 15

Impact ...... 16

Cont ent ...... 16

The Purchaser ...... 16

The Target ...... 17

Impact ...... 17

Financial ...... 18

The Purchaser: ...... 18

The Target: ...... 18

Impact : ...... 18

Impact on the Irish Language ...... 18

Impact : ...... 19

The scale and reach of RTE and TG4 ...... 19

Impact : ...... 19

The Views of the CCPC ...... 20

The Views of the BAI ...... 20

The Views of the Undertakings Involved ...... 20

3. Summary of the Application of the Relevant Criteria & s. 280 (2) of the

Competition Act ...... 21

4. Conclusion ...... 25

Media Merger - Bay & Classic Rock; Review - ii - 1. Background

1.1 The proposed media merger involves the acquisit ion of sole control of Classic

Rock Broadcasting Limited (the Target) by Bay Broadcasting Limited (the

Purchaser) through the purchase of the issued share capital of the Target that is

not already owned by the Purchaser.' In this document the Purchaser and the

Target are collectively referred to as "the Parties".

1.2 The proposed transaction is to be implemented pursuant to the terms of a

Share, Loan Note and Loan Purchase Agreement (S&LA) between the Parties,

dated 21 September 2017. 2 This bid is subject to certain express conditions,

including, amongst others, regulatory clearance in the State.

The Purchaser:

1.3 The Purchaser is a private limited company headquartered in in the State

and is active in the Broadcasting Sector in the State primarily through the

operation, through its subsidiaries, of a number of radio stations in the State.3

The Target:

1.4 The Target is a private limited company headquartered in Dublin in the State and

is active in the Broadcasting Sector in the State primarily through the operation

of a radio station in the State. 4

Media Sector

1.5 Media Mergers, as defined in s. 28A of the Competit ion Act 2002 (as amended)

(the Competition Act), refers to those undertakings which "carry on a media

business" in the State. A "media business" is defined in the Competit ion Act as

follows:

(a) 'media business' means the business (whether all or part of an undertaking's business) of-

1 Bay & Classic Rock, Merger Notification Form, p. 3 2 Bay & Classic Rock, Appendix 1, Share, Loan Note and Loan Purchase Agreement 3 Bay & Classic Rock, Merger Notification Form, p. 3 4 Ibid

Media Merger - Bay & Classic Rock; Review - 1 - (i) the publication of newspapers or periodicals consisting substantially of news and comment on current affairs, including the publication of such newspapers or periodicals on the internet,

(ii) transmitting, re-transmitting or relaying a broadcasting service,

(iii) providing any programme material consisting substantially of news and comment on current affairs to a broadcasting service, or

(iv) making available on an electronic communications network any written, audiovisual or photographic material, consisting substantially of news and comment on current affairs, that is under the editorial control of the undertaking making available such material;

1.6 Furthermore, the current Guidelines on Media Mergers (the Guidelines)

provides t he following supplementary definit ion of a "media sector":

(a) 'media sector' means one of the following (and 'media sectors' means one or more of the following collectively):

(i) Publishing - publication of newspapers or periodicals consisting substantially of news and comment on current affairs and the production of content for same.

(ii) Broadcasting - transmitting, re-transmitting or relaying a broadcast service including radio or television and the production of content for same.

(iii) Internet Media making available on an electronic communications network any written, audio-visual or photographic material consisting substantially of news and comment on current affairs.

Media Merger - Bay & Classic Rock; Review - 2 - 1.7 Furthermore, the Guidelines also note a number of sectors, these being

television, radio, print media, internet, [and] other media interests, on the basis

of w hich cross-media interests can be considered.

1.8 The Guidelines provide a working method of grouping media business, as

defined in the Competition Act, in order to facilitate the examination of notified

media mergers. The guidance provided by the Guidelines in this area is not

exhaustive and does not preclude the examination of sub-sectors of the media

sectors identified or other relevant groupings of media businesses.

The Purchaser:

1.9 The Purchaser is active in the Broadcasting Sector in the State through both the

transmitting, re-transmitting or relaying a broadcasting service and the provision

of programming material consisting substantially of news and comment on

current affairs to a broadcasting service through the operation of a number of

radio stations in the State. These stations are as follows:

(a) 4fm,

(b) Sunshine 106.8, and,

(c) (the Target).5

The Target:

1.10 The Target is active in the Broadcasting Sector in the State through both the

transmitting, re-transmitting or relaying a broadcasting service and the provision

of programming material consisting substantially of news and comment on

current affairs to a broadcasting service through the operation of a radio station

in the State, i.e. Radio Nova. 6

5 Ibid 6 Ibid

Media Merger - Bay & Classic Rock; Review - 3 - 2. Application of the Relevant Criteria

& s. 28D (2) of the Competition Act

Significant Interests

2.1 In accordance wit h Section 28L of the Competit ion Act 2002, the Guidelines

provide a definition of what constitutes a significant interest in a media business

- which it states means "[h]as sufficient voting, financial or ownership strength within the relevant media business or media businesses to influence directly or indirectly, to an appreciable extent, the direction or policy of the media business or media businesses with regard in particular to news, current affairs or cultural content. This includes sourcing, production, supply or delivery of such content".

