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UK COMMERCIAL RADIO
SECTOR: CURRENT
INDICATORS & FORECASTS

Grant Goddard
radio specialist
www.grantgoddard.co.uk

September 2007
Grant Goddard

Agenda

radio specialist

 CURRENT INDICATORS


UK commercial radio revenues



UK commercial radio profitability



UK local commercial revenue yields



UK commercial radio listening



BBC radio listening



Digital radio listening

 FORECASTS


Assumptions



UK radio listening forecasts



UK commercial radio listening forecasts



UK commercial radio revenues forecasts

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

2
Grant Goddard
radio specialist

 CURRENT INDICATORS

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

3
Grant Goddard

UK commercial radio revenues

radio specialist

COMMERCIAL RADIO REVENUES (£m 2006 prices)

700

Branded Content
600

National Advertisers
Local Advertisers

500
400
300
200
100

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

0

[source: Radio Advertising Bureau/Grant Goddard]

2005 revenues
2006 revenues
Q1 2007 revenues
Q2 2007 revenues

down 4% year-on-year (current prices)
down 5% year-on-year (current prices)
down 2% year-on-year (current prices)
up 1% year-on-year (current prices)

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

down 7% year-on-year (constant prices)
down 8% year-on-year (constant prices)

4
Grant Goddard

UK commercial radio revenues

radio specialist

NUMBER OF LOCAL COMMERCIAL RADIO STATIONS

350

COMMERCIAL RADIO REVENUES (£m 2006 prices)

700

[source: Ofcom]

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

2007

2005

2003

2001

1999

0

1997

0
1995

100

1993

50

1991

200

1989

100

1987

300

1985

150

1983

400

1981

200

1979

500

1977

250

1975

600

1973

300

[source: Radio Advertising Bureau/Grant Goddard]

The 1990s were a period of commercial radio growth because of a fortuitous combination of:
 Unprecedented expansion of the number of local commercial radio stations during the 1990s
 Launch of the Radio Advertising Bureau in 1992
 Launch of the UK’s first national commercial radio stations in 1992, 1993 and 1995
 Early consolidation in the industry reduced the number of commercial buying points
 The self-destruction of market leader BBC Radio One in 1993

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

5
Grant Goddard

UK commercial radio revenues

radio specialist

AVERAGE REVENUES PER COMMERCIAL RADIO
STATION (£m 2006 prices)

10

AVERAGE REVENUES PER COMMERCIAL RADIO
STATION (£m 2006 prices)

2.0

9
8

1.5

7
6
5

1.0

4
3

0.5

2

National Advertisers

1

Local Advertisers

0

[source: Radio Advertising Bureau/Ofcom/Grant Goddard]

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

0.0

[source: Radio Advertising Bureau/Ofcom/Grant Goddard]

 Average revenues per radio station have remained relatively constant since the 1990s
 Local stations have increasingly concentrated on national advertisers, to the neglect of local advertisers
 National advertisers have proven more susceptible to cyclical trends and fads (ie: the internet)
 Industry revenues from national advertisers are now more than twice the revenues from local advertisers

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

6
Grant Goddard

UK commercial radio profitability
60

radio specialist

PROFITABILITY OF LOCAL COMMERCIAL RADIO
STATIONS LAUNCHED 1996-2002 (% of stations)

50
40
30
20
10
0
Broke even Broke even in 3 Broke even in
w ithin 3 years
to 6 years
more than 6
years

Ever broke
even

Never broke
even

No data

[source: Ofcom]

PROFITABILITY OF LOCAL COMMERCIAL STATIONS
coverage area average profits % of stations
average
population
(£k per
profitable
station age
('000)
annum)
(years)
<50
-3
58
6
50-150
-20
36
8
150-250
65
48
10
250-500
400
65
15
500-1000
865
95
21
1000-5000
1,200
89
15
>5000
1,400
73
14
[source: Ofcom]

 The majority of local radio stations launched since 1996 have not yet broken even
 Small stations serving populations under 150,000 rarely achieve profitability
 Stations’ budgets are dominated by fixed costs (average 70% of total costs)
 50% of stations either lose money or make a profit of less than £100,000 per annum
 40% of all commercial radio stations lose money

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

7
Grant Goddard

UK commercial radio revenue yields
RADIO INDUSTRY REVENUE YIELD (£ 2006 prices per
1000 hours listened)

radio specialist

30
25
20
15
10
5
0

1999

2000

2001

2002

2003

2004

2005

2006

[source: Radio Advertising Bureau/RAJAR/Grant Goddard]

COMMERCIAL RADIO STATION REVENUES
revenue (£ per
% of total
% of industry
quarter)
commercial
revenues
stations
<250k
63
11
250k-500k
13
10
500k-1m
11
16
>1m
13
63
[source: Ofcom]

 The radio industry’s revenue yield has fallen from its peaks in 2000 and 2004
 There is a ‘triple whammy’ impact for the industry – not only are total revenues and total hours listened
falling, but the revenue yield achieved from each 1000 hours listened is falling too
 The ‘cost per thousand’ to advertisers has similarly been falling
 A small number of large stations generate most of the commercial radio industry’s revenues

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

8
Grant Goddard

UK commercial radio listening

radio specialist

SHARE OF RADIO LISTENING (% )

SHARE OF RADIO LISTENING (% )

60

Local Commercial Radio
BBC Radio One

50
40

50
40
30

30
20

20
BBC Radio

[source: RAJAR]

2007Q2

2006Q2

2005Q2

2004Q2

2003Q2

2002Q2

2001Q2

2000Q2

1999Q2

1998Q2

1997Q2

1996Q2

1995Q2

1994Q2

0
1993Q2

10

2007Q2

2006Q2

2005Q2

2004Q2

2003Q2

2002Q2

2001Q2

2000Q2

1999Q2

1998Q2

1997Q2

1996Q2

1995Q2

1994Q2

1993Q2

10
0

Commercial Radio

[source: RAJAR]

 BBC Radio lost share dramatically in 1993/4 as a direct result of radical programming changes at Radio
One
 Local commercial radio benefited directly from this huge loss of listening to BBC Radio One in 1993/4
 However, since then, commercial radio has not managed to retain this audience ‘windfall’, and its listening
has been eroded by defections to BBC Radios One and Two

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

9
Grant Goddard
BBC Radio One listening

radio specialist
E ndi ng

BBC RADIO ONE: % SHARE

30%

M ar
1999
E ndi ng

12

BBC RADIO ONE: AVERAGE HOURS/WEEK

2000

10

E ndi ng

M ar

M ar

2001
E ndi ng

20%

M ar

2001
E ndi ng

8

M ar

2002

2002
E ndi ng

E ndi ng

15%

M ar
2003

6

M ar
2003
E ndi ng

E ndi ng
M ar

10%

2004

1999

M ar

2000
E ndi ng

M ar

E ndi ng

M ar

25%

E ndi ng

M ar

4

2004

E ndi ng

E ndi ng

M ar

M ar

2005

5%

E ndi ng

2005

2

E ndi ng

M ar

M ar

2006

0%

E ndi ng
M ar

0-14

15-24

25-34

35-44

45-54

55-64

65+

2006

0

[source: RAJAR]

E ndi ng

0-14

2007

15-24

25-34

35-44

45-54

55-64

65+

M ar
2007

[source: RAJAR]

 The audience for Radio One is becoming significantly older
 In the early 1990s, the BBC had re-positioned Radio One as a youth radio station
 Since then, the station’s audience is increasingly dominated by 25-34 year olds

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

10
Grant Goddard
BBC Radio Two listening

radio specialist
E ndi ng

BBC RADIO TWO: % SHARE

25%

1999

E ndi ng

BBC RADIO TWO: REACH (% )

M ar

40%

M ar
1999

E ndi ng

E ndi ng

M ar
2000

M ar

35%

2000

E ndi ng

20%

M ar
2001

E ndi ng
M ar

30%

2001

E ndi ng
M ar

15%

2002

E ndi ng
M ar

25%

2002

E ndi ng
M ar
2003

10%

E ndi ng

20%

M ar
2003

E ndi ng
M ar
2004
E ndi ng
M ar

5%

E ndi ng

15%

M ar
2004
E ndi ng

10%

M ar

2005
E ndi ng
M ar

2005

5%

E ndi ng
M ar

2006

0%

E ndi ng
M ar

0-14

15-24

25-34

35-44

45-54

55-64

65+

2007

[source: RAJAR]

2006

0%

E ndi ng

0-14

15-24

25-34

35-44

45-54

55-64

65+

M ar
2007

[source: RAJAR]

 The audience for Radio Two is becoming significantly younger
 The station’s audience had been dominated by 50+ year olds
 Radio Two has now made huge inroads into the 25-34 and 35-44 age groups

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

11
Grant Goddard

BBC Radio Four listening

radio specialist
E ndi ng

BBC RADIO FOUR: % SHARE

25%

M ar
1999

18

BBC RADIO FOUR: AVERAGE HRS/WEEK

E ndi ng
M ar
2000

M ar
2001
E ndi ng
M ar

15%

2000
E ndi ng

14

M ar
2001

12

E ndi ng
M ar
2002

10

E ndi ng

M ar
2003

10%

E ndi ng

M ar
2003

8

E ndi ng

M ar
2004

M ar

6

2004

E ndi ng
M ar

5%

2005
E ndi ng
M ar

E ndi ng

4

M ar

2

E ndi ng

2005

M ar

2006

0%

E ndi ng
M ar

0-14

15-24

25-34

35-44

45-54

55-64

65+

2007

[source: RAJAR]

1999

M ar

2002
E ndi ng

M ar

E ndi ng

16

E ndi ng

20%

E ndi ng

2006

0

E ndi ng

0-14

15-24

25-34

35-44

45-54

55-64

65+

M ar
2007

[source: RAJAR]

 Radio Four has not succeeded in attracting listening from younger age groups
 The station has firmly consolidated its position amongst over-55’s, mainly through them spending more
time with the station
 Radio Four’s increasing dominance of over-55’s makes it harder for commercial radio to try and launch
(belatedly) stations targeting this demographic

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

12
Grant Goddard

UK commercial radio listening
E ndi ng

COMMERCIAL RADIO: % SHARE

80%

radio specialist
1999
E ndi ng
M ar

70%

2000
E ndi ng
M ar

60%

2001
E ndi ng
M ar

50%

2002
E ndi ng

40%

M ar
2003
E ndi ng

30%

M ar
2004
E ndi ng

20%

M ar
2005
E ndi ng

10%

M ar
2006

0%

E ndi ng
M ar

0-14

15-24

25-34

35-44

45-54

55-64

65+

2007

[source: RAJAR]

