Presentation outlining the business, economic, regulatory and technological issues facing the UK commercial radio sector, written by Grant Goddard in January 2008 for RadioCentre Members' Conference.

1. UK COMMERCIAL RADIO: A
PERSONAL PERSPECTIVE
Grant Goddard
radio specialist
www.grantgoddard.co.uk
29 January 2008

2. Grant Goddard
Commercial radio in 2007 – looking back
radio specialist
Ownership changes
 Chrysalis Radio and EMAP Radio sold
 Bid offer for GCap Media
New management
 New CEOs at GCap Media and Chrysalis Radio
 New management team at Virgin Radio
New entrants
 Global Radio and H Bauer
 Channel 4 awarded new digital multiplex
Deregulation
 Ofcom to relax format regulation
 More networking and station co-location
UK Commercial Radio Sector: A Personal Perspective © Grant Goddard: January 2008
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3. Grant Goddard
Commercial radio in 2008 – looking forward
radio specialist
Transmission costs
 Competition Commission inquiry into Arqiva/NGW ends March 2008
 Transmission contract renegotiations on horizon
Music copyright costs
 Current PPL agreement ends April 2008
DAB and digital radio platforms
 Channel 4 DAB multiplex launches mid-2008
 DCMS Digital Radio Working Party concludes end-2008
Less regulation
 Less restrictive ‘formats’ offer opportunities for innovation
 More collaborations (for example, Kiss and Galaxy joint programming)
UK Commercial Radio Sector: A Personal Perspective © Grant Goddard: January 2008
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4. 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’s future is positive as it continues to be a ‘mass medium’, reaching around 90% of the adult
population
 Time spent listening to radio is expected to decline slightly, in the face of competition from an influx of
media and entertainment sources
UK Commercial Radio Sector: A Personal Perspective © Grant Goddard: January 2008
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5. Grant Goddard
Commercial radio’s share of listening - forecast
radio specialist
COMMERCIAL RADIO SHARE OF LISTENING
(% )
50
47.8
47.0
45.9
45.5 45.2
45
44.6
43.5
43.1 42.9
42.6 42.3
42.0 41.7
41.4
40
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
35
[Source: RAJAR/Grant Goddard]
 Grant Goddard’s forecast predicts a possible 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 often converge towards the middle ground, rather than offering unique content
UK Commercial Radio Sector: A Personal Perspective © Grant Goddard: January 2008
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6. 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 2% to 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; SMG – Virgin Groove; independent – PrimeTime, OneWord)
UK Commercial Radio Sector: A Personal Perspective © Grant Goddard: January 2008
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7. Grant Goddard
Transmission costs
radio specialist
Commercial radio expenditure on transmission
 £50-60m per annum in total
 Analogue costs approx. £24m per annum
 DAB costs approx. £26m per annum
Renewal of transmission contracts
Do opportunities exist for commercial radio to reduce its transmission costs?
UK Commercial Radio Sector: A Personal Perspective © Grant Goddard: January 2008
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8. Grant Goddard
Music copyright costs
radio specialist
Commercial radio’s relationship with music
 Commercial radio pays £60m per annum for music copyright
 Agreements with PPL and Alliance date back to 1991
 The value of music to the consumer has changed immensely since then
 Radio is no longer consumers’ main source of music innovation/exposure
 Commercial radio continues to add value to music
 Commercial radio remains an important source of consumer exposure for new music
 Radio is exploring new ways of bringing music to its audience (podcasts, online, listen again)
Renewal of music copyright agreements should reflect changing role of music
UK Commercial Radio Sector: A Personal Perspective © Grant Goddard: January 2008
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9. Grant Goddard
DAB and digital radio platforms
radio specialist
The future of digital radio
 DCMS Working Party will report by year-end
 New Channel 4 multiplex will launch mid-2008
 Some radio groups scaling down commitment to digital
 Monetisation of digital platform remains a huge industry issue
UK Commercial Radio Sector: A Personal Perspective © Grant Goddard: January 2008
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