This definition further includes indicative thresholds as to what constitutes a

significant interest in entit ies that carry on media businesses in the State,

including that:

(a) A holding or voting strength of between 10% and 19% (directly or

indirectly) may constitute a significant interest.

(b) A holding or voting strength of more than 20% (directly or indirectly) will

generally constitute a significant interest.

2.2 The definition of "plurality of the media" is provided in the Competit ion Act and

includes both diversity of ownership and diversity of content, both of which are

also defined in the Act, as reproduced below:

(a) Diversity of content - "means the extent to which the broad diversity of views (including diversity of views on news and current affairs) and diversity of cultural interests prevalent in Irish society is reflected through the activities of media businesses in the State including their editorial ethos, content and sources".

(b) Diversity of ownership - "means the spread of ownership and control of media businesses in the State linked to the market share of those media

Media Merger - Bay & Classic Rock; Review - 4 - businesses as measured by listenership, readership, reach or other appropriate measures".

The Purchaser:

2.3 Two shareholders have a shareholding in excess of 10% in the Purchaser:

(a) M ichael Ormonde - 50%, and,

( b) Kevin Branigan - 50%.7

2.4 Furthermore, Mr Ormonde and Mr Branigan together comprise the board of the

Purchaser.8

2.5 Therefore, both Mr Ormonde and Mr Branigan can be considered to have a

significant interest in the Purchaser.

2.6 As the Purchaser is a limited liability company jointly controlled by Mr Ormonde

and Mr Branigan it is not necessary to consider the Purchaser, as an undertaking

as defined in the Competition Act, as having a significant interest in its ow n

business separate to those of Mr Ormonde and Mr Branigan.

The Target:

2.7 Three shareholders have a shareholding in excess of 10% in the Target:

(a) The Purchaser - 38.4%,

( b) Vienna Investments Limited - 38.4%, and,

(c) Patrick McDonagh-19.715%.9

2.8 Further to this, the Purchaser is represented by 3 persons, including Mr

Ormonde and Mr Branigan, on the Target's 8 person board. 10 Mr Branigan also

serves as the CEO of the Target.11

7 Ibid, p. 6 8 Ibid 9 Ibid, pp. 6-7 10 Ibid, p. 7 11 Ibid

Media Merger - Bay & Classic Rock; Review - 5 - 2.9 Vienna Investments Lim ited is also represented by 3 persons on the Target's 8

person board.12

2.10 Mr McDonagh is also represented by a person on the Target's board.13

2.11 Furthemore, the Target is currently jointly controll ed by Vienna Investments

Limited and Mr McD0nagh 14

2.12 Therefore, the Purchaser, Vienna investments Limited and Mr McDonagh can be considered to have a significant interest in the Target.

2.13 The significant interests of Vienna Investments Limited and Mr McDonagh will be

extinguished should the proposed transaction proceed.

The Views of the Parties:

2.14 The Parties state that, should the proposed transaction proceed, the Purchaser

will maintain its significant interest in the Target. 15

Impact:

2.15 As can be seen from the above, there are two persons that can be considered to

have a significant interest in the Purchaser:

(a) Mr Ormonde, and,

(b) Mr Branigan.

2.16 As can be seen from the above, there are three entit ies that can be considered to have a significant interest in the Target:

(a) The Purchaser,

( b) Vienna Investments Limited, and,

(c) Mr McDonagh.

12 Ibid 13 Ibid 14 CC PC, Determination of Merger Notification, M/17/056 , P. 2 15 Bay & Classic Rock, Merger Notification Fo rm, p. 6

Media Merger - Bay & Classic Rock; Review - 6 - 2.17 As the significant interests of Vienna Investments Lim ited and Mr McDonagh will

be extinguished should the proposed transaction proceed, they will not be

considered further in this examination.

2.18 The information above does not in itself give rise to concerns regarding issues of

significant interest in regard to this acquisition.

2.19 It should be noted that significant interests within a media business or a range of

media businesses do not necessarily constitute a significant interest in a media

sector or across media sectors. While the Guidelines provide a definition of what

constitutes a significant interest in a media business, the relevant criteria in the

Competition Act specifies the consideration of significant interests in and across

media sectors. Therefore, there are two separate concepts of significant

interests considered in media merger examinations and thus in this examination,

those in media businesses and those in media sectors.

