The Guardian Media Group (GMG) has sold its network of local radio stations to Global Radio for £70m. The network includes Smooth Radio and Real Radio networks.
Originally a price of £50m had been offered by Global Radio, but last minute bids by rival Bauer Radio increased the sale price. This increase was welcomed by GMG. It is using the capital from the sale to cover editoral costs at the Guardian and the Observer newspapers.
Guardian News and Media, which is owned by GMG and controls the newspaper divisions, saw losses increase this year due to the costs of expansion in the US. It is expected that they will announce a loss of £45m in the year up to March 2012, compared with a loss of £43.7m in the 2010/11 financial year.
This is not the first cost-covering sale by GMG. In 2009 Trinity Mirror bought their local newspaper assets, including the Manchester Evening News, for £7.4m.
The deal has come into opposition from rival radio company, Absolute Radio. Absolute Radio claim that the deal is anticompetitive as it leaves Global Radio controlling more than half of the UK radio and advertising sponsorship market.
Global Radio’s portfolio already includes Classic FM, Capital and Heart FM, and the company already sell advertising to GMG. This criticism will be considered by regulators and the two companies will be kept separate by Global until regulatory approval has been given.