E ndi ng

COMMERCIAL RADIO: AVERAGE
HOURS/WEEK

M ar

18

M ar
1999
E ndi ng
M ar
2000

16

E ndi ng
M ar
2001

14

E ndi ng
M ar

12

2002
E ndi ng

10

M ar
2003

8

E ndi ng
M ar
2004

6

E ndi ng
M ar

4

2005
E ndi ng

2

M ar

0

E ndi ng

2006

M ar

0-14

15-24

25-34

35-44

45-54

55-64

65+

2007

[source: RAJAR]

 Commercial radio is losing share dramatically in the key 25-34 and 35-44 age groups
 This loss in share is attributable mainly to lower listening levels, rather than reach, amongst these age
groups and similarly amongst 15-24 year olds
 By 2008, it is likely that 15-24 year olds will remain the only adult demographic in which commercial radio
has the dominant share of listening (over the BBC)

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

13
Grant Goddard

UK all radio listening

radio specialist

100%

M ar
1999

E ndi ng

ALL RADIO: AVERAGE HOURS/WEEK

E ndi ng

ALL RADIO: REACH (% )

30

M ar
1999
E ndi ng

E ndi ng

95%

M ar

90%

E ndi ng

2000

M ar
2000

25

E ndi ng
M ar

M ar

2001

2001

85%

E ndi ng
M ar

80%

20

E ndi ng
M ar
2002

2002
E ndi ng

75%

M ar

70%

E ndi ng

15

E ndi ng

2003

M ar
2004

65%

M ar
2003
E ndi ng
M ar

10

2004

E ndi ng

60%

E ndi ng

M ar

M ar

2005
E ndi ng

55%

E ndi ng

E ndi ng

M ar

50%

2005

5

M ar
2006

2006

M ar

0-14

15-24

25-34

35-44

45-54

55-64

65+

2007

[source: RAJAR]

0

E ndi ng
M ar

0-14

15-24

25-34

35-44

45-54

55-64

65+

2007

[source: RAJAR]

 Radio listening has held up remarkably well to the challenge of new media (online, personal music players,
games)
 Radio’s key characteristics as a portable medium (compared to TV or computers) and as a secondary
medium (to accompany primary activities such as work or driving) make it more resilient than other
traditional media
 Radio remains firmly a ‘mass medium’ reaching 90%+ of the adult population each week

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

14
Grant Goddard

UK all radio listening – males

radio specialist
E ndi ng

ALL RADIO: REACH (% )

100%

M ar
1999

30

ALL RADIO: AVERAGE HOURS/WEEK

M ar

90%

E ndi ng

2000

2000
E ndi ng
M ar
2001

2001
E ndi ng

1999

M ar

25

M ar

85%

M ar

E ndi ng

E ndi ng

95%

E ndi ng

20

E ndi ng

80%

M ar

M ar

2002

2002

75%

E ndi ng
M ar

15

E ndi ng
M ar
2003

2003

70%

E ndi ng
M ar

65%

2004

E ndi ng

10

M ar
2004
E ndi ng

E ndi ng

60%

M ar
2005

55%

M ar

5

2005
E ndi ng

E ndi ng

M ar

M ar

50%

2006

0-14

15-24
male

25-34
male

35-44
male

45-54
male

55-64
male

65+ male

E ndi ng
M ar
2007

[source: RAJAR]

0

2006

0-14 male

15-24
male

25-34
male

35-44
male

45-54
male

55-64
male

65+ male

E ndi ng
M ar
2007

[source: RAJAR]

 Radio’s weekly reach of 15-24 year old males has remained consistent
 Hours listened to all radio by 15-24 year old males is in decline, as their time is increasingly constrained by
competing entertainment sources (online, mobile phones, socialising)
 Radio needs to produce compelling content for this demographic to arrest the decline

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

15
Grant Goddard

Digital radio listening
16%

radio specialist

DIGITAL RADIO HRS LISTENED BY PLATFORM
(% )

8%

LISTENING VIA DAB
LISTENING VIA TV
LISTENING VIA INTERNET
DIGITAL UNSPECIFIED

14%
12%

DIGITAL RADIO HRS LISTENED BY
PLATFORM (% )
COMMERCIAL RADIO

7%

BBC RADIO

6%

10%

5%

8%

4%

6%

3%

4%

2%

2%

1%

2007Q2

2007Q1

2006Q4

2006Q3

2006Q2

2006Q1

2005Q4

2005Q3

2005Q2

2005Q1

2004Q4

0%

[source: RAJAR]

0%
LISTENING VIA
DAB

LISTENING VIA TV

LISTENING VIA
INTERNET

DIGITAL
UNSPECIFIED

[source: RAJAR, Q2 2007]

 Digital radio listening accounts for 13% of all radio listening
 DAB radios are the most significant source of digital listening
 The BBC dominates DAB radio listening
 Listening to radio via the internet remains relatively insignificant (~1%)

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

16
Grant Goddard

Digital-only radio stations

radio specialist
SHARE OF LISTENING TO DIGITAL-ONLY
STATIONS (%)

LISTENING TO DIGITAL-ONLY RADIO STATIONS

14%

reach (%) all adults
12%

100%

hours (%) all radio

Commercial
BBC

10%

75%

8%

50%

6%
4%

25%
2%

2007Q2

2007Q1

2006Q4

2006Q3

2006Q2

2006Q1

2005Q4

2005Q3

2005Q2

2005Q1

2004Q4

2004Q3

2004Q2

2004Q1

2003Q4

2003Q3

2003Q2

2007Q2

2007Q1

2006Q4

2006Q3

2006Q2

2006Q1

2005Q4

2005Q3

2005Q2

2005Q1

2004Q4

2004Q3

2004Q2

2004Q1

2003Q4

2003Q3

2003Q2

2003Q1

[source: RAJAR]

2003Q1

0%

0%

[source: RAJAR]



Although listening to digital radio accounts for 13% of all radio listening, 72% of that digital listening is to
simulcasts of analogue stations



Less than 4% of ALL listening is to radio stations exclusively available via digital



Commercial radio’s share of listening to digital-only radio stations is falling, while the BBC (despite its later
digital launch) is soon likely to dominate the digital radio platform, just as it already dominates the
analogue radio platform



The BBC offers only 5 digital-only stations, all available nationally; whereas commercial radio offers 32
digital-only stations, 9 of which are national, with the remainder available on regional/local multiplexes

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

17
Grant Goddard

Digital radio industry forecasts

radio specialist

DAB CUMULATIVE SET SALES (millions)

25

DIGITAL RADIO LISTENING (% of total listening)

100

20

80

15

60

10

40

RAJAR Platform Survey

20

GfK actual

Ofcom forecast

DRDB forecast 2006
DRDB forecast 2007

[source: GfK & DRDB]

2020

2019

2018

2017

2015

2014

2013

2010

2012

2009

2011

2008

2010

2007

2009

2006

2008

2005

2007

2004

2006

2003

2004

2002

2005

0

0

2016

5

[source: RAJAR & Ofcom]

 No analogue switch-off date has yet been fixed for radio
 Radio industry projections for DAB receiver sales and digital radio listening are both ambitious
 Growth rates to date do not exhibit exponential characteristics

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

18
Grant Goddard

DAB radio receiver sales

radio specialist

DAB RADIO RECEIVER CUMULATIVE SALES
('000s)

6,000

YEAR-ON-YEAR CHANGE IN DAB RADIO SALES (%)

200

12-month moving average

5,000

150

4,000
100

3,000
2,000

50

1,000
0

[source: GfK/DRDB]

Jun-07

Apr-07

Feb-07

Dec-06

Oct-06

Aug-06

Jun-06

Apr-06

Feb-06

Dec-05

Oct-05

Aug-05

Jun-05

Apr-05

Feb-05

Dec-04

Jun-07

Mar-07

Dec-06

Sep-06

Jun-06

Mar-06

Dec-05

Sep-05

Jun-05

Mar-05

Dec-04

Sep-04

Jun-04

Mar-04

Dec-03

Sep-03

Jun-03

Mar-03

Dec-02

0

[source: GfK/DRDB]

 The growth rate of DAB receiver sales is not emulating the experience of Freeview in TV
 By June 2007, the year-on-year annualised growth rate of DAB radio receiver sales had fallen to 12%
 Analogue and digital broadcasts are likely to be required simultaneously for some time

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

19
Grant Goddard

BBC online listening

radio specialist

HOURS LISTENED PER QUARTER TO BBC
RADIO ONLINE
50,000,000
STREAMING

ON DEMAND

40,000,000

PODCASTS

30,000,000
20,000,000
10,000,000

2007Q2

2007Q1

2006Q4

2006Q3

2006Q2

2006Q1

2005Q4

2005Q3

2005Q2

2005Q1

2004Q4

2004Q3

2004Q2

2004Q1

2003Q4

0

[source: BBC]

 The BBC has pioneered the offer of radio programming online as simulcast streams, on-demand shows and
podcasts
 Usage data exhibits an almost linear growth pattern for these services, despite substantial cross-promotion
across BBC outlets
 BBC Online listening (globally) is currently 72m hours per quarter, whereas total BBC radio listening (in the
UK alone) is 7,456m hours per quarter
 Commercial radio’s online offerings are not yet as developed as the BBC’s

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

20
Grant Goddard

Commercial radio ‘heritage’ FM stations

radio specialist

COMMERCIAL HERITAGE FM STATIONS (% share listening)

30
Q2 1999
25

Q2 2007

20
15
10
5

Hallam FM

97.4 Rock FM

Downtown

Radio (DTR)

Metro Radio

Radio City 96.7

Clyde 1 FM

96.4 BRMB

Key 103

(Manchester)

LBC 97.3

Radio

95.8 Capital

0

[source: RAJAR, ranked by population coverage]

 13% of commercial radio stations earn 63% of industry revenues
 ‘Heritage’ FM stations, traditionally the ‘cash cows’ of the industry, have lost huge amounts of listening
since the 1990s
 Revenues of these stations (owned mainly by GCap and EMAP) are falling substantially

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

21
Grant Goddard

Commercial radio ‘heritage’ AM stations

radio specialist

COMMERCIAL HERITAGE AM STATIONS (% share listening)

14
Q2 1999
12

Q2 2007

10
8
6
4
2

Classic Gold

Bristol/Bath/Wiltshire

Classic Gold

Wolverhampton

Magic AM

(Sheffield)

Magic 1152

(Newcastle)

Magic 1548

(Liverpool)

Clyde 2

Capital Gold

Birmingham

Magic 1152

(Manchester)

LBC News 1152

London

Capital Gold

0

[source: RAJAR, ranked by population coverage]