2.20 Therefore, whether any of the following is concerning to the State and if they

w ill have an adverse impact on the plurality of the media in the State will be

assessed, in accordance w ith the relevant provisions of the 2002 Act and the

Guidelines, in terms of the remainder of the indicators in this examination,

particularly Relevant Media Assets, Ownership and Control, Market Share and

the Views of the CCPC:

(a) The concentration of the interests of the Purchaser in the Target, i.e.

38.4% to 100%.

Relevant Media Assets

2.21 Relevant media asset is defined by the Guidelines as "holdings which constitute a significant interest in an undertaking (other than an undertaking party to the merger) that carries on a media business in a media sector(s) in the State, and which are held either by an undertaking party to the merger or by a natural or legal person with a significant interest in an undertaking party to the merger".

The Purchaser:

2.22 The Purchaser operates a number of relevant media assets in the State. These

are as follows:

Media Merger - Bay & Classic Rock; Review - 7 - (a ) Three local radio stations (par. 1.9), as fo llows:

(i) Classic Hits 4fm (99% holding),

(ii) Sunshine 106.8 (45.83% holding), and,

(iii) Radio Nova (38.4% holding).16

2.23 The Department is not aware of any other relevant media assets arising from the significant interests that may be held by Mr Ormonde or Mr Branigan.

The Target:

2.24 The Target operates a single relevant media asset in the State, as fo ll ows:

(a ) Radio Nova (par. 1.10).

Impact:

2.25 The information above does not in itself give rise to concerns regarding issues of relevant media assets in regard to the proposed transaction. The foll owing entities relevant to this examination have significant interests in businesses that operate a number of relevant media assets:

(a ) Mr Ormonde:

(i) The relevant media assets of the Purchaser identified above.

(b) Mr Branigan:

(i) The relevant media assets of the Purchaser identified above.

( c ) The Purchaser:

(i) The relevant media assets of the Target identified above.

2.26 The ownership, of a number of the relevant media assets identified above, by those who can be considered the significant interest holders identified above must be assessed in terms of the market share that these relevant assets possess in their respective sectors and on a cross-sector basis.

16 Ibid, p. 3

Media Merger - Bay & Classic Rock; Review - 8 - Ownership and Control

Relevant Media Assets:

2.27 The follow ing entit ies have holdings in the Purchaser that constitute significant

interests and thus significant interests in the relevant media assets, identified

above (par. 2.21), of the Purchaser:

(a) Mr Ormonde, and,

( b ) Mr Branigan.

2.28 Furthermore, the Purchaser has significant interests in the Target and thus

significant interests in the relevant media assets of the Target, identified above

(par. 2.29).

Regulatory Oversight:

2.29 As noted by the Parties, the radio stations they operate are licenced to broadcast

by the Broadcasting Authorit y of Ireland (the BAI) and are subject to its various

codes and rules, including its Code of Fairness, Objectivity and Impartialit y and

its Code of Programme Standards. 17

2.30 Further to this, the Parties voluntarily abide by the alcohol codes of both the

Independent Broadcasters of Ireland and the Advertising Standards Authorit y of

lreland.18

Proposed Changes:

2.31 The Parties note in their contract variation request submission to the BAI that 4

members of the board of the Target will step dow n should the proposed

transaction proceed and the remaining members, including the three members

currently representing the Purchaser, shall then comprise the w hole board. 19

17 Ibid, p. 12 18 Ibid, pp. 12-13 19 Bay & Classic Rock, Appendix 4, Vari at ion Request to BAI, pp. 3 & 8

Media Merger - Bay & Classic Rock; Review - 9 - 2.32 The Parties also note that certain executive services are currently seconded from RedFM, which is operated by Vienna Investments Limited, to the Target and that

these arrangements shall cease should the transaction proceed. 20

Impact:

2.33 The information above does not in itself give rise to concerns regarding issues of ownership and control in regard to this acquisition. The ownership, of a number of the relevant media assets identified above, by the significant interest holders

identified above, must be assessed in terms of the market share that these relevant assets possess in their respective sectors and across sectors.

Market Share

2.34 The above identified relevant media assets of the Purchaser and of the Target are active in the radio broadcasting sector through the operation of a number of radio stations. Therefore, they are directly comparable with each other.

2.35 Direct comparison, through the use of various market share or similarly indicative data, will be used to determine whether the significant interests possessed in the Purchaser, as measured by its relevant market shares, when taken together with the market shares of the relevant media assets of the Target, would constitute an excessive significant interest in the radio broadcasting sector.

