GCap phone-in investigation may affect Global deal

by Daniel Farey-Jones, Brand Republic 31-Mar-08, 11:15

LONDON - Global Radio's attempted £370m takeover of GCap Media has hit a last-minute hitch after it emerged GCap has a potential liability for improper running of a premium-rate phone line competition.

Global has until 5pm today to make a firm offer for GCap or walk away for six months under a deadline imposed by the Takeover Panel.

However, GCap has notified Global that a competition called 'Secret Sound', which it ran on several stations in January and February 2007, is being investigated by media and telecoms regulator Ofcom.

GCap this morning confirmed it received a letter from Ofcom on Friday saying that it is still pursuing the investigation.

The extent of any liability is unclear, but any impropriety is unlikely to be on the scale witnessed in relation to TV companies' costs over their phone-in misdeeds last year, which resulted in Ofcom hitting GMTV with a record £2m fine and ITV setting aside £7.8m to cover the cost of reimbursing viewers.

Today's Daily Telegraph reports that a source close to Global said the company was not fazed by the Ofcom probe and was likely to meet today's deadline.

Global was unavailable to comment when contacted by Brand Republic.

GCap has also updated the stockmarket on its financial performance, saying its expectations for the year ending today are still that revenue will be flat while like-for-like revenue will up by around 4%.

It has raised its online revenue forecast by 38% after seeing a rise in unique users of 48% year on year to more than 2m.

GCap's share price has dropped 2.1% to 196.75p this morning.