 ‘Heritage’ AM stations have lost listening even more substantially than their FM counterparts
 Commercial radio has attributed these declines to users’ preference for FM reception over AM reception
 Revenues of these stations (owned mainly by GCap and EMAP) are also falling substantially

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

22
Grant Goddard

Commercial radio ‘post-1990’ stations

radio specialist

POST-1990 COMMERCIAL STATIONS (% share listening)

7

Q2 1999
6

Q2 2007

5
4
3
2
1

London

Virgin Radio

London)

Kismat Radio

1035 (Greater

Radio

Premier Christian

(London)

Smooth Radio

Sunrise Radio

(Greater London)

London

Choice FM

XFM 104.9

Kiss 100 FM

Magic 105.4

Heart 106.2 FM

0

[source: RAJAR, ranked by population coverage]

 The substantial losses in listening to commercial radio FM and AM stations are not generally the result of
audience fragmentation, nor of cannibalisation within the commercial radio sector
 Post-heritage commercial radio stations (those launched after 1990) have benefited only marginally from
the losses suffered by the heritage stations since 1999

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

23
Grant Goddard

National radio stations

radio specialist
NATIONAL RADIO STATIONS (% share listening)

16

Q2 1999

14

Q2 2007

12
10
8
6
4
2

Total Virgin Radio

talkSPORT

Classic FM

Live

BBC Radio 5

BBC Radio 4

BBC Radio 3

BBC Radio 2

BBC Radio 1

0

[source: RAJAR]

 National commercial radio stations have not benefited from the audience losses at heritage local
commercial stations
 BBC Radio Two has benefited and increased its lead as the most listened to UK radio station (13m
listeners per week, 164m hours per week)

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

24
Grant Goddard

UK commercial radio ownership
COMMERCIAL RADIO OWNERS (% share of commercial radio listening)

35
30

radio specialist

29.2
23.4

25
20
15

11.4

10.8

10

1.7

1.6

1.1

0.8

0.8

0.7

0.4

0.3

0.2

0.1

0.0

0.0

0.0

Lincs FM Group

Sunrise Group

UKRD

Cumberland
News Group

Tindle Radio

Kent
Messenger

Town &
Country

Northern Media
Group

Forward Media

CanWest
MediaWorks UK

Absolute Radio
International

Laser
Broadcasting

UTV Radio

Guardian Media
Group

Chrysalis/Global
Radio

EMAP Radio

GCap Media

0

Scottish Media
Group

3.4

5

The Local Radio
Company

7.0

[source: RAJAR, Q2 2007]

 Ownership of commercial radio is skewed towards a small number of large groups
 Two groups (GCap and EMAP) control more than half of the industry, while three groups (GCap, EMAP and
Chrysalis/Global Radio) control almost two-thirds
 Further industry consolidation is possible under existing ownership rules

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

25
Grant Goddard

UK commercial radio industry forecasts

radio specialist
COMMERCIAL RADIO SHARE OF DISPLAY
ADVERTISING SPEND (% )

9%

Radio % share
RadioCentre forecast [Jan07]

8%
7%
6%
5%
4%
3%
2%
1%

Commercial radio’s share of listening versus the BBC
 46% by 2009, 48% by 2011 (from 43.5% in Q2 2007)



2011

2010

2009

2008

2007

2006

2005

2004

2003

COMMERCIAL RADIO % SHARE
RadioCentre forecast [Jan07]

50

20

40
30

10

Digital platforms’ share of all commercial radio listening
 30% by 2009, 50% by 2011 (from 13.7% in Q2 2007)

60%
50%

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

0
1999



Radio’s share of display advertising
 7% by 2009, 8% by 2011 (from 6% in 2006)

2002

COMMERCIAL RADIO SHARE OF LISTENING
(% )

60



2001

In January 2007, the commercial radio industry adopted a five-year plan
with forecasts for:

2000

1999

0%

SHARE OF COMMERCIAL RADIO LISTENING
VIA DIGITAL (% )
actual % share
RadioCentre forecast [Jan07]

40%
30%
20%
10%

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

2011

2010

2009

2008

2006

Q2 2007

[source: RAJAR, RAB, RadioCentre]

2005

2004

0%

26
Grant Goddard
radio specialist

 FORECASTS

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

27
Grant Goddard

Assumptions

radio specialist

 Existing strategies of the commercial radio groups and the BBC will continue to be pursued
 The launch of the second national digital commercial radio multiplex in 2008 will merely cannibalise existing
commercial radio listening
 Listening to online simulcasts of station broadcasts is included in the forecasts (as it is in RAJAR)
 Listening to ‘listen again’ on-demand radio programmes is not included in the forecasts (as RAJAR)
 Population changes are based on Statistics Office/Government Actuary 2004-based projections

 NB: No forecasts are included for digital versus analogue listening - RAJAR data released to date is too
irregular and has used differing methodologies
 NB: No forecasts are included for digital versus analogue revenues – limited data released to date is not
transparent

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

28
Grant Goddard

Population forecast

radio specialist

11,000

UK POPULATION PROJECTIONS BY AGE
('000)

10,000

2004
2005

9,000

2006
2007

8,000

2008
2009
2010

7,000

2011
2012

6,000
15-24

25-34

35-44

45-54

55-64

65+

[source: Government Actuary, 2004-based]

 The ageing of the population benefits BBC radio, which dominates listening in the 50+ demographics
 Commercial radio has very few services targeted at the 50+ demographic

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

29
Grant Goddard

Total radio listening forecast

radio specialist

ALL RADIO - REACH (% )

ALL RADIO LISTENING (average
hrs/wk/listener)

95
90.4 90.8 90.4 90.7 90.0 90.1
89.7 89.7 89.6 89.5 89.4
89.3 89.1
90 89.3

29
27
25

23.1

23.8

23

24.4 24.1 24.3 24.4 24.0
23.7 23.3
23.0 22.6
22.3 22.0
21.6

21

85

19
17
2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

[source: RAJAR/Grant Goddard]

1999

15

80

[source: RAJAR/Grant Goddard]

 Radio continues to be a mass medium, reaching around 90% of the adult population
 Time spent listening to radio declines, in the face of competition from other media and entertainment
sources

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

30
Grant Goddard

Total radio listening forecast

radio specialist

ALL RADIO REACH: 15-24 (% /wk)

95
91.7 91.6

92.4

91.5 91.3

ALL RADIO LISTENING: 15-24 (hrs/wk)

30

90.5
89.4 89.3 89.2 89.2 89.2 89.2 89.2 89.2

90

25
20.8 21.0

85

21.6

20.9 21.4 21.0

20

80

20.2 19.7

19.2

18.6

18.1

17.6

17.1

16.7

[source: RAJAR/Grant Goddard]

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

15

[source: RAJAR/Grant Goddard]

 The latest audience data suggests that the declining reach amongst 15-24 year olds experienced 20012005 has abated
 Time spent listening to the radio continues to fall, under pressure from competing leisure opportunities

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

31
Grant Goddard

Total radio listening forecast

radio specialist

ALL RADIO REACH: 25-34 (% /wk)

95

90.7

92.3

91.7 91.5
90.1

89.8 89.7 89.7 90.1

90

90.6 91.0

ALL RADIO LISTENING: 25-34 (hrs/wk)

30

91.5 91.9

92.4

25
21.6

22.3 22.5 22.0
21.8 22.2 22.0

21.1

20.4

20

85

80

19.7

19.0

18.4

17.7

17.1

[source: RAJAR/Grant Goddard]

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

15

[source: RAJAR/Grant Goddard]

 Similar to the 15-24 demographic, reach is not the problem amongst 25-34 year olds and is likely to remain
within a window between 90 and 93%
 Time spent listening continues to decline, with competitive pressure for this age group’s time

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

32
Grant Goddard

Total radio listening forecast

radio specialist

ALL RADIO REACH: 35-44 (% /wk)
92.9 92.5 92.6

91.2

92.0

92.5
92.0 92.1 92.3 92.4
91.5 91.7 91.9
25

90

22.3

[source: RAJAR/Grant Goddard]

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

1999

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

15

2000

80

23.8 23.5 23.7 23.5
23.3 23.3 23.3 23.2 23.2 23.1 23.1 23.0

20

1999

85

23.0

2001

92.4

ALL RADIO LISTENING: 35-44 (hrs/wk)

30

2000

95

[source: RAJAR/Grant Goddard]

 For this age group, reach remains consistent
 Time spent listening remains steady too, as this demographic is under less pressure from competing leisure
pursuits, and because radio is already embedded in their routine

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

33
Grant Goddard

Total radio listening forecast

radio specialist

ALL RADIO REACH: 45-54 (% /wk)

95
90.9

91.8

ALL RADIO LISTENING: 45-54 (hrs/wk)

30

92.3 92.3 92.4 91.9 92.4
91.8 91.7 91.6 91.5
91.4 91.3 91.2

[source: RAJAR/Grant Goddard]

2012

2011

2010

23.7 23.3
22.9 22.5

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

15
2002

80

25.5 25.4 25.5 25.9 25.4
25.0 24.6
24.1

20

2001

85

2000

25 24.2

1999

90

24.9

[source: RAJAR/Grant Goddard]

 Reach remains relatively constant amongst 45-54 year olds
 Time spent listening is falling slightly

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

34
Grant Goddard

Total radio listening forecast

radio specialist

ALL RADIO REACH: 55-64 (% /wk)

95

90 88.7

89.8

90.7 90.9 90.5
90.3

ALL RADIO LISTENING: 55-64 (hrs/wk)

30

91.4 91.0
91.0 90.9 90.8 90.8 90.7 90.7

25.4

26.3

26.9 26.6 26.9 27.3 26.6
26.4 26.2 26.0
25.8 25.6 25.4
25.2

25

[source: RAJAR/Grant Goddard]

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

15

2001

80
2000

20

1999

85

[source: RAJAR/Grant Goddard]

 Reach remains constant amongst 55-64 year olds
 Time spent listening is likely to oscillate between 25 and 27 hours per week

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

35
Grant Goddard

Total radio listening forecast

radio specialist

ALL RADIO REACH: 65+ (% /wk)

95

25

90
86.1 85.9
85.5 85.9 85.7

ALL RADIO LISTENING: 65+ (hrs/wk)

30

24.6

25.5

26.6 26.5 26.6 26.4
26.1 26.0 25.8
25.7 25.5 25.3
25.1 25.0

86.8
85.8

85 83.7

84.9

84.2

83.4

20

82.7

81.9

81.2

[source: RAJAR/Grant Goddard]

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1999

15

80

[source: RAJAR/Grant Goddard]