2.36 Distinct data is generally available for the different media sectors and the market shares in the relevant sub-sectors therein. The relevant data is assessed by different methods and across different time periods. The sourcing of this data for

this examination is outlined below:

(a) The market share data, supplied by the Parties or sourced directly, regarding radio li stenership comes from the Joint National Listenership Research (JNLR).

( b) As provided for in the Competition Act, "other appropriate measures" of market share may be referenced as deemed appropriate.

20 Bay & Classic Rock, Merger Notification Form, p. 9

Media Merger - Bay & Classic Rock; Review - 10 - 2.37 There are a number of different methods of measuring market share and

different t ime periods during w hich market share is measured. The nature of a

particular market share and its time period w ill be noted during this section.

2.38 Generally, the media sectors considered for the purposes of gauging cross­

sectoral market share are the print publication sector, the radio broadcasting

sector, the TV broadcasting sector and the on line news sector.

The Purchaser:

2.39 While the Parties have provided JNLR information w ith regard to the reach of the

Purchaser's radio broadcasting assets (par. 2.22), more up-to-date market share

information is also available via the JNLR directly:

Classic Hits 4FM Dublin Commuter 2.3%

Classic Hits 4FM Co. 7%

Sunshine 106.8 Co. Dublin 6.6%

Radio Nova Dublin Commuter 4.1%

2.40 While Sunshine 106.8 operates in Co. Dublin rather than the broader Dublin

Commuter franchise area, it is estimated that the market share of the station in

the broader franchise area is 5.4%. 22 Therefore, the radio stations operated by

the Purchaser have an aggregated market share in the Dublin Commuter

franchise area of 11.8%.

21 JNLR, January- December 2017, Market Share, 7am-7pm 22 JNLR, January- December 2017, Market Share, 7am-7pm, Extrapolated from Co. Dublin to Dublin Commuter Franchise Area

Media Merger - Bay & Classic Rock; Review - 11 - 2.41 As a percentage of national listenership, loca l, or otherw ise regionalised, radio

comprises 54.5% of all listenership. 23 The Purchaser' s radio stations together

comprised 4.77% of national listenership from October 2016-September 2017.

(a) National listenership w as estimated by weighting local area listenership

against 2016 Census data, e.g. for Classic Hits 4FM in Cork - 6.8% of the

15+ population of Cork, as per the 2016 Census, as a percentage of the

total 15+ population of the State as per the 2016 Census.

The Target:

2.42 Market share data regarding the Target's radio broadcast ing asset, i.e. Radio

Nova, is detailed in the Purchaser subsection above.

Brand & News Reach:

2.43 The Purchaser

2.44 According to the Reuters Digital News Report 2017 for Ireland, local radio had a

reach across traditiona l media (radio, television and print) of 19%. 24 The

Purchaser's radio stations had the following reach in their respective franchise

areas:

Classic Hits 4FM Dublin Commuter 3%

Classic Hits 4FM Co. Cork 12%

Sunshine 106.8 Co. Dublin 7%

23 JNLR, January- December 2017, Market Share, 7am-7pm 24 Reuters Institute, Digital News Report 2017, Ireland, p. 50 25 JNLR, January- December 2017, Reach (Weekday Yesterday Li stenership)

Media Merger - Bay & Classic Rock; Review - 12 - Radio Nova Dublin Commuter 6%

2.45 It is not possible to aggregate the national reach of the Purchaser's stations

together as reach does not discriminate between listeners in the same manner

that market share does.

The Views of the Parties:

2.46 The Parties note that the Dublin Commuter franchise area is a highly competitive

market and that competitor broadcasting groups possess higher market shares,

for example:

RTE 40.6%26

Communicorp 24.88%27

Wireless Group 14.42%28

2.47 The Parties also note that in terms of the number of licenced radio stations

operating w ithin the Dublin Commuter Franchise area, including those limited to

Co. Dublin, the Purchaser operates 17.6% of these stations. Whereas, in

comparison, RTE operate 24%, also operate 24% and Wireless

Group operates 18%. 29

2.48 The Target:

26 JN LR, January- December 2017, Market Share, 7am-7pm 27 JN LR, January- December 2017, M arket Share, 7am-7pm, Ext rapolated from Co. Dublin to Dublin Commuter Franchise Area 28 Ibid 29 Bay & Classic Rock, Merger Not ificat ion Form, p. 10

Media Merger - Bay & Classic Rock; Review - 13 - 2.49 Reach data regarding the Target's radio broadcasting asset, i.e. Radio Nova, is

detail ed in the Purchaser subsection above.

Impact:

2.50 Should the transaction proceed, the entit ies identified above, which can be said to have a significant interest in the Purchaser, can be said to have significant interests in companies whose relevant media assets have the fo llowing market

shares and reach.

