Presentation outlining topline five-year revenue and audience forecasts for the UK commercial radio broadcasting sector, written by Grant Goddard in November 2007 for Guardian Media Group plc.

1. UK COMMERCIAL RADIO
SECTOR: FIVE-YEAR
FORECASTS
Grant Goddard
radio specialist
www.grantgoddard.co.uk
November 2007

2. Grant Goddard
Radio listening
radio specialist
■ Radio will continue to be listened to by approximately 90% of the adult population on a weekly basis
(commercial radio approximately 60%)
■ Time spent listening to radio will decline slowly from its present 23 hours/week, as a result of increasing
competition for consumers’ leisure time
■ Commercial radio is losing reach and hours at a faster rate than ‘all radio’, resulting in a continuing loss of
share to BBC radio (43% of radio listening currently attributed to commercial radio)
Radio: weekly reach (% of adults)
Radio: average hours listened per week
per adult listener
100
25
80
20
60
15
40
10
20
5
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
ALL RADIO
COMMERCIAL RADIO
[Source: RAJAR and Grant Goddard forecast]
UK Commercial Radio Sector: Five-Year Forecasts © Grant Goddard: November 2007
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
ALL RADIO
COMMERCIAL RADIO
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3. Grant Goddard
Radio listening by demographic
radio specialist
■ Radio listening is increasingly dominated by older demographics (50+)
■ This shift is the result of two factors: the ageing population and increasing competition for the leisure time
of younger demographics
■ Commercial radio owners are not well positioned to take advantage of these changing consumption
patterns, compared to BBC Radio (with the exception of GMG stations and GCap Media’s Classic FM
brand that target older consumers)
Radio: total hours listened per week by demographic (‘000)
250,000
200,000
150,000
100,000
50,000
0
15-24
2000
25-34
2002
2004
35-44
2006
45-54
2008f
55-64
2010f
65+
2012f
[Source: RAJAR and Grant Goddard forecast]
UK Commercial Radio Sector: Five-Year Forecasts © Grant Goddard: November 2007
3

4. Grant Goddard
Commercial radio revenues
radio specialist
■ Commercial radio revenues peaked in 2000 after a period of sustained growth in the 1990s
■ Commercial radio has attracted increasing amounts of national advertising since the early 1990s, though
this source is susceptible to cyclical factors and advertiser migration to the internet
■ Our forecast predicts that commercial radio revenues will continue to decline in real terms
Commercial radio revenues (£m per annum –
actual prices) by source
400
Total commercial radio revenues (£m per
annum – 2006 prices)
700
350
600
300
500
250
400
200
300
150
200
100
100
50
0
0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
LOCAL ADVERTISERS
NATIONAL ADVERTISERS
BRANDED CONTENT
[Source: Radio Advertising Bureau and Grant Goddard forecast]
UK Commercial Radio Sector: Five-Year Forecasts © Grant Goddard: November 2007
4

5. Grant Goddard
Commercial radio owners
Radio Group
radio specialist
GCap Media
Number
of UK
analogue
licences
70
Total weekly
reach
(million
adults)
15.3
EMAP Radio
37
12.2
Global Radio
(exChrysalis)
Guardian
Media Group
9
6.4
13
4.8
47.9
18
3.6
30.9
2
2.8
17.8
28
0.9
7.5
UTV Radio
Scottish
Media Group
The Local
Radio
Company
Hours
listened
(million per
week)
135.9
UK Commercial Radio Sector: Five-Year Forecasts © Grant Goddard: November 2007
Share of
Strengths/weaknesses
commercial
radio
listening
31% Local heritage stations (including London’s
Capital FM) performing poorly; national Classic
FM very strong; costly investment in digital
109.4
25% Local heritage stations performing poorly; digital
stations on Freeview platform are relatively
successful
51.9
12% Heart brand is strong; Galaxy brand targeting
youth demographic remains vulnerable
11% Large regional stations offer better margins; older
demographic is less vulnerable to audience and
advertiser migration
7% Improved revenues at national Talksport;
turnaround of local stations proving a challenge
4% National Virgin Radio has proven impossible to
turn around; London FM licence is valuable
2% Very small local stations focusing on local
advertising revenues; not a profitable business
model
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6. Grant Goddard
Commercial radio overview
radio specialist
■ Radio listening is declining only slowly (1% per annum) compared to other traditional media, due to:

the portability of radio (for example, it is listened to in the bathroom or in the car)

its characteristic as a secondary activity (for example, whilst online or driving)
■ Radio is already delivered by a plethora of different platforms (analogue and digital terrestrial, internet,
Freeview, Sky, cable, wi-fi) to a wide range of devices (computers, mobile phones, TVs, portable music
players, games consoles)
■ Commercial radio is losing listening, revenues and profitability as a result of:

audience migration to the BBC’s national radio networks (notably Radios One and Two)

the significant financial burden of broadcasting simultaneously on several platforms

commercial radio’s lack of investment in content and new radio formats

the preponderance of commercial radio stations targeting younger demographics with similar formats
which cannibalise each other’s audiences and revenues

commercial radio’s lack of a new exciting product that will stimulate advertiser enthusiasm
■ Successive rounds of consolidation within the commercial radio industry have succeeded in reducing its
central costs, but have not improved its ability to compete with the BBC
■ Commercial radio owners have not yet developed a strategy either to compete successfully with online
personalised ‘radio’ such as Last.fm or Pandora, or to develop their own online services to complement
existing broadcast services
UK Commercial Radio Sector: Five-Year Forecasts © Grant Goddard: November 2007
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