 Reach continues to fall as:
• A greater proportion of this demographic is aged 85+
• Stations such as BBC Radio Two and BBC local radio serve this demographic less and less directly
• The commercial sector has no specific offerings to attract this demographic
 Time spent listening of those who continue to listen remains almost constant

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

36
Grant Goddard

Commercial radio listening forecast

radio specialist

COMMERCIAL RADIO - REACH (% )

90

COMMERCIAL RADIO LISTENING
(average hrs/wk/listener)

20

80
70 65.2 65.2 65.5 65.1 65.2 64.2
62.8 62.1 61.9 61.6 61.3
61.0 60.6 60.3
60

15.1
15

50

15.5 15.5 15.2 15.3 15.2
15.0 14.7
14.5 14.2
14.0 13.7
13.5 13.2

40
30

[source: RAJAR/Grant Goddard]

 Time spent listening to commercial radio declines
significantly
 As a result, commercial radio’s share (versus the
BBC) continues to fall

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

[source: RAJAR/Grant Goddard]

COMMERCIAL RADIO % SHARE OF LISTENING

70

 Commercial radio’s weekly reach continues its slow
decline

2000

1999

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

10

60

50

47.8 47.0
45.9 45.5 45.2
44.6 43.5
43.1 42.9 42.6 42.3 42.0
41.7 41.4

40

30

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

20

[source: RAJAR/Grant Goddard]
UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

37
Grant Goddard

Commercial radio listening forecast
90
80

COMMERCIAL RADIO REACH: 15-24
(% /wk)
80.3 80.5 81.0 79.7 80.8 79.6

radio specialist
COMMERCIAL RADIO LISTENING: 15-24
(hrs/wk)

20

75.7 75.2 75.0 74.9 74.7 74.6 74.4 74.3

70

15

60

14.5

15.2

15.7

15.2

15.6 15.4
14.5

14.2

13.7

50

13.3

12.9

12.5

12.1

11.8

40
30

[source: RAJAR/Grant Goddard]

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

[source: RAJAR/Grant Goddard]

COMMERCIAL RADIO SHARE: 15-24 (% )

70
61.1

 Commercial radio’s reach remains stable amongst
15-24 year olds

2000

1999

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

10

63.5 63.7 63.1 64.6 64.3

60

61.0 60.7 60.3 59.9 59.6
59.3 59.1 58.9

50

 Time spent listening falls dramatically
40
30

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

20
1999

 Commercial radio’s share falls, but not as
dramatically, because 15-24 year olds are listening
less to ALL radio, not only commercial radio

[source: RAJAR/Grant Goddard]
UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

38
Grant Goddard

Commercial radio listening forecast
COMMERCIAL RADIO REACH: 25-34
(% /wk)

90

80 76.2 76.2 76.2 73.5 75.1
72.4
70

radio specialist
COMMERCIAL RADIO LISTENING: 25-34
(hrs/wk)

20

70.1 69.6 69.5 69.5 69.4 69.3 69.3 69.2
15.8

60

16.2 15.9
15.8 15.6 15.7

15.0

15

14.4

13.7

50

13.0

12.4

11.7

40
30

11.2

10.6

[source: RAJAR/Grant Goddard]

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

[source: RAJAR/Grant Goddard]

COMMERCIAL RADIO SHARE: 25-34 (% )

70

 Similarly to 15-24 year olds, commercial radio’s
reach remains fairly constant

2000

1999

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

10

61.6 60.6
60

 Time spent listening falls dramatically

53.2 52.8 51.6
50.6 49.5
48.5 47.5
46.5

50

 Commercial radio’s share falls, accelerated by this
demographic spending more time with BBC Radio
One

59.0 58.5 58.9
57.2

40
30

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

20

[source: RAJAR/Grant Goddard]
UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

39
Grant Goddard

Commercial radio listening forecast
COMMERCIAL RADIO REACH: 35-44
(% /wk)

90

radio specialist
COMMERCIAL RADIO LISTENING: 35-44
(hrs/wk)

20

80 74.2 75.1 75.4 73.7
73.3 72.5
70.8 69.7
68.9 68.1 67.3
66.6 65.9 65.2
70

16.1 16.3

16.7 16.5 16.6

16.1 16.0 15.9 15.9 15.9
15.8 15.7 15.7 15.6

15

60
50
40
30

[source: RAJAR/Grant Goddard]

 Time spent listening to commercial radio falls
marginally, under competition from BBC Radio Two
 Commercial radio’s share continues to fall

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

[source: RAJAR/Grant Goddard]

COMMERCIAL RADIO SHARE: 35-44 (% )

70

 Commercial radio’s reach continues to falls marginally
amongst 35-44 year olds

2000

1999

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

10

58.6 57.6
57.0 55.9
55.3 54.0
53.1 52.0
51.2 50.5 49.8
49.1 48.5 47.8
50
60

40
30

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

20

[source: RAJAR/Grant Goddard]
UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

40
Grant Goddard

Commercial radio listening forecast
COMMERCIAL RADIO REACH: 45-54
(% /wk)

90

radio specialist
COMMERCIAL RADIO LISTENING: 45-54
(hrs/wk)

20

80
70 66.9 66.9 67.0 67.2 66.8 66.6 65.9 65.8 66.0 66.2 66.5 66.8 67.0 67.3
60

15.7 15.7 15.8 15.5 15.4
15.4 15.6 15.7 15.7
15.3 15.2 15.1 15.1
15.0
15

50
40
30

[source: RAJAR/Grant Goddard]

 Time spent listening to commercial radio similarly
remains constant
 Commercial radio’s share increases slowly, as the
sector’s audience ages

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

[source: RAJAR/Grant Goddard]

COMMERCIAL RADIO SHARE: 45-54 (% )

70

 Commercial radio’s reach in this demographic
remains constant

2000

1999

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

10

60
48.3 49.1
46.7 47.5
50 46.8 45.6
44.6 45.0 44.6 43.8 44.3 44.5 45.2 46.0
40
30

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

20

[source: RAJAR/Grant Goddard]
UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

41
Grant Goddard

Commercial radio listening forecast
COMMERCIAL RADIO REACH: 55-64
(% /wk)

90

radio specialist
COMMERCIAL RADIO LISTENING: 55-64
(hrs/wk)

20

80
70
60 54.9 55.1 55.4 56.1 56.3 55.5 56.5 55.5 55.1 54.6 54.2 53.8
53.3 52.9

15 14.3 14.5 14.2

13.7 13.9

14.4 14.4 14.3

50

14.0 13.7
13.4 13.1
12.9 12.6

40
30

[source: RAJAR/Grant Goddard]

 The commercial radio sector fails to develop a
product to persuade this demographic away from
BBC radio services

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

[source: RAJAR/Grant Goddard]

COMMERCIAL RADIO SHARE: 55-64 (% )

70

 Reach, time spent listening and share remain
relatively static

2000

1999

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

10

60
50
40

34.9 33.8

30

32.4 31.8 31.8 32.5 33.4 33.0 32.3 31.7 31.0
30.4 29.8 29.2

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

20

[source: RAJAR/Grant Goddard]
UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

42
Grant Goddard

Commercial radio listening forecast

radio specialist

COMMERCIAL RADIO REACH: 65+ (% /wk)

90

COMMERCIAL RADIO LISTENING: 65+
(hrs/wk)

20

80
70
60

15
13.4

50
40.4 39.5 40.2

13.5

42.7 42.3 42.1 41.7
40.7 40.2 39.9 39.5 39.2
38.9 38.5

30

13.9
13.5 13.6 13.7 13.7 13.8 13.8
13.2 13.1 13.2 13.5

[source: RAJAR/Grant Goddard]

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

10
1999

40

14.0

[source: RAJAR/Grant Goddard]

COMMERCIAL RADIO SHARE: 65+ (% )

70
60

 The 65+ age group’s interest in commercial radio
remains marginal

50
40
30 26.4 25.4
25.5 25.8 26.1 26.4
23.9 24.8 24.1 24.5 24.7 24.7 24.9 25.2

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

20

[source: RAJAR/Grant Goddard]
UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

43
Grant Goddard

Commercial radio listening forecast

radio specialist

RADIO LISTENING ('000 hours per week)

1,250,000

ALL RADIO
COMMERCIAL RADIO

1,000,000

750,000

500,000

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

250,000

[source: RAJAR/Grant Goddard]

 Total hours listened to all radio is declining by 1% year-on-year
 Hours listened to commercial radio will continue to decline by almost 2% year-on-year
 Commercial radio’s position is a result of:


The ageing of the population



Increased competition for the leisure time of teens, 20 and 30 year olds, in which commercial radio
has traditionally dominated listening



Attrition to commercial radio’s ‘heartland audience’ of 15-44 year olds by BBC Radio One targeting
older listeners and BBC Radio Two targeting younger listeners

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

44
Grant Goddard

Commercial radio revenues forecast

radio specialist

COMMERCIAL RADIO REVENUES (£ 2006 prices per
1000 hours listened)

30

£27.40
£24.42 £25.07

25 £22.66

£26.22

£27.43

£26.27
£24.59 £23.90
£23.46 £23.19 £22.80
£22.41 £22.02

20
15
10
5

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

0

[source: RAJAR/Radio Advertising Bureau/Grant Goddard]

 Commercial radio’s ability to monetise its listening will become harder because:


Cost per thousands are falling



Inventory has increased substantially with the launch of digital-only commercial stations



‘Heritage’ stations are no longer delivering such substantial audiences for advertisers



Commercial radio is losing ground in advertisers’ minds to new competitors (online, games, mobile)



Commercial radio is not an exciting, attention-grabbing environment

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

45
Grant Goddard

Commercial radio revenues forecast

radio specialist

COMMERCIAL RADIO REVENUES (£m 2006 prices)
800
691.7

700
600

627.6 632.6

660.0

680.1
632.9
581.7

556.2

558.7

500

539.2 523.9
506.2 489.2
472.6

400
300
200
100

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

0

[source: RAJAR/Radio Advertising Bureau/Grant Goddard]

 Our commercial radio revenue forecast predicts continuing year-on-year declines of around 3% per annum
in real terms
 Commercial radio companies have yet to implement successful strategies to combat audience defection to
BBC radio
 Increased supply of commercial radio services (such as the launch of the Channel 4 digital radio multiplex
in 2008) will not, by itself, increase consumer demand for commercial radio
 Commercial radio has been closing more services than it has been opening (GCap – The Storm, Capital
Disney, Core, Life; EMAP – 3C; independent – PrimeTime)
UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

46
Grant Goddard

UK commercial radio share of listening
COMMERCIAL RADIO SHARE OF LISTENING
(% )

50
47.8

radio specialist
COMMERCIAL RADIO SHARE OF LISTENING
(% )