2.51 Mr Ormonde and Mr Branigan wil l have, and indeed currently possess, significant interests in the foll owing relevant media assets with the foll owing market shares and reach:

(a ) 3 local radio stations with an aggregate li stenership in the Dubli n

Commuter franchise area of 11.8% (par. 2.40), li stenership of 7% in Co. Cork (par. 2.39) and an aggregated national listenership of 4.77% (par. 2.41).

(b ) 3 local radio stations in the Dubli n Commuter franchise area, comprising

17.6% of the licensed radio stations in that area (par. 2.47).

2.52 On the basis of the above, should this transaction proceed, Mr Ormonde and Mr Branigan are unli kely to gain significant interests in the radio broadcasting sector

in the State. However, they may already possess significant interests in the radio broadcasting sector in the Dubli n Commuter area, which may be said to be concentrated through the proposed transaction.

2.53 While the proposed transaction would result in the concentration of the

significant interests that Mr Ormonde and Mr Branigan may possess in the radio broadcasting sector in the Dublin Commuter area, it is considered un li kely that this concentration, and thus the proposed transaction, w il l, in this regard, have

an adverse impact on the plurality of the media in the State.

Governance and Editorial Management

2.54 As previously noted, Mr Ormonde and Mr Branigan together comprise the board of the Purchaser (par. 2.4).

Media Merger - Bay & Classic Rock; Review - 14 - 2.55 The Target has an 8 person board of directors.30 As previously noted, the

Purchaser is represented by 3 persons, including Mr Ormonde and Mr Branigan,

on the Target's 8 person board and Mr Branigan also serves as the CEO of the

Target (par. 2.8).

2.56 As previously noted, the Purchaser intends that 4 members of the board of the

Target will step down should the proposed transaction proceed and the

remaining members, including the three members currently representing the

Purchaser, shall then comprise the whole board (par. 2.31). It is also intended

that Mr Branigan will remain the CEO of the Target. 3 1

Compliance and Ethics

2.57 As previously noted, the radio stations the Parties operate are licenced to

broadcast by the BAI and are subject to its various codes and rules and the

Parties voluntarily abide by the alcohol codes of both the Independent

Broadcasters of Ireland and the Advertising Standards Authority of Ireland (par.

2.29; par. 2.30).

2.58 As part of their contracts with the BAI, each of the radio stations operated by the

Parties are broadcast in accordance with a programme schedule and programme

policy, adherence to which is monitored by the Authorit y and variations from

w hich are subject to the consent of the Authority. 32 The Target employs a

Programme Director to ensure compliance with the schedule and the policy. 33

Editorial Ethos

2.59 The Parties note that the editorial policy of the Target, i.e. Radio Nova, is

managed by the Programme Director, reporting to the CEO, in line with the

Target's programme policy and schedule. 3 4

2.60 In terms of its news and current affairs output, the Target maintains an internal

editorial policy document w hich outlines how the journalists and newscasters

employed by the Target shall comply with their programme policy obligation to

30 Bay & Classic Rock, Merger Not ifi cat ion Fo rm, pp. 11-12 3 1 Ibid, p. 11 32 Classic Rock Broadcast ing Lim ited, Sound Broadcast ing Contract, 2010 33 Bay & Classic Rock, Merger Notificat ion Fo rm, p. 13 34 Ibid, p. 14

Media Merger - Bay & Classic Rock; Review - 15 - provide primaril y original reporting in it s news bu ll etins and current affairs

shows and how the use of syndicated news content should be approached. 35

2.61 The Parties note that the Target does not take editorial positions on matters of

publi c debate. 36

Impact

2.62 The information above does not appear to raise concerns regarding governance and editorial management in relation to the proposed acquisition. The Purchaser

and the Target operate within the regulatory framework set out by the BAI with regard to their radio broadcasting assets. Furthermore, it is not proposed that the current management and editorial structures in place in the Target shall change. Therefore, it is unli kely that the proposed acquisit ion will, in this regard,

have an adverse impact on the plurality of the media in the State.

Content

2.63 The Parties have provided information regarding the type of content contained in a number of the relevant media assets relevant to the proposed transaction.

The Purchaser

2.64 Each of the radio stations operated by the Purchaser are music-driven services focused on particular demographics, as fo llows:

Station Primary Music Genre Demographics

Classic hits 4FM37 Gold & Easy 45+

Sunshine 106.838 Soft Music Mix 35-54

Radio Nova39 Cla ssic Rock 25-54

35 Bay & Classic Rock, Appendix 24, Radio Nova News Guidelines 36 Bay & Classic Rock, Merger Notification Fo rm, p. 15 37 Choice Broadcasting Li mited, Sound Broadcasting Co nt ract, 2009 38 Star Broadcasting Li mited, Sound Broadcasting Contract, 2014

Media Merger - Bay & Classic Rock; Review - 16 - 2.65 All sound broadcasters licenced by the BAI are required, under Section 39(1) of

the Broadcasting Act 2009, to devote a minimum of 20% of broadcasting time to

news and current affairs programmes. However, derogations can be granted

from this requirement by the BAI and such derogations were granted by the BAI

to Sunshine 106.8 and Radio Nova.

