Radiodays Europe in Barcelona, March 2012

1. Why digital radio?
Patrick Hannon
15th March 2012, Barcelona

2. Contents
1 Radio today
2 Benefits of digital radio
3 Keys to success
2

3. The world in which radio competes is changing
Digital music services with power to disrupt
•Media consumption habits
are shifting
-especially younger listeners
•Greater competition for
advertising revenues
•Analogue radio has limited
ability to innovate
3

4. Across Europe, the footprint of digital radio is expanding
Norway: DSO Sweden: planning
planned for 2017 for DAB+
UK: 40% have
Denmark: 34%
digital radio
have digital radio
NL: planned
migration to DAB+
Germany: DAB+
launch 2011
Belgium1: creating
DAB+ strategy
Switzerland: 25%
France: by end 2012, have digital radio
10 cities DAB+
4 Note: (1) French-speaking part

5. Newer territories can benefit from the experiences of other
markets
Benefits of experience
Consumer Automotive
• Device prices falling • Over 20% of listening is in-vehicle
- Chip prices falling • New cars: in UK, digital as standard
- Economies of scale - Q4 2011, 21% of all new cars
- by 2015, 75-85%
- Jan 2013, DAB royalty ends
• Other countries following, e.g. Toyota
Lexus in Australia
• Aftermarket solutions being developed
and refined
5

6. Contents
1 Radio today
2 Benefits of digital radio
3 Keys to success
6

7. Listener benefits can be classed in three areas
Consumer
benefits
Sound & Additional
Choice
ease of use functionality
• Lack of interference • Extra stations • Scrolling text / info
• Clear, consistent • Specialist stations • Visuals
sound (e.g. live sport)
• Pause / rewind / record
• Easy tuning • Pop-up / event
stations • Detailed traffic info
• EPG
• Interactivity (smart radio)
7

8. Digital radio offers listeners significantly greater choice
Sydney analogue services Sydney digital services
17 services on AM and FM 40+ on DAB+
8

9. Providing a range of new speech-based services…
Germany Australia Hong Kong
• Exclusive live rights to • Comedy radio station • Digital Money
German football
- business news / stock
• Up to 5 matches market reports
simultaneously - horse racing
9

10. … and music services designed for the tastes of specific
audiences
UK Australia Germany
Classic Rock Unsigned bands Electronic music
Jazz Country Classical
10

11. Existing radio groups can retain share on digital radio
Share of listening by platform, %
AM / FM services (simulcasts) Incumbent digital-only1
New entrants and others
2% 3%
15%
14%
19%
98%
83%
66%
UK AM / FM UK DAB UK online
Note: (1) includes analogue services broadcast on digital-only outside their analogue licence area
11 Source: RAJAR, PH analysis

12. How can digital radio build value for commercial broadcasters?
Strategic options
1 2 3
Geographic Deepen user
Develop portfolio
coverage experience
• Extend beyond • Analogue stations in • Value add through
analogue licence area digital quality
- Text
• Niche and temporary
stations - Visuals
• Cross-promotion - Interactivity
12

13. First, digital radio can enable broadcasters to extend their
geographic coverage – potential to create national brands
XFM – UK coverage
• XFM on FM in London and
Manchester
FM and DAB -14m population
DAB-only
• XFM on DAB in many regions
-40m population
• Listening up by 22%
13

14. Second, broadcasters can use digital to extend their brand
portfolio
Analogue and digital Digital-only services
14

15. New digital-only services have increased Absolute’s listening
hours by 60% in two years
Absolute Radio, weekly listening hours, m
Absolute Radio (core service) Absolute digital-only services
Launch of 00s
20.3 +60%
Launch of 90s 19.0
Classic Rock 80s replaces
and Extreme Extreme 15.5
7.4 8.7
12.6 13.3
4.4
1.2 2.0
11.4 11.3 11.1 11.6 11.6
Q4 09 Q2 10 Q4 10 Q2 11 Q4 11
15 Source: RAJAR; four quarter moving average

16. Third, broadcasters can enhance the user experience – for
example through colour screens
Revo Axis
(launched 2009)
• Top-end devices typically over
€150
• This year, in Germany, new colour
screen devices will be available
Pure Sensia
(launched 2009) - expected prices from ~€100
16

17. Stations in UK, Germany and Australia use colour images to
provide information and cross-promote services
17

18. Looking ahead, smart radio (broadcast and IP) will provide new
listener benefits - and create new revenue opportunities
1
New song
2
Smart radio
Listen later
(connected)
3
Advertising
18

19. New song – no longer a passive relationship
• Hear new song on radio
• Use IP to
-access info
-add to playlist
-share with friends
19

20. Listen later – on any connected device
• Listening to programme
is interrupted
• Tag and listen later
-same or different device
20

21. Hybrid radio gives access to online and mobile marketing budgets
• Hear ad on radio / see
visual display
• Use IP to
-access more information
-register interest
21

22. Contents
1 Radio today
2 Benefits of digital radio
3 Keys to success
22

23. Collaboration between various industry groups, government and
regulators is essential
Policy and
regulation
Network Broad- Consumer
Cars Retail Consumers
operators casters devices
Broadcasters
& stakeholder
body
23

24. Thank you
Patrick Hannon
VP Corporate Development Frontier Silicon
patrick.hannon@frontier-silicon.com
24

25. The BBC has also seen significant benefits from co-branding,
cross-promotion & smart scheduling
Radio 7 / Radio 4 Extra weekly listening hours, m
Service rebranded1
April 2011
Radio 4
Radio 7 Extra
9.2
8.6 37%
increase
5.8
5.7 6.7 6.7
5.6
5.4
Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11
Note: rebranding coincided with increase in cross-promotion and greater emphasis on complementary scheduling
25 Source: RAJAR