Completed acquisitions by Bauer Media Group of certain businesses of Celador Entertainment Limited, Lincs FM Group Limited and Wireless Group Limited, and the entire business of UKRD Group Limited Provisional findings report Notified: 5 December 2019 © Crown copyright 2019 You may reuse this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit www.nationalarchives.gov.uk/doc/open-government- licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected]. The Competition and Markets Authority has excluded from this published version of the provisional findings report information which the inquiry group considers should be excluded having regard to the three considerations set out in section 244 of the Enterprise Act 2002 (specified information: considerations relevant to disclosure). The omissions are indicated by []. [Some numbers have been replaced by a range. These are shown in square brackets.] [Non-sensitive wording is also indicated in square brackets.] Contents Page Summary .................................................................................................................... 4 Competitive effects of the Acquisitions ............................................................... 10 Market definition ............................................................................................ 10 Horizontal unilateral effects in the supply of representation for national advertising to independent radio stations ..................................................... 11 Horizontal unilateral effects in the supply of national advertising................... 13 Vertical effects in the supply of local radio advertising as a result of the loss of FRS as a national advertising sales house ................................................... 14 Horizontal unilateral effects in the supply of local radio advertising ............... 15 Countervailing factors .................................................................................... 18 Provisional conclusions ....................................................................................... 18 Provisional findings ............................................................................................. 19 1. The Reference .................................................................................................... 19 2. Industry background ........................................................................................... 20 Introduction ......................................................................................................... 20 Broadcast technologies ....................................................................................... 20 Types of provider ................................................................................................ 21 Radio listening and revenues .............................................................................. 22 Regulation and licensing ..................................................................................... 24 Industry structure and consolidation ................................................................... 27 Advertising on commercial radio ......................................................................... 30 Airtime purchasing ......................................................................................... 30 Airtime sales .................................................................................................. 30 Sponsorship and promotion ........................................................................... 31 3. The Parties and FRS .......................................................................................... 32 Bauer .................................................................................................................. 32 Celador ............................................................................................................... 33 Lincs ................................................................................................................... 33 Wireless .............................................................................................................. 34 UKRD .................................................................................................................. 35 FRS ..................................................................................................................... 35 4. The Acquisitions.................................................................................................. 40 Agreements with [] .......................................................................................... 41 Rationale for the acquisitions .............................................................................. 41 5. Jurisdiction .......................................................................................................... 43 The elements of a relevant merger situation ....................................................... 43 Application to the Acquisitions ............................................................................ 43 Two or more enterprises ................................................................................ 43 Have ceased to be distinct............................................................................. 44 At a time or in circumstances falling within section 24 ................................... 45 Turnover test and/or share of supply test ...................................................... 45 6. The counterfactual .............................................................................................. 46 Common commercial strategy ............................................................................ 48 The position of Bauer in the counterfactual ......................................................... 50 Counterfactual in relation to each of the Acquisitions and the subsequent station sales to Nation ................................................................................................... 51 Bauer’s overall counterfactual submission .................................................... 51 Celador .......................................................................................................... 51 1 Lincs .............................................................................................................. 52 Wireless ......................................................................................................... 53 UKRD ............................................................................................................ 53 Bauer/Nation transaction ............................................................................... 54 [] ...................................................................................................................... 55 FRS ..................................................................................................................... 56 Prospects for FRS in the longer term ............................................................ 58 7. Market definition.................................................................................................. 59 Introduction ......................................................................................................... 59 The supply of radio advertising ........................................................................... 60 Product scope................................................................................................ 60 Geographic scope ......................................................................................... 66 The supply of representation for national advertising to independent radio stations .............................................................................................................. 67 Provisional conclusion on market definition ........................................................ 68 8. The supply of representation for national advertising to independent radio stations .............................................................................................................. 69 Introduction ......................................................................................................... 69 The representation of national advertising to independent radio stations theory of harm................................................................................................................... 69 Competitive assessment ..................................................................................... 70 Parties’ submissions ...................................................................................... 70 Alternatives for representation ....................................................................... 72 Provisional finding on competition in the supply of representation services .. 82 9. Horizontal unilateral effects in the supply of national advertising ........................ 83 Introduction ......................................................................................................... 83 Competitive assessment ..................................................................................... 85 Constraint from FRS on Bauer ...................................................................... 86 Constraint from Bauer on FRS .....................................................................