2.66 Sunshine 106.8 has an overnight derogation from news and current affairs to 0%.

Furthermore, the station has a total broadcast day derogation from 20% to 10%.

The station sources it s news content from Classic Hits 4FM and 's

syndicated news bulletin service.40

2.67 Radio Nova has t otal broadcast day derogation for news and current affairs from

20% to 10%.41 As previously noted, this derogation comes with a programme

policy obligation to provide primarily original reporting in the station's news

bulletins and current affairs shows. To fulfil this obligation, Radio Nova's

journalist s and newsca sters use a number of sources in creating their news

42 scripts and bulletins, including an internal list of contacts , syndicated news

43 44 from Newstalk , and breaking news services • Radio Nova's internal editorial

policy document notes that the station aims for 80% of news copy to be

generated internally.45

The Target

2.68 Content information regarding the Target's radio broadcasting asset, i.e. Radio

Nova, is detailed in the Purchaser subsection above.

Impact

2.69 The information above does not appear t o raise concerns regarding diversity of

content, particularly news and current affairs, in relation to the proposed

transaction. Therefore, it is unlikely that the proposed transaction will, in this

regard, have an adverse impact on the plurality of the media in the State.

39 Classic Rock Broadcast ing Li mited, Sound Broadcast ing Contract, 2010 40 Star Broadcasting Lim ited, Sound Broadcasting Contract, 2014 41 Bay & Classic Rock, Merger Notification Fo rm, pp. 15-16 42 Bay & Classic Rock, Appendix 24, Radio Nova News Guidelines 43 Bay & Classic Rock, Merger Notification Fo rm, p. 18 44 Bay & Classic Rock, Appendix 24, Radio Nova News Guidelines 45 Ibid

Media Merger - Bay & Classic Rock; Review - 17 - Financial

The Purchaser:

2.70 The Purchaser, taken together with its subsidiaries, is a small to medium-sized

established business operating in the radio broadcasting sector in the State.

2.71 The Purchaser had a worldwide turnover for the financial year ending 31 March

2017 of €18, 70346 and its subsidiaries, including Radio Nova, had a combined

47 48 4 9 turnover for the financial year ending 31 December 2016 of €:S,295,050 ' ' ,

5 0 2.72 The proposed Transaction, worth €3,009,512 , is to be financed by the

shareholders of the Purchaser, Mr Ormonde and Mr Branigan, in the form of

loans to the Purchaser. 51 The Purchaser will purchase the outstanding loan

amounts owed by the Target to departing shareholders and the shares owned by

said shareholders. 52 As such, the debt posit ion of the Target will remain the

same.

The Target:

2.73 The Target is a small established business operating in the radio broadcasting

sector in the State and had a worldwide turnover for the financi al year ending 31

December 2016 of €2,095,894. 5 3

Impact:

2.74 The information above does not appear to raise concerns regarding finance in

relation to the proposed transaction. The Purchaser is part of a small to medium­

sized business with access to the requisite funds to complete the transaction.

Impact on the Irish Language

46 Bay & Classic Rock, Merger Notification Form, p. 21 47 Bay & Classic Rock, Appendix 5, Choice Broadcasting Financial Statements, 31 December 2016, p. 8 48 Bay & Classic Rock, Merger Not ification Form, p. 20 49 Bay & Classic Rock, Appendix 5, Star Broadcast ing Financial Statements, 31 December 2016, p. 7 50 Bay & Classic Rock, Appendix 1, Share, Loan Note and Loan Purchase Agreement, p. 10 51 Bay & Classic Rock, Merger Not ification Form, p. 19 52 Bay & Classic Rock, Appendix 1, Share, Loan Note and Loan Purchase Agreement, pp. 10-11 53 Bay & Classic Rock, Merger Not ification Form, p. 20

Media Merger - Bay & Classic Rock; Review - 18 - 2.75 Pursuant to its programme policy, the Target broadcasts a 2 hour Irish language

show every weekend. 54 Furthermore, the Target also airs 5 one minute Irish

language features during the broadcast day. 55

2.76 The Purchaser has not indicated any plans for a change to the level of Irish

language output following the acquisit ion. 56

Impact:

2.77 The information above does not appear to raise concerns regarding the impact

on the Irish language in relation to the proposed acquisition. As the Purchaser

has not indicated any plans to change the level of Irish language output following

the acquisit ion it is unlikely that the proposed transaction will, in this regard,

have an adverse impact on the plurality of the media in the State.

