bay broadcasting rock broadcasting limited

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.


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


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


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


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


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:


(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:


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


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


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:


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


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


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


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).


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


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


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


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,


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


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


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


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


(e) Governance & Editorial Management - The current governance and

editorial regimes of the Purchaser and the Target are analysed.


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.


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.


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.


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