Radio holds breath over #375m GCap sale.

Industry hopes Global's takeover of commercial radio rival will finally create powerhouse to take on financial clout of the BBC, as Competition Commission prepares to examine deal

The UK's commercial radio industry will be watching intently this week, as the Competition Commission starts the delicate job of examining Global's #375m purchase of radio rival GCap.

The deal, which has been in the pipeline since December, may remind many of the 2005 merger between GWR and Capital which led to the formation of GCap itself, with the industry clamouring once again about the possibility of a powerhouse to rival the financial clout of the BBC.

But, while that union has ultimately proved unsuccessful - Capital and GWR were worth #711m when they merged in what was a rocky radio market - many people are hoping that history will not repeat itself, with a successful Global/GCap hook-up widely considered to be healthy for the commercial radio industry as a whole.

"The wish for the commercial sector is that this deal will do what GCap was originally supposed to do and be a strong brand, a strong competitor for the BBC and a flag-waver for the sector, which it's lacked over the past couple of years," says Charles Stanley Securities analyst Paul Bates.

Bates says the torturous merger of GWR and Capital has been a damaging process, with GCap eventually being sold for less than half of what the two companies were worth in 2005, despite GCap chief executive Fru Hazlitt raising the price from the first Global offer of #300m in December.

What is more, many observers believe that the commercial radio sector will benefit from another player being bought into private ownership, given current uncertainty over advertising revenues.