Regional Media: Merger mania hits radio.(radio broadcasting industry)

Consolidation calls for a balancing act between network strength and local appeal.

Not even the smallest tin-pot radio station in the remotest part of the UK can escape the sweeping tide of consolidation. The recent merger of GWR and Capital Radio created GCap. The UK's largest commercial radio group, with 17 million listeners, GCap listeners account for around 35 per cent of the country's commercial radio audience.

GCap's creation was followed in June by Emap's acquisition of Scottish Radio Holdings and its network of 22 stations. GCap, Emap and Chrysalis make up a triumvirate of heavyweight media owners that accounts for the lion's share of the commercial radio spoils.

There are concerns in the agency world that concentrating media ownership may push up airtime prices. There are also fears it may presage more bland on-air homogeneity that could put off listeners and advertisers. Against this background, advertiser confidence seems a little shaky.

In a trading update at the end of June, GCap announced that business in May was affected by weak consumer confidence and low spend from key advertisers. Year-on-year revenues fell 14 per cent that month. Chrysalis was similarly downbeat. Heart FM's owner announced a 14.5 per cent slump in radio revenues for the three months to the end of May.

'A smaller number of players in the market is a concern,' MindShare's head of radio, Howard Bareham, says. 'But we haven't yet seen any evidence that they will stop being competitive. Time will tell.'

In Bareham's opinion, there will still be a place on schedules for the smaller, local players. He sees them benefiting from advertising placed by retailers and other businesses with a strong local presence. The likes of GCap and Emap, however, are looking to make their radio offer increasingly attractive to national advertisers.