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 considered carefully Radio Network's undertaking that it would divest, within one year, all its interests and rights in one of the licences it would acquire from C93FM, that being 94.5FM.
However, Dr Bollard said that even with the divestment, the Commission was not satisfied that Radio Network would not acquire or strengthen a dominant position in the market for radio advertising services in Christchurch.
This was the second time the Commission has declined clearance to Radio Network to acquire C93FM. The first application, declined in March, did not include a divestment undertaking.
In its second application, Radio Network provided additional information stating that since March there has been a substantial change in both the listenership and advertising revenue market shares. It stated that this is directly attributable to popular breakfast show hosts, Simon Barnett and Phil Gifford, leaving Radio Network's 91ZM for competitor MORE FM.
The additional information provided covered only one month. Also, historically, radio listenership and advertising revenue shares have fluctuated widely. The Commission concluded that it could not use the additional information to estimate medium or long-term market share changes.
In looking at the divestment undertaking, the Commission concluded that the one frequency, which currently has a very small market share, was insufficient to allow a new entrant or an existing competitor to constrain Radio Network should it acquire C93FM.
There are no unallocated frequencies in Christchurch and no new frequencies will be available for some years.
The Commission also found that only one radio advertiser had sufficient bargaining power to prevent the combined entity increasing advertising rates. The others spend too little on advertising to constrain the combined entity, and most need to use radio advertising.
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets. Parties can apply for a clearance, which the Commission will grant if it is satisfied that dominance is not acquired or strengthened.
Radio Network owns licences for 99 radio frequencies, five of which are in Christchurch. It broadcasts 91ZM, Classic Hits 98 FM and Newstalk ZB in Christchurch.
C93FM owns three frequencies, all in Christchurch, and broadcasts Classic Rock 93FM and Easy Listening i94.5FM.