50

COMMERCIAL RADIO % SHARE

47.0
45.9

RadioCentre forecast [Jan07]
45.5 45.2

45

44.6
43.5

43.1 42.9
42.6 42.3
42.0 41.7
41.4

45

[Source: RAJAR/Grant Goddard]

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

35
2001

35
2000

40

1999

40

[Source: RAJAR/RadioCentre]

 Our forecast predicts a continuing decline in commercial radio’s share of listening (versus the BBC)
 There is still no specific commercial radio product to appeal to the growing 50+ demographic
 While the number of commercial radio stations has increased, these new services have cannibalised their
commercial competitors, rather than competed directly for BBC audiences
 Commercial radio formats continue to converge towards the middle ground (ie: GMG’s conversion of the
Saga stations to its Smooth format), rather than offering unique content

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

47
Issues facing commercial radio

Grant Goddard
radio specialist

 No date has yet been set for digital radio switchover/analogue switch off
 The costs of DAB transmission alongside existing analogue services will continue to burden the industry
 The costs of transmission contracts with Arqiva/National Grid Wireless require re-negotiation
 Music royalty agreements with PRS and PPL require re-negotiation
 Radio’s regulatory regime requires reform to level the playing field with new competitors
 The 2003 Communications Act requires updating to reflect the emerging media landscape
 The DAB platform is in danger of marginalisation without compelling content to drive hardware sales
 The commercial radio industry has to work together to reduce its fixed cost base, during a period when
revenues will continue to decline in real terms

UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007

48

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'UK Commercial Radio Sector Current Indicators & Forecasts: September 2007' by Grant Goddard

