The Competition Authority has told Scottish Radio Holdings (SRH) it must sell its 8.8 per cent stake in NewsTalk if it wants to complete its purchase of Dublin music station FM 104.
The authority said SRH's proposed €30 million takeover of FM 104 would not substantially lessen competition. However, several conditions needed to be attached to its permission.
SRH must, following completion of the FM 104 deal, dispose of its 8.8 per cent stake in Newstalk. It has until December 31st to find a buyer.
If it fails to locate a buyer, the NewsTalk shares shall be transferred to a trustee nominated by the parties.
The authority has imposed several other conditions on FM 104. One of which is that it must cease any participation in Independent Radio Sales (IRS).
IRS is an advertising umbrella group for several commercial stations, which sells packages of adverts across several of these stations.
SRH last night indicated it would comply with the conditions. It now awaits final judgment on the deal from the Minister for Enterprise, Trade and Employment, Ms Harney. She is empowered under the Competition Act 2002 to review all media mergers.
The Competition Authority is understood to have examined in depth SRH's influence in the advertising market.
At present, there are three broad groups selling advertising nationally in the radio business: RTÉ, Today FM and IRS, of which FM 104 is a member.
Because SRH already owns Today FM, its purchase of FM 104 would give it an indirect presence in two of three groups.
However, radio sources said the departure of FM 104 from the IRS group would simply reduce the value of the packages which IRS offers, thereby damaging the group of stations which make up IRS.
Mr Willie O'Reilly, managing director of Today FM and a senior representative of SRH in Ireland, said he was delighted with the announcement. He said that, while the details were still being studied, it was a step in the right direction.
The shareholders of FM 104, among them managing director Mr Dermot Hanrahan, aviation millionaire Mr Ulick McEvaddy and concert promoter Mr Jim Aitken, are still waiting for the takeover to be completed.
Mr Hanrahan has been a long- standing critic of NewsTalk and its performance.
However, because FM 104 has not contributed to all fund-raisings, its stake has fallen from 23 per cent down to 8.89 per cent.
With further funds to be invested in 2004, this stake could end up being further diluted.
Mr O'Brien's Radio 2000 Group are the largest shareholders in Newstalk with 57 per cent of the equity.
