Radio giants await merger decision: GWR and Capital's 700m [pounds sterling] marriage-plan is buoyed by positive sign from OFT.(Radio)

GWR and Capital still have a short wait ahead of them to heat" whether the Office Of Fair Trading will give final clearance to their proposed 700m [pounds sterling] merger.

The two radio groups received a strong positive signal from the OFT in the final days before Christmas, +when it confirmed that it would not be referring the matter to the Competition Commission-provided that the two companies give undertakings to resolve a concern over their East Midlands operations.

The radio groups proposed that they will sell off Century 106 FM in Nottingham to address the OFT's concerns; Century--part of the Capital Group--overlaps with GWR's Ram, Trent and Leicester Sound FM services, creating a potential issue for the OFT.

An OFT spokesman says that it will consult on the two groups' proposal before making a final decision whether to accept their proposal and clear their merger. An OFT spokesman says this decision will be made in "the early part of 2005", but refused to speculate further; the full text of the OFT's judgement is also currently being checked for sensitive information by GWR and Capital and should be available from "sometime in the New Year".

OFT director of competition enforcement Vincent Smith says, "Except in the East Midlands, the radio stations of Capital and GWR do not strongly overlap at a local level. So, for national advertisers putting together a radio advertising package they are largely complementary rather than competing alternatives. However, the merger would result in a substantial lessening of competition in the East Midlands."

Despite its offer to sell Century, the new group will remain committed to Century. "Century has proved to a be a very successful brand for Capital and there will be a lot of external interest in Century. 106," says a Capital spokesperson. "Obviously, we remain committed to the Century brand and are retaining the other three stations within the network."

The OFT announcement was interpreted by the stock market as a clear sign that the merger will be green-lighted, with GWR and Capital's share prices rising on the day (see breakout, right).