  • 1. UK COMMERCIAL RADIO SECTOR: CURRENT INDICATORS & FORECASTS Grant Goddard radio specialist www.grantgoddard.co.uk September 2007
  • 2. Grant Goddard Agenda radio specialist  CURRENT INDICATORS  UK commercial radio revenues  UK commercial radio profitability  UK local commercial revenue yields  UK commercial radio listening  BBC radio listening  Digital radio listening  FORECASTS  Assumptions  UK radio listening forecasts  UK commercial radio listening forecasts  UK commercial radio revenues forecasts UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 2
  • 3. Grant Goddard radio specialist  CURRENT INDICATORS UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 3
  • 4. Grant Goddard UK commercial radio revenues radio specialist COMMERCIAL RADIO REVENUES (£m 2006 prices) 700 Branded Content 600 National Advertisers Local Advertisers 500 400 300 200 100 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 0 [source: Radio Advertising Bureau/Grant Goddard] 2005 revenues 2006 revenues Q1 2007 revenues Q2 2007 revenues down 4% year-on-year (current prices) down 5% year-on-year (current prices) down 2% year-on-year (current prices) up 1% year-on-year (current prices) UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 down 7% year-on-year (constant prices) down 8% year-on-year (constant prices) 4
  • 5. Grant Goddard UK commercial radio revenues radio specialist NUMBER OF LOCAL COMMERCIAL RADIO STATIONS 350 COMMERCIAL RADIO REVENUES (£m 2006 prices) 700 [source: Ofcom] 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1974 2007 2005 2003 2001 1999 0 1997 0 1995 100 1993 50 1991 200 1989 100 1987 300 1985 150 1983 400 1981 200 1979 500 1977 250 1975 600 1973 300 [source: Radio Advertising Bureau/Grant Goddard] The 1990s were a period of commercial radio growth because of a fortuitous combination of:  Unprecedented expansion of the number of local commercial radio stations during the 1990s  Launch of the Radio Advertising Bureau in 1992  Launch of the UK’s first national commercial radio stations in 1992, 1993 and 1995  Early consolidation in the industry reduced the number of commercial buying points  The self-destruction of market leader BBC Radio One in 1993 UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 5
  • 6. Grant Goddard UK commercial radio revenues radio specialist AVERAGE REVENUES PER COMMERCIAL RADIO STATION (£m 2006 prices) 10 AVERAGE REVENUES PER COMMERCIAL RADIO STATION (£m 2006 prices) 2.0 9 8 1.5 7 6 5 1.0 4 3 0.5 2 National Advertisers 1 Local Advertisers 0 [source: Radio Advertising Bureau/Ofcom/Grant Goddard] 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1974 0.0 [source: Radio Advertising Bureau/Ofcom/Grant Goddard]  Average revenues per radio station have remained relatively constant since the 1990s  Local stations have increasingly concentrated on national advertisers, to the neglect of local advertisers  National advertisers have proven more susceptible to cyclical trends and fads (ie: the internet)  Industry revenues from national advertisers are now more than twice the revenues from local advertisers UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 6
  • 7. Grant Goddard UK commercial radio profitability 60 radio specialist PROFITABILITY OF LOCAL COMMERCIAL RADIO STATIONS LAUNCHED 1996-2002 (% of stations) 50 40 30 20 10 0 Broke even Broke even in 3 Broke even in w ithin 3 years to 6 years more than 6 years Ever broke even Never broke even No data [source: Ofcom] PROFITABILITY OF LOCAL COMMERCIAL STATIONS coverage area average profits % of stations average population (£k per profitable station age ('000) annum) (years) <50 -3 58 6 50-150 -20 36 8 150-250 65 48 10 250-500 400 65 15 500-1000 865 95 21 1000-5000 1,200 89 15 >5000 1,400 73 14 [source: Ofcom]  The majority of local radio stations launched since 1996 have not yet broken even  Small stations serving populations under 150,000 rarely achieve profitability  Stations’ budgets are dominated by fixed costs (average 70% of total costs)  50% of stations either lose money or make a profit of less than £100,000 per annum  40% of all commercial radio stations lose money UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 7
  • 8. Grant Goddard UK commercial radio revenue yields RADIO INDUSTRY REVENUE YIELD (£ 2006 prices per 1000 hours listened) radio specialist 30 25 20 15 10 5 0 1999 2000 2001 2002 2003 2004 2005 2006 [source: Radio Advertising Bureau/RAJAR/Grant Goddard] COMMERCIAL RADIO STATION REVENUES revenue (£ per % of total % of industry quarter) commercial revenues stations <250k 63 11 250k-500k 13 10 500k-1m 11 16 >1m 13 63 [source: Ofcom]  The radio industry’s revenue yield has fallen from its peaks in 2000 and 2004  There is a ‘triple whammy’ impact for the industry – not only are total revenues and total hours listened falling, but the revenue yield achieved from each 1000 hours listened is falling too  The ‘cost per thousand’ to advertisers has similarly been falling  A small number of large stations generate most of the commercial radio industry’s revenues UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 8
  • 9. Grant Goddard UK commercial radio listening radio specialist SHARE OF RADIO LISTENING (% ) SHARE OF RADIO LISTENING (% ) 60 Local Commercial Radio BBC Radio One 50 40 50 40 30 30 20 20 BBC Radio [source: RAJAR] 2007Q2 2006Q2 2005Q2 2004Q2 2003Q2 2002Q2 2001Q2 2000Q2 1999Q2 1998Q2 1997Q2 1996Q2 1995Q2 1994Q2 0 1993Q2 10 2007Q2 2006Q2 2005Q2 2004Q2 2003Q2 2002Q2 2001Q2 2000Q2 1999Q2 1998Q2 1997Q2 1996Q2 1995Q2 1994Q2 1993Q2 10 0 Commercial Radio [source: RAJAR]  BBC Radio lost share dramatically in 1993/4 as a direct result of radical programming changes at Radio One  Local commercial radio benefited directly from this huge loss of listening to BBC Radio One in 1993/4  However, since then, commercial radio has not managed to retain this audience ‘windfall’, and its listening has been eroded by defections to BBC Radios One and Two UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 9
  • 10. Grant Goddard BBC Radio One listening radio specialist E ndi ng BBC RADIO ONE: % SHARE 30% M ar 1999 E ndi ng 12 BBC RADIO ONE: AVERAGE HOURS/WEEK 2000 10 E ndi ng M ar M ar 2001 E ndi ng 20% M ar 2001 E ndi ng 8 M ar 2002 2002 E ndi ng E ndi ng 15% M ar 2003 6 M ar 2003 E ndi ng E ndi ng M ar 10% 2004 1999 M ar 2000 E ndi ng M ar E ndi ng M ar 25% E ndi ng M ar 4 2004 E ndi ng E ndi ng M ar M ar 2005 5% E ndi ng 2005 2 E ndi ng M ar M ar 2006 0% E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2006 0 [source: RAJAR] E ndi ng 0-14 2007 15-24 25-34 35-44 45-54 55-64 65+ M ar 2007 [source: RAJAR]  The audience for Radio One is becoming significantly older  In the early 1990s, the BBC had re-positioned Radio One as a youth radio station  Since then, the station’s audience is increasingly dominated by 25-34 year olds UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 10
  • 11. Grant Goddard BBC Radio Two listening radio specialist E ndi ng BBC RADIO TWO: % SHARE 25% 1999 E ndi ng BBC RADIO TWO: REACH (% ) M ar 40% M ar 1999 E ndi ng E ndi ng M ar 2000 M ar 35% 2000 E ndi ng 20% M ar 2001 E ndi ng M ar 30% 2001 E ndi ng M ar 15% 2002 E ndi ng M ar 25% 2002 E ndi ng M ar 2003 10% E ndi ng 20% M ar 2003 E ndi ng M ar 2004 E ndi ng M ar 5% E ndi ng 15% M ar 2004 E ndi ng 10% M ar 2005 E ndi ng M ar 2005 5% E ndi ng M ar 2006 0% E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR] 2006 0% E ndi ng 0-14 15-24 25-34 35-44 45-54 55-64 65+ M ar 2007 [source: RAJAR]  The audience for Radio Two is becoming significantly younger  The station’s audience had been dominated by 50+ year olds  Radio Two has now made huge inroads into the 25-34 and 35-44 age groups UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 11
  • 12. Grant Goddard BBC Radio Four listening radio specialist E ndi ng BBC RADIO FOUR: % SHARE 25% M ar 1999 18 BBC RADIO FOUR: AVERAGE HRS/WEEK E ndi ng M ar 2000 M ar 2001 E ndi ng M ar 15% 2000 E ndi ng 14 M ar 2001 12 E ndi ng M ar 2002 10 E ndi ng M ar 2003 10% E ndi ng M ar 2003 8 E ndi ng M ar 2004 M ar 6 2004 E ndi ng M ar 5% 2005 E ndi ng M ar E ndi ng 4 M ar 2 E ndi ng 2005 M ar 2006 0% E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR] 1999 M ar 2002 E ndi ng M ar E ndi ng 16 E ndi ng 20% E ndi ng 2006 0 E ndi ng 0-14 15-24 25-34 35-44 45-54 55-64 65+ M ar 2007 [source: RAJAR]  Radio Four has not succeeded in attracting listening from younger age groups  The station has firmly consolidated its position amongst over-55’s, mainly through them spending more time with the station  Radio Four’s increasing dominance of over-55’s makes it harder for commercial radio to try and launch (belatedly) stations targeting this demographic UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 12
  • 13. Grant Goddard UK commercial radio listening E ndi ng COMMERCIAL RADIO: % SHARE 80% radio specialist 1999 E ndi ng M ar 70% 2000 E ndi ng M ar 60% 2001 E ndi ng M ar 50% 2002 E ndi ng 40% M ar 2003 E ndi ng 30% M ar 2004 E ndi ng 20% M ar 2005 E ndi ng 10% M ar 2006 0% E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR] E ndi ng COMMERCIAL RADIO: AVERAGE HOURS/WEEK M ar 18 M ar 1999 E ndi ng M ar 2000 16 E ndi ng M ar 2001 14 E ndi ng M ar 12 2002 E ndi ng 10 M ar 2003 8 E ndi ng M ar 2004 6 E ndi ng M ar 4 2005 E ndi ng 2 M ar 0 E ndi ng 2006 M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR]  Commercial radio is losing share dramatically in the key 25-34 and 35-44 age groups  This loss in share is attributable mainly to lower listening levels, rather than reach, amongst these age groups and similarly amongst 15-24 year olds  By 2008, it is likely that 15-24 year olds will remain the only adult demographic in which commercial radio has the dominant share of listening (over the BBC) UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 13
  • 14. Grant Goddard UK all radio listening radio specialist 100% M ar 1999 E ndi ng ALL RADIO: AVERAGE HOURS/WEEK E ndi ng ALL RADIO: REACH (% ) 30 M ar 1999 E ndi ng E ndi ng 95% M ar 90% E ndi ng 2000 M ar 2000 25 E ndi ng M ar M ar 2001 2001 85% E ndi ng M ar 80% 20 E ndi ng M ar 2002 2002 E ndi ng 75% M ar 70% E ndi ng 15 E ndi ng 2003 M ar 2004 65% M ar 2003 E ndi ng M ar 10 2004 E ndi ng 60% E ndi ng M ar M ar 2005 E ndi ng 55% E ndi ng E ndi ng M ar 50% 2005 5 M ar 2006 2006 M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR] 0 E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR]  Radio listening has held up remarkably well to the challenge of new media (online, personal music players, games)  Radio’s key characteristics as a portable medium (compared to TV or computers) and as a secondary medium (to accompany primary activities such as work or driving) make it more resilient than other traditional media  Radio remains firmly a ‘mass medium’ reaching 90%+ of the adult population each week UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 14
  • 15. Grant Goddard UK all radio listening – males radio specialist E ndi ng ALL RADIO: REACH (% ) 100% M ar 1999 30 ALL RADIO: AVERAGE HOURS/WEEK M ar 90% E ndi ng 2000 2000 E ndi ng M ar 2001 2001 E ndi ng 1999 M ar 25 M ar 85% M ar E ndi ng E ndi ng 95% E ndi ng 20 E ndi ng 80% M ar M ar 2002 2002 75% E ndi ng M ar 15 E ndi ng M ar 2003 2003 70% E ndi ng M ar 65% 2004 E ndi ng 10 M ar 2004 E ndi ng E ndi ng 60% M ar 2005 55% M ar 5 2005 E ndi ng E ndi ng M ar M ar 50% 2006 0-14 15-24 male 25-34 male 35-44 male 45-54 male 55-64 male 65+ male E ndi ng M ar 2007 [source: RAJAR] 0 2006 0-14 male 15-24 male 25-34 male 35-44 male 45-54 male 55-64 male 65+ male E ndi ng M ar 2007 [source: RAJAR]  Radio’s weekly reach of 15-24 year old males has remained consistent  Hours listened to all radio by 15-24 year old males is in decline, as their time is increasingly constrained by competing entertainment sources (online, mobile phones, socialising)  Radio needs to produce compelling content for this demographic to arrest the decline UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 15
  • 16. Grant Goddard Digital radio listening 16% radio specialist DIGITAL RADIO HRS LISTENED BY PLATFORM (% ) 8% LISTENING VIA DAB LISTENING VIA TV LISTENING VIA INTERNET DIGITAL UNSPECIFIED 14% 12% DIGITAL RADIO HRS LISTENED BY PLATFORM (% ) COMMERCIAL RADIO 7% BBC RADIO 6% 10% 5% 8% 4% 6% 3% 4% 2% 2% 1% 2007Q2 2007Q1 2006Q4 2006Q3 2006Q2 2006Q1 2005Q4 2005Q3 2005Q2 2005Q1 2004Q4 0% [source: RAJAR] 0% LISTENING VIA DAB LISTENING VIA TV LISTENING VIA INTERNET DIGITAL UNSPECIFIED [source: RAJAR, Q2 2007]  Digital radio listening accounts for 13% of all radio listening  DAB radios are the most significant source of digital listening  The BBC dominates DAB radio listening  Listening to radio via the internet remains relatively insignificant (~1%) UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 16
