Capital gains

With a slew of acquisitions and stakes in other stations, Natalie Schwarz joined Capital Radio at a challenging time. Emma Vere-Jones tunes in

Nathalie Schwarz’s job title is something of a mouthful. As director of strategy and development, company secretary and director of legal services at Capital Radio, it is a good thing she talks fast.

And she thinks fast, which is also good, as she works in an incredibly fast-paced industry for a highly acquisitive company.

In the past 18 months alone, Capital has acquired Big AM’s analogue and digital licences in Manchester, taken a stake in Choice FM, acquired Border Television and purchased Beat 106. The company has also set up a joint venture with the Disney Corporation, launched the first ever interactive mobile radio service with Nokia, become the first national broadcaster to launch a digital radio channel and entered into a joint venture with UBS Media.

When Schwarz joined Capital from Clifford Chance‘s corporate finance department four years ago, she said she was looking for a challenge. It looks like her wish has come true.

“I wanted to become really involved in the heart of a business. I enjoyed deals and M&A work, but I wanted to see what it was like from the inside – meaning doing much more from the commercial and business perspective,” says Schwarz. “And having decided I wanted to work in business, I wanted to be involved in an industry in which I had an interest – media and radio, being dynamic, was very appealing.”

Until then the company had never had an in-house lawyer. Perhaps a daunting task for some, Schwarz relished the opportunity.

“It meant I had the freedom to create the legal role – and now the legal department – in the way I wanted,” she says. “You don’t have the legacy of someone else’s vision of a legal department.

“I had to put in systems and processes and checks that were not there before – and make people think about issues slightly differently.” The media world is very fast-moving, so you don’t want to overburden people with huge, 90-page-long volumes of contracts, but I had to put some of that discipline in place, particularly with music rights and commercial arrangements.”

Once in the role, Schwarz continued to instruct long-term adviser Freshfields Bruckhaus Deringer on corporate work, with Dechert advising on intellectual property and trademark issues. But her aim was to bring as much of the work in-house as she could.

“We outsource property work, large corporate and trademark work,” she says. “Virtually everything else is done in-house, such as the commercial work, most of the remainder of the corporate, rights clearances, dealing with artists and presenters and employment issues.”

Of more recent corporate work, the one job that was outsourced was the investment in Choice FM. Under current legislation the company is not allowed to own more than two FM and one AM stations in London. But once the new Communications Bill comes into play, these rules will change. So rather than acquiring Choice, Capital had to come up with another plan.

“Choice FM investment was interesting because it adopted an innovative structure,” says Schwarz, “whereby we took an initial equity interest in it and a put/call option over the remainder, thereby allowing Capital to position itself ahead of regulatory changes.”

As soon as the new Communications Bill is effective, Capital will take 100 per cent control of Choice.
“The implications of the draft Communications Bill – in particular the reform of the media ownership rules, relaxation of cross-media ownership and foreign ownership – means that it could be a very interesting 12-24 months in the media industry in general,” Schwarz says.

Will this mean a lot more purchases for a particularly acquisitive company? “Yes, it should do,” she says. “It removes some of the barriers we experience at the moment which have prevented us from buying more radio assets. And we have a strong balance sheet and a good track record, which should put us in a good position.”

The company also has its hands full with its recent joint venture with Disney in a deal that the team managed in-house.

“The joint venture with Disney is quite significant – a big landmark,” she says. “It’s the first time that Disney in its 100 years of history has allowed its brand to be married with anyone else’s in this way.”

Together the two companies will launch the first UK digital radio station targeted specifically at children. “The number of kids that listen to radio is significant, but there are no substantial dedicated services tailored for them,” says Schwarz. “What better players than Capital, which is the leading commercial radio group, and Disney?”
While digital TV has been far less successful than hoped, Schwarz believes that digital radio will not suffer the same fate.

“Digital radio doesn’t have the same problems associated with digital TV. The technology is there and it’s robust,” she says. “And it’s already gathered a certain amount of consumer interest.”

As well as the joint ventures and acquisitions, the team also spends some time on the company’s record label, Wildstar.

The label, which Capital co-owns with Telstar Records, is most well known for Craig David. (At this point I succumb to the obvious and ask Schwarz if she has met him. “Yes,” she laughs, “but he probably wouldn’t remember. I think it was in some really nerdy capacity, asking him to sign off a rights clearance or something.”)

There is also Party in the Park in early July. This is always a big project for the in-house team because it requires negotiating contracts with all the artists and their labels.

“The first year of Party in the Park was a real challenge,” says Schwarz, who at the time was the only lawyer at Capital. “To get 40 artists to sign off internet rights was hard work, particularly at a time when the record labels and artists were concerned with exploitation over the internet.”

With all this activity taking place and the possibility of more acquisitions after the introduction of the Communications Bill, I wonder if Schwarz will need more lawyers on the in-house team.

Not so, she says. “At the moment it’s the right balance between expertise and in-house knowledge and being able to seek specialist external advice where necessary.”

For Schwarz, the role is continually becoming more strategic and less legal. But that is something she is happy with. “The business has really transformed over the past five years, she explains. “We now have a national presence and have extended our radio brands using digital radio, internet and new technology.”
Nathalie Schwarz
Company secretary, director of legal services and director of strategy and development
Capital Radio

Organisation Capital Radio
Sector Media and entertainment
Turnover £134.6m
Employees Approximately 1,000 including presenters
Legal capability Two lawyers and one paralegal
Company secretary, director of legal services and director of strategy and development Nathalie Schwarz
Reporting to Chief executive David Mansfield
Main law firms Dechert (IP and trademark), Eversheds (property), and Freshfields Bruchaus Deringer (corporate)