The scale and reach of RTE and TG4

2.78 Both the Purchaser and the Target are in competition with RTE in the radio

broadcasting sector in the Dublin Commuter area and Co. Cork.

2.79 As previously, noted the aggregated market share of the Purchaser, including

Radio Nova, in the Dublin Commuter area is 11.8% (par. 2.51) w hile the market

share for RTE radio stations in the same area is 40.6% (par. 2.46). Furthermore,

the market share of the Purchaser' s stations in Co. Cork is 7% w hile the market

57 share for RTE' s radio stations in the same area is 24.3% •

Impact:

2.80 The information above does not appear to raise concerns regarding any

detrimental impact to the pluralistic nature of RTE or TG4 in relation to the

proposed transaction. Therefore, it is unlikely that the proposed transaction will,

in this regard, have an adverse impact on the plurality of the media in the State

in terms of the scale and reach of RTE and TG4 and therefore the adequacy of

the public service broadcasters is not affected by the proposed transaction.

54 Bay & Classic Rock, Appendix 21, Share, Loan Note and Loan Purchase Agreement, pp. 10-11 55 Bay & Cla ssic Rock, Merger Not ificat ion Form, p. 20 56 Bay & Cla ssic Rock, Appendix 4, Vari at ion Request to BAI 57 JNLR, January- December 2017, Market Share, 7am-7pm

Media Merger - Bay & Classic Rock; Review - 19 - The Views of the CCPC

2.81 The proposed transaction was notified to the Competition and Consumer

Protection Commission (the CCPC) on 20 October 2017 and, following an

extended Phase 1 examination, was cleared without conditions on 22 January

2018.

2.82 The CCPC subjected the proposed acquisit ion to a competitive analysis,

examining its possible competitive effects, focusing on the sale of radio

advertising in Co. Dublin. The CCPC determined that the proposed acquisition did

not give rise to any horizontal or vertical competition concerns and the effect of

the proposed acquisition "will not substantially lessen competition in any market for goods or services in the State".

The Views of the BAI

2.83 The "relevant criteria" laid out in s. 28A of the Competition Act require that in

considering the implications of a media merger case in terms of media plurality

the Minister sha ll, if appropriate, have regard to "the ownership and control policy of the Broadcasting Authority of Ireland for the time being in force".

2.84 The Parties submitted a variation request regarding the proposed transaction to

the BAI on the 20 July 2017.58 This request was approved by the Authority in

September 2017.59

The Views of the Undertakings Involved

2.85 The Parties state that the "proposed transaction will contribute to and protect the plurality of media in the State as the relevant market will remain highly competitive with a large number of market participants competing vigorously

with each other".60

58 Bay & Classic Rock, Appendix 4, Va riation Req uest to BAI, p. 3 59 Correspondence with BAI 60 Bay & Classic Rock, Merger Notification Form, p. 21

Media Merger - Bay & Classic Rock; Review - 20 - 3. Summary of the Application of the

Relevant Criteria & s. 28D (2) of the

Competition Act

3.1 This examination, in accordance with s. 28D(2) of Part 3A of the Competition Act,

was conducted with regard to the following:

(a) The "relevant criteria" as set out in s. 28A of the Competition Act.

( b) The Guidelines on Media Mergers issued in accordance w ith s. 28L of the

Competition Act.

( c) The Notification Form and other information provided by the Parties to

the proposed media merger.

(d) The Views of the Competit ion & Consumer Protection Commission in

relation to the proposed media merger.

( e) Relevant research conducted by the BAI under s. 28M of the

Competition Act.

(f) The views of the BAI with regard to Part 6 of the Broadcasting Act 2009

and their Ownership and Control Policy.

3.2 Furthermore, this examination considered the following indicators in the

application of the "relevant criteria" and w ith regard to s. 28D(2):

(a) Significant Interest - Mr Ormonde and Mr Branigan are determined to

have a significant interest in the Purchaser.

Furthermore, the Purchaser is determined to have a significant interest

in the Target.

Whether these interests are of concern, post-transaction, is assessed in

terms of the remainder of the indicators in this examination, particu larly

Media Merger - Bay & Classic Rock; Review - 21 - Relevant Media Assets, Ownership and Control, Market Share and the

Views of the CCPC.

The views of the Parties in relation to this section are also examined.

( b) Relevant Media Assets - The relevant media assets of the Purchaser and

the Target to be considered in this examination are identified.

