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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
Regulatory 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
Content ...................... ........................... ......................... ......................... ......................... . 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.
1.1
Background
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 Dublin 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 lim ited 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 the 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 faci litate 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 re laying 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) Classic Hits 4fm,
(b) Sunshine 106.8, and,
(c) Radio Nova (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 re laying 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 definit ion 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 controlled 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 s ignificant interest in the Target.
2.13 The s ignificant 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:
12 Ibid 13 Ibid
(a) The Purchaser,
( b) Vienna Investments Limited, and,
(c) Mr McDonagh.
14 CCPC, Determination of Merger Notificatio n, M/17 /056, P. 2 15 Bay & Classic Rock, Merger Notification Form, 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 acquisit ion .
2.19 It shou ld 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
Competit ion 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 loca l 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 llows:
(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 following
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 s ignificant 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, Variat 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 acquisit ion. 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 s ignificant 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 s ignificant 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 t ime 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 listenership comes from the Joint National Listenership
Research (JNLR).
( b) As provided for in the Competit ion 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 t ime 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 avai lable via the JNLR directly:
Classic Hits 4FM Dublin Commuter 2.3%
Classic Hits 4FM Co. Cork 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, Ext rapolated from Co. Dublin to Dublin Commuter Franchise Area
Media Merger - Bay & Classic Rock; Review - 11 -
2.41 As a percentage of nationa l 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+ popu lation 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, loca l 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
Classic Hits 4FM Co. Cork
Sunshine 106.8 Co. Dublin
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 Listenership)
Media Merger - Bay & Classic Rock; Review
3%
12%
7%
- 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%, Communicorp also operate 24% and Wireless
Group operates 18%. 29
2.48 The Target:
26 JNLR, January- December 2017, Market Share, 7am-7pm 27 JNLR, 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
detailed 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 s ignificant
interests in companies whose relevant media assets have the fo llowing market
shares and reach.
2.51 Mr Ormonde and Mr Branigan will have, and indeed currently possess,
significant interests in the following relevant media assets with the following
market shares and reach:
(a ) 3 local radio stations with an aggregate listenership in the Dublin
Commuter franchise area of 11.8% (par. 2.40), listenership of 7% in Co.
Cork (par. 2.39) and an aggregated national listenership of 4 .77% (par.
2.41).
(b ) 3 loca l radio stations in the Dublin 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 unlikely to gain s ignificant 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 wou ld 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 likely that
this concentration, and thus the proposed transaction, will, 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 wi ll 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 & Class ic Rock, Merger Not ificat ion Form, pp. 11-12 3 1 Ibid, p. 11 32 Classic Rock Broadcast ing Limited, Sound Broadcast ing Contract, 2010 33 Bay & Class ic Rock, Merger Notificat ion Form, p. 13 34 Ibid, p. 14
Media Merger - Bay & Classic Rock; Review - 15 -
provide primarily original reporting in it s news bu lletins 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
public 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 sha ll
change. Therefore, it is unlikely 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 particu lar demographics, as fo llows:
Station Primary Music Genre
Classic hits 4FM37 Gold & Easy
Sunshine 106.838 Soft Music Mix
Radio Nova39 Classic Rock
35 Bay & Classic Rock, Appendix 24, Radio Nova News Guidelines 36 Bay & Classic Rock, Merger Notification Form, p. 15 37 Choice Broadcasting Limited, Sound Broadcasting Cont ract, 2009 38 Star Broadcasting Limited, Sound Broadcasting Contract, 2014
Media Merger - Bay & Classic Rock; Review
Demographics
45+
35-54
25-54
- 16 -
2.65 All sound broadcasters licenced by the BAI are required, under Section 39(1) of
the Broadcast ing Act 2009, to devote a minimum of 20% of broadcasting t ime 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 Newsta lk'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 prov ide primarily original reporting in the station's news
bulletins and current affairs shows. To fulfi l this obligation, Radio Nova's
journalist s and newscasters use a number of sources in creating their news
scripts and bulletins, including an interna l list of contacts42, syndicated news
from Newstalk43, and breaking news services44
• Radio Nova's interna l 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 broadcast ing 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 Limited, Sound Broadcast ing Contract, 2010 40 Star Broadcasting Limited, Sound Broadcasting Contract, 2014 41 Bay & Class ic Rock, Merger Notification Form, pp. 15-16 42 Bay & Class ic Rock, Appendix 24, Radio Nova News Guidelines 43 Bay & Class ic Rock, Merger Notification Form, p. 18 44 Bay & Class ic 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
turnover for the financial year ending 31 December 2016 of €:S,295,05047'
48'
4 9,
2.72 The proposed Transaction, worth €3,009,5125 0, 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 financial 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
share for RTE' s radio stations in the same area is 24.3%57 •
Impact:
2.80 The information above does not appear to raise concerns regarding any
detrimental impact to the plura listic 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 & Classic Rock, Merger Not ificat ion Form, p. 20 56 Bay & Classic Rock, Appendix 4, Variat 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 competit ive analysis,
examining its possible competit ive 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 competit ion 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 Competit ion 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, Variation Request 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 Competit ion 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
Competit ion 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
Competit ion 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 shou ld the proposed
transaction proceed are analysed.
The views of the Parties in relation to this section are also examined.
Furthermore, it is determined that, 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 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 transact ion and it
is deemed unlikely 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
available 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
unlikely that the proposed transact ion 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
unlikely that the proposed transact ion 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 acquisit ion. As the
Purchaser has not indicated any plans to change the leve l 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 plura lit y 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 Public Service Broadcasters, RTE and
TG4, is ana lysed.
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 Dublin Commuter Area and Co . Cork.
The information does not appear raise concerns regarding the impact on
adequacy of the public 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 plura lit y of
the media in the State.
(j ) Views of the CCPC - The views of the CCPC regarding the competit ion
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.
4.1
Conclusion
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 Competit ion 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 unlike ly 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 plura lit y in the State and shou ld be permitted
to be put into effect.
Media Merger - Bay & Classic Rock; Review - 25 -
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