The €26 million purchase of Dublin station FM 104 by Scottish Radio Holdings (SRH) was in doubt last night after the Competition Authority said it wanted to investigate the deal further.
The decision to move to a "phase two" investigation, which could last for three months, means large payouts for FM 104's shareholders - including managing director Mr Dermot Hanrahan - have been put on hold.
The purchase price for FM 104 is €26 million but SRH is also agreeing to pay off €4 million of debt belonging to the station, which is owned by a company called Capital Radio Productions Ltd.
With the approval of the Tánaiste and Minister for Enterprise, Trade and Employment, Ms Harney also required for media mergers, the deal may not be completed for some months.
The Competition Authority will now seek further information from the parties. The authority wants to assess whether competition in the Dublin radio market might be lessened by the merger, particularly from an advertiser's perspective.
A phase two investigation involves a detailed review of data and information provided by the parties. Most mergers are not subject to a phase two investigation.
SRH already owns Today FM and, while this is a national station, it has a significant presence in Dublin. The authority will be assessing whether SRH's ownership of Today FM and FM 104 would lessen competition in the city.
Mr Denis O'Brien's Communicorp Ltd owns the other Dublin station, 98 FM, and the majority of the equity in NewsTalk 106. UTV owns Lite FM, while Country 106 is owned by a group of private investors.
Last night, there was some surprise in radio circles about the authority's determination. However, SRH remained upbeat. "SRH and the sellers will be assisting the authority fully and will seek to address any concerns arising in the course of its investigation," said a statement.
The main shareholders in FM 104 are: Mr Ulick McEvaddy with 38 per cent; concert promoter Mr Jim Aitken with 5 per cent; music industry director Mr Maurice Cassidy with 23 per cent; accountant Mr Pearse Farrell with 16 per cent; Mr Dermot Hanrahan with 10 per cent; First Active chairman Mr John O'Callaghan with 3 per cent; and accountant Mr Greg Sparks with 3 per cent.
Based on these shareholdings, Mr McEvaddy could make a profit of about €11 million; Mr Aitken about €1.5 million; Mr Cassidy some €7 million; Mr Farrell about €4.5 million; Mr Hanrahan €3 million; and Mr O'Callaghan and Mr Sparks would each get almost €1 million.
Meanwhile, SRH announced that it had returned to the black with a pre-tax profit of £11.8 million sterling (€17 million). Preliminary results for the year ended September 30th showed the company's turnover from continuing operations rising 18 per cent to £83.5 million sterling.
It said a recovery in advertising in Britain was a major factor behind the turnaround.