  • 17. Grant Goddard Digital-only radio stations radio specialist SHARE OF LISTENING TO DIGITAL-ONLY STATIONS (%) LISTENING TO DIGITAL-ONLY RADIO STATIONS 14% reach (%) all adults 12% 100% hours (%) all radio Commercial BBC 10% 75% 8% 50% 6% 4% 25% 2% 2007Q2 2007Q1 2006Q4 2006Q3 2006Q2 2006Q1 2005Q4 2005Q3 2005Q2 2005Q1 2004Q4 2004Q3 2004Q2 2004Q1 2003Q4 2003Q3 2003Q2 2007Q2 2007Q1 2006Q4 2006Q3 2006Q2 2006Q1 2005Q4 2005Q3 2005Q2 2005Q1 2004Q4 2004Q3 2004Q2 2004Q1 2003Q4 2003Q3 2003Q2 2003Q1 [source: RAJAR] 2003Q1 0% 0% [source: RAJAR]  Although listening to digital radio accounts for 13% of all radio listening, 72% of that digital listening is to simulcasts of analogue stations  Less than 4% of ALL listening is to radio stations exclusively available via digital  Commercial radio’s share of listening to digital-only radio stations is falling, while the BBC (despite its later digital launch) is soon likely to dominate the digital radio platform, just as it already dominates the analogue radio platform  The BBC offers only 5 digital-only stations, all available nationally; whereas commercial radio offers 32 digital-only stations, 9 of which are national, with the remainder available on regional/local multiplexes UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 17
  • 18. Grant Goddard Digital radio industry forecasts radio specialist DAB CUMULATIVE SET SALES (millions) 25 DIGITAL RADIO LISTENING (% of total listening) 100 20 80 15 60 10 40 RAJAR Platform Survey 20 GfK actual Ofcom forecast DRDB forecast 2006 DRDB forecast 2007 [source: GfK & DRDB] 2020 2019 2018 2017 2015 2014 2013 2010 2012 2009 2011 2008 2010 2007 2009 2006 2008 2005 2007 2004 2006 2003 2004 2002 2005 0 0 2016 5 [source: RAJAR & Ofcom]  No analogue switch-off date has yet been fixed for radio  Radio industry projections for DAB receiver sales and digital radio listening are both ambitious  Growth rates to date do not exhibit exponential characteristics UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 18
  • 19. Grant Goddard DAB radio receiver sales radio specialist DAB RADIO RECEIVER CUMULATIVE SALES ('000s) 6,000 YEAR-ON-YEAR CHANGE IN DAB RADIO SALES (%) 200 12-month moving average 5,000 150 4,000 100 3,000 2,000 50 1,000 0 [source: GfK/DRDB] Jun-07 Apr-07 Feb-07 Dec-06 Oct-06 Aug-06 Jun-06 Apr-06 Feb-06 Dec-05 Oct-05 Aug-05 Jun-05 Apr-05 Feb-05 Dec-04 Jun-07 Mar-07 Dec-06 Sep-06 Jun-06 Mar-06 Dec-05 Sep-05 Jun-05 Mar-05 Dec-04 Sep-04 Jun-04 Mar-04 Dec-03 Sep-03 Jun-03 Mar-03 Dec-02 0 [source: GfK/DRDB]  The growth rate of DAB receiver sales is not emulating the experience of Freeview in TV  By June 2007, the year-on-year annualised growth rate of DAB radio receiver sales had fallen to 12%  Analogue and digital broadcasts are likely to be required simultaneously for some time UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 19
  • 20. Grant Goddard BBC online listening radio specialist HOURS LISTENED PER QUARTER TO BBC RADIO ONLINE 50,000,000 STREAMING ON DEMAND 40,000,000 PODCASTS 30,000,000 20,000,000 10,000,000 2007Q2 2007Q1 2006Q4 2006Q3 2006Q2 2006Q1 2005Q4 2005Q3 2005Q2 2005Q1 2004Q4 2004Q3 2004Q2 2004Q1 2003Q4 0 [source: BBC]  The BBC has pioneered the offer of radio programming online as simulcast streams, on-demand shows and podcasts  Usage data exhibits an almost linear growth pattern for these services, despite substantial cross-promotion across BBC outlets  BBC Online listening (globally) is currently 72m hours per quarter, whereas total BBC radio listening (in the UK alone) is 7,456m hours per quarter  Commercial radio’s online offerings are not yet as developed as the BBC’s UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 20
  • 21. Grant Goddard Commercial radio ‘heritage’ FM stations radio specialist COMMERCIAL HERITAGE FM STATIONS (% share listening) 30 Q2 1999 25 Q2 2007 20 15 10 5 Hallam FM 97.4 Rock FM Downtown Radio (DTR) Metro Radio Radio City 96.7 Clyde 1 FM 96.4 BRMB Key 103 (Manchester) LBC 97.3 Radio 95.8 Capital 0 [source: RAJAR, ranked by population coverage]  13% of commercial radio stations earn 63% of industry revenues  ‘Heritage’ FM stations, traditionally the ‘cash cows’ of the industry, have lost huge amounts of listening since the 1990s  Revenues of these stations (owned mainly by GCap and EMAP) are falling substantially UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 21
  • 22. Grant Goddard Commercial radio ‘heritage’ AM stations radio specialist COMMERCIAL HERITAGE AM STATIONS (% share listening) 14 Q2 1999 12 Q2 2007 10 8 6 4 2 Classic Gold Bristol/Bath/Wiltshire Classic Gold Wolverhampton Magic AM (Sheffield) Magic 1152 (Newcastle) Magic 1548 (Liverpool) Clyde 2 Capital Gold Birmingham Magic 1152 (Manchester) LBC News 1152 London Capital Gold 0 [source: RAJAR, ranked by population coverage]  ‘Heritage’ AM stations have lost listening even more substantially than their FM counterparts  Commercial radio has attributed these declines to users’ preference for FM reception over AM reception  Revenues of these stations (owned mainly by GCap and EMAP) are also falling substantially UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 22
  • 23. Grant Goddard Commercial radio ‘post-1990’ stations radio specialist POST-1990 COMMERCIAL STATIONS (% share listening) 7 Q2 1999 6 Q2 2007 5 4 3 2 1 London Virgin Radio London) Kismat Radio 1035 (Greater Radio Premier Christian (London) Smooth Radio Sunrise Radio (Greater London) London Choice FM XFM 104.9 Kiss 100 FM Magic 105.4 Heart 106.2 FM 0 [source: RAJAR, ranked by population coverage]  The substantial losses in listening to commercial radio FM and AM stations are not generally the result of audience fragmentation, nor of cannibalisation within the commercial radio sector  Post-heritage commercial radio stations (those launched after 1990) have benefited only marginally from the losses suffered by the heritage stations since 1999 UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 23
  • 24. Grant Goddard National radio stations radio specialist NATIONAL RADIO STATIONS (% share listening) 16 Q2 1999 14 Q2 2007 12 10 8 6 4 2 Total Virgin Radio talkSPORT Classic FM Live BBC Radio 5 BBC Radio 4 BBC Radio 3 BBC Radio 2 BBC Radio 1 0 [source: RAJAR]  National commercial radio stations have not benefited from the audience losses at heritage local commercial stations  BBC Radio Two has benefited and increased its lead as the most listened to UK radio station (13m listeners per week, 164m hours per week) UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 24
  • 25. Grant Goddard UK commercial radio ownership COMMERCIAL RADIO OWNERS (% share of commercial radio listening) 35 30 radio specialist 29.2 23.4 25 20 15 11.4 10.8 10 1.7 1.6 1.1 0.8 0.8 0.7 0.4 0.3 0.2 0.1 0.0 0.0 0.0 Lincs FM Group Sunrise Group UKRD Cumberland News Group Tindle Radio Kent Messenger Town & Country Northern Media Group Forward Media CanWest MediaWorks UK Absolute Radio International Laser Broadcasting UTV Radio Guardian Media Group Chrysalis/Global Radio EMAP Radio GCap Media 0 Scottish Media Group 3.4 5 The Local Radio Company 7.0 [source: RAJAR, Q2 2007]  Ownership of commercial radio is skewed towards a small number of large groups  Two groups (GCap and EMAP) control more than half of the industry, while three groups (GCap, EMAP and Chrysalis/Global Radio) control almost two-thirds  Further industry consolidation is possible under existing ownership rules UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 25
  • 26. Grant Goddard UK commercial radio industry forecasts radio specialist COMMERCIAL RADIO SHARE OF DISPLAY ADVERTISING SPEND (% ) 9% Radio % share RadioCentre forecast [Jan07] 8% 7% 6% 5% 4% 3% 2% 1% Commercial radio’s share of listening versus the BBC  46% by 2009, 48% by 2011 (from 43.5% in Q2 2007)  2011 2010 2009 2008 2007 2006 2005 2004 2003 COMMERCIAL RADIO % SHARE RadioCentre forecast [Jan07] 50 20 40 30 10 Digital platforms’ share of all commercial radio listening  30% by 2009, 50% by 2011 (from 13.7% in Q2 2007) 60% 50% 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 0 1999  Radio’s share of display advertising  7% by 2009, 8% by 2011 (from 6% in 2006) 2002 COMMERCIAL RADIO SHARE OF LISTENING (% ) 60  2001 In January 2007, the commercial radio industry adopted a five-year plan with forecasts for: 2000 1999 0% SHARE OF COMMERCIAL RADIO LISTENING VIA DIGITAL (% ) actual % share RadioCentre forecast [Jan07] 40% 30% 20% 10% UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 2011 2010 2009 2008 2006 Q2 2007 [source: RAJAR, RAB, RadioCentre] 2005 2004 0% 26
  • 27. Grant Goddard radio specialist  FORECASTS UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 27
  • 28. Grant Goddard Assumptions radio specialist  Existing strategies of the commercial radio groups and the BBC will continue to be pursued  The launch of the second national digital commercial radio multiplex in 2008 will merely cannibalise existing commercial radio listening  Listening to online simulcasts of station broadcasts is included in the forecasts (as it is in RAJAR)  Listening to ‘listen again’ on-demand radio programmes is not included in the forecasts (as RAJAR)  Population changes are based on Statistics Office/Government Actuary 2004-based projections  NB: No forecasts are included for digital versus analogue listening - RAJAR data released to date is too irregular and has used differing methodologies  NB: No forecasts are included for digital versus analogue revenues – limited data released to date is not transparent UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 28
  • 29. Grant Goddard Population forecast radio specialist 11,000 UK POPULATION PROJECTIONS BY AGE ('000) 10,000 2004 2005 9,000 2006 2007 8,000 2008 2009 2010 7,000 2011 2012 6,000 15-24 25-34 35-44 45-54 55-64 65+ [source: Government Actuary, 2004-based]  The ageing of the population benefits BBC radio, which dominates listening in the 50+ demographics  Commercial radio has very few services targeted at the 50+ demographic UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 29
  • 30. Grant Goddard Total radio listening forecast radio specialist ALL RADIO - REACH (% ) ALL RADIO LISTENING (average hrs/wk/listener) 95 90.4 90.8 90.4 90.7 90.0 90.1 89.7 89.7 89.6 89.5 89.4 89.3 89.1 90 89.3 29 27 25 23.1 23.8 23 24.4 24.1 24.3 24.4 24.0 23.7 23.3 23.0 22.6 22.3 22.0 21.6 21 85 19 17 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 [source: RAJAR/Grant Goddard] 1999 15 80 [source: RAJAR/Grant Goddard]  Radio continues to be a mass medium, reaching around 90% of the adult population  Time spent listening to radio declines, in the face of competition from other media and entertainment sources UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 30
  • 31. Grant Goddard Total radio listening forecast radio specialist ALL RADIO REACH: 15-24 (% /wk) 95 91.7 91.6 92.4 91.5 91.3 ALL RADIO LISTENING: 15-24 (hrs/wk) 30 90.5 89.4 89.3 89.2 89.2 89.2 89.2 89.2 89.2 90 25 20.8 21.0 85 21.6 20.9 21.4 21.0 20 80 20.2 19.7 19.2 18.6 18.1 17.6 17.1 16.7 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 15 [source: RAJAR/Grant Goddard]  The latest audience data suggests that the declining reach amongst 15-24 year olds experienced 20012005 has abated  Time spent listening to the radio continues to fall, under pressure from competing leisure opportunities UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 31
  • 32. Grant Goddard Total radio listening forecast radio specialist ALL RADIO REACH: 25-34 (% /wk) 95 90.7 92.3 91.7 91.5 90.1 89.8 89.7 89.7 90.1 90 90.6 91.0 ALL RADIO LISTENING: 25-34 (hrs/wk) 30 91.5 91.9 92.4 25 21.6 22.3 22.5 22.0 21.8 22.2 22.0 21.1 20.4 20 85 80 19.7 19.0 18.4 17.7 17.1 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 15 [source: RAJAR/Grant Goddard]  Similar to the 15-24 demographic, reach is not the problem amongst 25-34 year olds and is likely to remain within a window between 90 and 93%  Time spent listening continues to decline, with competitive pressure for this age group’s time UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 32
