KEY shareholders in Capital Radio and GWR warned the two radio companies yesterday that they will not tolerate any confusion as to who is in charge of a £700 million combined group.
Merger proposals being considered by Capital and GWR envisage that Ralph Bernard, the GWR executive chairman, will be a full-time executive chairman and that Capital’s leader, David Mansfield, will be chief executive.
Investors are worried that keeping both men on full-time could lead to conflicts over management of the group. “There can’t be two people running any company,” said one investor, who asked not to be named.
The situation is an uncomfortable echo of the run-up to the merger of the ITV broadcasters Carlton and Granada. That saw a group of shareholders, led by Fidelity, successfully demand the removal of Michael Green, the head of Carlton, who was originally planning to be executive chairman of the enlarged ITV group.
Sources in the radio companies argue that there will be a clear division of responsibility between Mr Bernard, 51, and Mr Mansfield, 50. Mr Bernard will be responsible for the group’s digital radio strategy and has a background in programming, while Mr Mansfield will be responsible for what is being described as “the commercial side” of the combined group.
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In addition, the two men are not saddled with having lost considerable sums of shareholders’ money — whereas Mr Green and Charles Allen, his Granada counterpart, were accused of having lost £1 billion on the failed pay-television operator ITV Digital.
Fidelity is again one of the largest shareholders in Capital and GWR. The US fund manager has about 13 per cent of GWR and nearly 9 per cent of Capital. After a merger, which is expected to be concluded on, or close to, a 50-50 basis, Fidelity would be the second largest investor after Daily Mail and General Trust, which holds 29.8 per cent of GWR.
Shareholders who were contacted yesterday said that they would wait for Capital and GWR to declare details of the planned all-paper, nil-premium merger before deciding on the management structure.
Shares in GWR yesterday rose 9 per cent to 287p, while Capital shares gained 6.5 per cent to close at 458p.