(c) Ownership and Control - The ownership and control arrangements of the various relevant media assets identified are examined in this section, as are the regulatory regimes in place regarding the relevant media

assets and any proposed changes on the part of the Purchaser to the operation of the relevant media assets of the Target post-transaction.

The significant interests held by Mr Ormonde, Mr Branigan and the

Purchaser, in the relevant media assets of the Purchaser and the Target respectively, are assessed in the Market Share section of this examination in terms of the market share that these assets possess in the radio broadcasting sector.

( d) Market Share - The market shares of the various relevant media assets identified earlier in this examination are analysed in terms of listenership, reach, etc. The aggregated market shares of those assets

which would be owned by the Purchaser should the proposed transaction proceed are analysed.

The views of the Parties in relation to this section are also examined.

Furthermore, it is determined that, whil e the proposed transaction

would result in the concentration of the significant interests that Mr Ormonde and Mr Branigan may possess in the radio broadcasting sector in the Dublin Commuter area, it is unlikely that this concentration will

have an adverse impact on the plurality of the media in the State.

(e) Governance & Editorial Management - The current governance and editorial regimes of the Purchaser and the Target are analysed.

Media Merger - Bay & Classic Rock; Review - 22 - The information does not appear to raise concerns regarding governance

and editorial management in relatio n to the proposed transaction and it is deemed unli kely that the proposed transaction will, in this regard, have an adverse impact on the plurality of media in the State.

(f) Content - The content, particularly news content, presently made avail able by the Purchaser and the Target are analysed.

The information does not appear to raise concerns regarding content management in relation to the proposed transaction and it is deemed

unli kely that the proposed transaction will, in this regard, have an adverse impact on the plurality of media in the State.

( g ) Financial - The Financial standings of the Partie s are examined.

The information does not appear to raise concerns regarding fi nancia l management in relation to the proposed transaction and it is deemed unli kely that the proposed transaction will, in this regard, have an adverse impact on the plurality of media in the State.

(h) Impact on the Irish Language - potentia l impact of the proposed transaction on the provision of Irish language content is analysed.

It is noted that, at present, the Target broadcasts a 2 hour Irish language

show every weekend and a lso airs 5 one minute Irish language features during the broadcast day.

The information does not appear raise concerns regarding the impact on the Irish language in relation to the proposed acquisition. As the

Purchaser has not indicated any plans to change the leve l of Irish language output foll owing the acquisition it is unlikely that the proposed transaction will, in this regard, have an adverse impact on the plura lity of

the media in the State.

(i) The Scale and Reach of RTE and TG4 - The potential impact of this acquisit ion should it proceed on the Publi c Service Broadcasters, RTE and

TG4, is analysed.

Media Merger - Bay & Classic Rock; Review - 23 - It is noted that RTE and the Purchaser are in competit ion in the radio

broadcasting sector in the Dubli n Commuter Area and Co. Cork.

The information does not appear raise concerns regarding the impact on adequacy of the publi c service broadcasters in ensuring the plurality of

the media in the State. Therefore, it is unli kely that the proposed transaction will, in this regard, have an adverse impact on the plurality of

the media in the State.

(j) Views of the CCPC - The views of the CCPC regarding the competition e lement of this proposed transaction are noted.

(k) Views of the BAI - It is noted that the BAI, as the contractor for the Purchaser's and Target's radio stations, approved the proposed

transaction in September 2017.

(I) Views of the Parties - The views of the Parties are noted and considered throughout this assessment, generally, and specifically in the relevant sections, and where appropriate, responses are provided.

Media Merger - Bay & Classic Rock; Review - 24 - 4. Conclusion

4.1 In light of the notification, and other materials supplied by the Parties to the

proposed acquisit ion as considered with regard to the matters the M inister sha ll

have regard to under s. 280 of the Competit ion Act, including the 'relevant

criteria' as set out in Part 3A of the Competition Act, the Guidelines published by

the Minister under s. 28L of the same Act, as considered by the Department in

this assessment, it is recommended that the acquisition should be allowed to be

put into effect as proposed.

4.2 The following are the major factors informing the recommendation:

(a) That Mr Ormonde and Mr Branigan are unlikely to gain significant

interests in the radio broadcasting sector in the State as a resu lt of the

proposed transaction.

( b) That, w hile the proposed transaction would resu lt in the concentration

of the significant interests that Mr Ormonde and Mr Branigan may

possess in the radio broadcasting sector in the Dublin Commuter area, it

is unlikely that this concentration will have an adverse impact on the

plurality of the media in the State.

4.3 Given the above, the likely impact of the proposed merger on media plurality in

the State is minimal. As such the proposed transaction is not contrary to the

public interest in protecting media pluralit y in the State and should be permitted

to be put into effect.

Media Merger - Bay & Classic Rock; Review - 25 -