The Commerce Commission today declined to clear the Radio Network of New Zealand Limited to acquire C93FM (Christchurch) Limited.
Commission Chairman Dr Alan Bollard said that the Commission was not satisfied that the proposal would not result in dominance being acquired or strengthened in the market for radio advertising services in Christchurch.
Radio Network currently owns 99 radio frequencies. Five of its frequencies are in Christchurch, where it broadcasts Newstalk ZB, 91ZM and Classic Hits 98FM.
C93FM owns three frequencies in Christchurch. It broadcasts Classic Rock 93FM and Easy Listening i94.5FM.
If the proposal were to go ahead, then Radio Network would have a very large share of the Christchurch radio advertising market. It would face insufficient constraint from its main competitor, MORE FM. While several other stations, including Radio Pacific, broadcast in the area, they receive little advertising revenue from Christchurch.
New entry to the Christchurch market is highly unlikely as no frequencies are currently available in the area. The Ministry of Commerce is considering developing additional frequencies, but these will not be available for at least another three years.
Further, it appears there would be little opportunity for Christchurch advertisers to constrain the combined company. Most advertisers would have little ability to negotiate better deals if prices increased.
The Commission also considered the impact of the proposal on the market for radio news information and entertainment.
In the news, information and entertainment market only, the Commission was satisfied that Radio Network would not acquire or strengthen a dominant position. National Radio and Concert FM would continue to provide effective competition.
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any market. Parties can apply to the Commission for a clearance, which will be granted if the Commission is satisfied that dominance is not acquired or strengthened.