  • 33. Grant Goddard Total radio listening forecast radio specialist ALL RADIO REACH: 35-44 (% /wk) 92.9 92.5 92.6 91.2 92.0 92.5 92.0 92.1 92.3 92.4 91.5 91.7 91.9 25 90 22.3 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 15 2000 80 23.8 23.5 23.7 23.5 23.3 23.3 23.3 23.2 23.2 23.1 23.1 23.0 20 1999 85 23.0 2001 92.4 ALL RADIO LISTENING: 35-44 (hrs/wk) 30 2000 95 [source: RAJAR/Grant Goddard]  For this age group, reach remains consistent  Time spent listening remains steady too, as this demographic is under less pressure from competing leisure pursuits, and because radio is already embedded in their routine UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 33
  • 34. Grant Goddard Total radio listening forecast radio specialist ALL RADIO REACH: 45-54 (% /wk) 95 90.9 91.8 ALL RADIO LISTENING: 45-54 (hrs/wk) 30 92.3 92.3 92.4 91.9 92.4 91.8 91.7 91.6 91.5 91.4 91.3 91.2 [source: RAJAR/Grant Goddard] 2012 2011 2010 23.7 23.3 22.9 22.5 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 15 2002 80 25.5 25.4 25.5 25.9 25.4 25.0 24.6 24.1 20 2001 85 2000 25 24.2 1999 90 24.9 [source: RAJAR/Grant Goddard]  Reach remains relatively constant amongst 45-54 year olds  Time spent listening is falling slightly UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 34
  • 35. Grant Goddard Total radio listening forecast radio specialist ALL RADIO REACH: 55-64 (% /wk) 95 90 88.7 89.8 90.7 90.9 90.5 90.3 ALL RADIO LISTENING: 55-64 (hrs/wk) 30 91.4 91.0 91.0 90.9 90.8 90.8 90.7 90.7 25.4 26.3 26.9 26.6 26.9 27.3 26.6 26.4 26.2 26.0 25.8 25.6 25.4 25.2 25 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 15 2001 80 2000 20 1999 85 [source: RAJAR/Grant Goddard]  Reach remains constant amongst 55-64 year olds  Time spent listening is likely to oscillate between 25 and 27 hours per week UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 35
  • 36. Grant Goddard Total radio listening forecast radio specialist ALL RADIO REACH: 65+ (% /wk) 95 25 90 86.1 85.9 85.5 85.9 85.7 ALL RADIO LISTENING: 65+ (hrs/wk) 30 24.6 25.5 26.6 26.5 26.6 26.4 26.1 26.0 25.8 25.7 25.5 25.3 25.1 25.0 86.8 85.8 85 83.7 84.9 84.2 83.4 20 82.7 81.9 81.2 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1999 15 80 [source: RAJAR/Grant Goddard]  Reach continues to fall as: • A greater proportion of this demographic is aged 85+ • Stations such as BBC Radio Two and BBC local radio serve this demographic less and less directly • The commercial sector has no specific offerings to attract this demographic  Time spent listening of those who continue to listen remains almost constant UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 36
  • 37. Grant Goddard Commercial radio listening forecast radio specialist COMMERCIAL RADIO - REACH (% ) 90 COMMERCIAL RADIO LISTENING (average hrs/wk/listener) 20 80 70 65.2 65.2 65.5 65.1 65.2 64.2 62.8 62.1 61.9 61.6 61.3 61.0 60.6 60.3 60 15.1 15 50 15.5 15.5 15.2 15.3 15.2 15.0 14.7 14.5 14.2 14.0 13.7 13.5 13.2 40 30 [source: RAJAR/Grant Goddard]  Time spent listening to commercial radio declines significantly  As a result, commercial radio’s share (versus the BBC) continues to fall 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO % SHARE OF LISTENING 70  Commercial radio’s weekly reach continues its slow decline 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 60 50 47.8 47.0 45.9 45.5 45.2 44.6 43.5 43.1 42.9 42.6 42.3 42.0 41.7 41.4 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 37
  • 38. Grant Goddard Commercial radio listening forecast 90 80 COMMERCIAL RADIO REACH: 15-24 (% /wk) 80.3 80.5 81.0 79.7 80.8 79.6 radio specialist COMMERCIAL RADIO LISTENING: 15-24 (hrs/wk) 20 75.7 75.2 75.0 74.9 74.7 74.6 74.4 74.3 70 15 60 14.5 15.2 15.7 15.2 15.6 15.4 14.5 14.2 13.7 50 13.3 12.9 12.5 12.1 11.8 40 30 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 15-24 (% ) 70 61.1  Commercial radio’s reach remains stable amongst 15-24 year olds 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 63.5 63.7 63.1 64.6 64.3 60 61.0 60.7 60.3 59.9 59.6 59.3 59.1 58.9 50  Time spent listening falls dramatically 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 20 1999  Commercial radio’s share falls, but not as dramatically, because 15-24 year olds are listening less to ALL radio, not only commercial radio [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 38
  • 39. Grant Goddard Commercial radio listening forecast COMMERCIAL RADIO REACH: 25-34 (% /wk) 90 80 76.2 76.2 76.2 73.5 75.1 72.4 70 radio specialist COMMERCIAL RADIO LISTENING: 25-34 (hrs/wk) 20 70.1 69.6 69.5 69.5 69.4 69.3 69.3 69.2 15.8 60 16.2 15.9 15.8 15.6 15.7 15.0 15 14.4 13.7 50 13.0 12.4 11.7 40 30 11.2 10.6 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 25-34 (% ) 70  Similarly to 15-24 year olds, commercial radio’s reach remains fairly constant 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 61.6 60.6 60  Time spent listening falls dramatically 53.2 52.8 51.6 50.6 49.5 48.5 47.5 46.5 50  Commercial radio’s share falls, accelerated by this demographic spending more time with BBC Radio One 59.0 58.5 58.9 57.2 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 39
  • 40. Grant Goddard Commercial radio listening forecast COMMERCIAL RADIO REACH: 35-44 (% /wk) 90 radio specialist COMMERCIAL RADIO LISTENING: 35-44 (hrs/wk) 20 80 74.2 75.1 75.4 73.7 73.3 72.5 70.8 69.7 68.9 68.1 67.3 66.6 65.9 65.2 70 16.1 16.3 16.7 16.5 16.6 16.1 16.0 15.9 15.9 15.9 15.8 15.7 15.7 15.6 15 60 50 40 30 [source: RAJAR/Grant Goddard]  Time spent listening to commercial radio falls marginally, under competition from BBC Radio Two  Commercial radio’s share continues to fall 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 35-44 (% ) 70  Commercial radio’s reach continues to falls marginally amongst 35-44 year olds 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 58.6 57.6 57.0 55.9 55.3 54.0 53.1 52.0 51.2 50.5 49.8 49.1 48.5 47.8 50 60 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 40
  • 41. Grant Goddard Commercial radio listening forecast COMMERCIAL RADIO REACH: 45-54 (% /wk) 90 radio specialist COMMERCIAL RADIO LISTENING: 45-54 (hrs/wk) 20 80 70 66.9 66.9 67.0 67.2 66.8 66.6 65.9 65.8 66.0 66.2 66.5 66.8 67.0 67.3 60 15.7 15.7 15.8 15.5 15.4 15.4 15.6 15.7 15.7 15.3 15.2 15.1 15.1 15.0 15 50 40 30 [source: RAJAR/Grant Goddard]  Time spent listening to commercial radio similarly remains constant  Commercial radio’s share increases slowly, as the sector’s audience ages 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 45-54 (% ) 70  Commercial radio’s reach in this demographic remains constant 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 60 48.3 49.1 46.7 47.5 50 46.8 45.6 44.6 45.0 44.6 43.8 44.3 44.5 45.2 46.0 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 41
  • 42. Grant Goddard Commercial radio listening forecast COMMERCIAL RADIO REACH: 55-64 (% /wk) 90 radio specialist COMMERCIAL RADIO LISTENING: 55-64 (hrs/wk) 20 80 70 60 54.9 55.1 55.4 56.1 56.3 55.5 56.5 55.5 55.1 54.6 54.2 53.8 53.3 52.9 15 14.3 14.5 14.2 13.7 13.9 14.4 14.4 14.3 50 14.0 13.7 13.4 13.1 12.9 12.6 40 30 [source: RAJAR/Grant Goddard]  The commercial radio sector fails to develop a product to persuade this demographic away from BBC radio services 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 55-64 (% ) 70  Reach, time spent listening and share remain relatively static 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 60 50 40 34.9 33.8 30 32.4 31.8 31.8 32.5 33.4 33.0 32.3 31.7 31.0 30.4 29.8 29.2 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 42
  • 43. Grant Goddard Commercial radio listening forecast radio specialist COMMERCIAL RADIO REACH: 65+ (% /wk) 90 COMMERCIAL RADIO LISTENING: 65+ (hrs/wk) 20 80 70 60 15 13.4 50 40.4 39.5 40.2 13.5 42.7 42.3 42.1 41.7 40.7 40.2 39.9 39.5 39.2 38.9 38.5 30 13.9 13.5 13.6 13.7 13.7 13.8 13.8 13.2 13.1 13.2 13.5 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 1999 40 14.0 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 65+ (% ) 70 60  The 65+ age group’s interest in commercial radio remains marginal 50 40 30 26.4 25.4 25.5 25.8 26.1 26.4 23.9 24.8 24.1 24.5 24.7 24.7 24.9 25.2 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 43
  • 44. Grant Goddard Commercial radio listening forecast radio specialist RADIO LISTENING ('000 hours per week) 1,250,000 ALL RADIO COMMERCIAL RADIO 1,000,000 750,000 500,000 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 250,000 [source: RAJAR/Grant Goddard]  Total hours listened to all radio is declining by 1% year-on-year  Hours listened to commercial radio will continue to decline by almost 2% year-on-year  Commercial radio’s position is a result of:  The ageing of the population  Increased competition for the leisure time of teens, 20 and 30 year olds, in which commercial radio has traditionally dominated listening  Attrition to commercial radio’s ‘heartland audience’ of 15-44 year olds by BBC Radio One targeting older listeners and BBC Radio Two targeting younger listeners UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 44
  • 45. Grant Goddard Commercial radio revenues forecast radio specialist COMMERCIAL RADIO REVENUES (£ 2006 prices per 1000 hours listened) 30 £27.40 £24.42 £25.07 25 £22.66 £26.22 £27.43 £26.27 £24.59 £23.90 £23.46 £23.19 £22.80 £22.41 £22.02 20 15 10 5 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 0 [source: RAJAR/Radio Advertising Bureau/Grant Goddard]  Commercial radio’s ability to monetise its listening will become harder because:  Cost per thousands are falling  Inventory has increased substantially with the launch of digital-only commercial stations  ‘Heritage’ stations are no longer delivering such substantial audiences for advertisers  Commercial radio is losing ground in advertisers’ minds to new competitors (online, games, mobile)  Commercial radio is not an exciting, attention-grabbing environment UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 45
  • 46. Grant Goddard Commercial radio revenues forecast radio specialist COMMERCIAL RADIO REVENUES (£m 2006 prices) 800 691.7 700 600 627.6 632.6 660.0 680.1 632.9 581.7 556.2 558.7 500 539.2 523.9 506.2 489.2 472.6 400 300 200 100 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 0 [source: RAJAR/Radio Advertising Bureau/Grant Goddard]  Our commercial radio revenue forecast predicts continuing year-on-year declines of around 3% per annum in real terms  Commercial radio companies have yet to implement successful strategies to combat audience defection to BBC radio  Increased supply of commercial radio services (such as the launch of the Channel 4 digital radio multiplex in 2008) will not, by itself, increase consumer demand for commercial radio  Commercial radio has been closing more services than it has been opening (GCap – The Storm, Capital Disney, Core, Life; EMAP – 3C; independent – PrimeTime) UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 46
  • 47. Grant Goddard UK commercial radio share of listening COMMERCIAL RADIO SHARE OF LISTENING (% ) 50 47.8 radio specialist COMMERCIAL RADIO SHARE OF LISTENING (% ) 50 COMMERCIAL RADIO % SHARE 47.0 45.9 RadioCentre forecast [Jan07] 45.5 45.2 45 44.6 43.5 43.1 42.9 42.6 42.3 42.0 41.7 41.4 45 [Source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 35 2001 35 2000 40 1999 40 [Source: RAJAR/RadioCentre]  Our forecast predicts a continuing decline in commercial radio’s share of listening (versus the BBC)  There is still no specific commercial radio product to appeal to the growing 50+ demographic  While the number of commercial radio stations has increased, these new services have cannibalised their commercial competitors, rather than competed directly for BBC audiences  Commercial radio formats continue to converge towards the middle ground (ie: GMG’s conversion of the Saga stations to its Smooth format), rather than offering unique content UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 47
  • 48. Issues facing commercial radio Grant Goddard radio specialist  No date has yet been set for digital radio switchover/analogue switch off  The costs of DAB transmission alongside existing analogue services will continue to burden the industry  The costs of transmission contracts with Arqiva/National Grid Wireless require re-negotiation  Music royalty agreements with PRS and PPL require re-negotiation  Radio’s regulatory regime requires reform to level the playing field with new competitors  The 2003 Communications Act requires updating to reflect the emerging media landscape  The DAB platform is in danger of marginalisation without compelling content to drive hardware sales  The commercial radio industry has to work together to reduce its fixed cost base, during a period when revenues will continue to decline in real terms UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: September 2007 48