Media: All about ... Commercial radio figures

Digital has given radio a necessary shot in the arm.

At the beginning of 2007, you would have struggled to find a positive story about commercial radio in the UK. Ad revenues were down by 5 per cent in 2006 and the market leader, GCap, was warning investors that it expected its own revenues to fall by 9 per cent.

However, the picture has become sunnier over recent months, with August providing the best news yet for the industry this year.

The most recent audience data published by Rajar showed that radio listening was up over the past quarter, with 600,000 more listeners tuning in compared with the first quarter of the year. Also, thanks to the introduction of new metrics, Rajar was able to say that 12.8 per cent of radio listening is now via digital platforms, such as digital radio sets, the internet or digital TV.

Jonathan Barrowman, the head of radio at Initiative, argues that it is this opening up of the spectrum that is helping commercial radio fight back against the BBC, which previously dominated with five national analogue FM licences.

"As more people migrate to digital and as online offers more niche formats, we'd hoped that commercial radio would be able to redress the balance," Barrowman says.

He cites digital success stories such as GCap's Planet Rock and theJazz as evidence the industry is starting to find success in building brands with popular appeal.

Hot on the heels of Rajar, the Radio Advertising Bureau has released figures showing that advertisers spent 3.4 per cent more on national radio in the second quarter compared with the same period last year. Andrew Harrison, the chief executive of the RAB, attributes part of the growth to changing attitudes at media agencies. "The main change has been much more sensitive and sensible recognition from media agencies and advertisers that radio is here to stay and is part of the mix," he says.

However, Steve Hatch, the joint managing director of Mediaedge:cia, thinks there are other forces at work. "The BBC has taken its eye off the ball when it comes to radio," he says. "At the moment, it is all about iPlayer. Radio feels a bit like a warhorse that's done well for them but it's not promoting it as heavily."

Many see the next stage of the challenge as stepping up the quality of programming. Nick Hewat, the sales director at Virgin Radio, says: "It's no longer enough just to play records - anyone wanting to listen to or watch The Killers can do it instantly. The bits between the records are crucial - what the jocks say, that's important, that's the stuff you can't find anywhere else."

Overall, there is a sense of hope that radio is entering a new phase of growth, although not without reservations. "We're cautiously optimistic, but there's no call yet for getting out the bunting," Hewat says.

1. RAB statistics show an increase in national radio ad revenue of 3.4 per cent over the second quarter of the year to £85 million. This compares with a 5 per cent drop in ad revenues overall last year, including a 10 per cent drop in the last quarter. Local radio revenue was up by 1.2 per cent to £40 million.

2. Rajar figures show that commercial radio gained ground on the BBC during the second quarter of 2007, with audience share up from 42.1 per cent for the first quarter to 43.5 per cent for the second three months.

3. However, in the London market there was bad news for GCap's flagship, Capital, which saw its audience share slip to 4.1 per cent, putting it behind Heart, on 6.2 per cent, and Kiss, on 4.5 per cent. Capital is also facing continuing criticism for maintaining its "never more than two ads in a row" policy.

4. There has been a spate of activity among radio holding companies. This includes the sale of Chrysalis' radio assets, prominent among them Heart and Galaxy, to Global Radio UK, and the planned flotation of Virgin Radio by Scottish Media Group. Virgin Radio has appointed Richard Huntingford, the chief exe- cutive of Chrysalis Group, as its non-executive chairman. In addition, Emap's radio assets, including the Kiss and Magic brands, are in play and may attract bids from the likes of Guardian Media Group and Global Radio UK.

5. The entry of Channel 4 into the market, via the second digital multiplex, is expected to build further momentum for commercial radio.



- Radio is, like every other medium, selling itself as an environment where advertisers can go beyond the spot ad. However, it may have a point, given that commercial messages can be deeply embedded in editorial. As Hewat points out: "This fits in with trends. In an era where people are moving away from intrusive, annoying advertising, radio stands out."


- Consolidation and the economies of scale it provides look set to continue. Emap Radio and Virgin Radio are possible acquisition targets.

- There is the potential for greater commercial freedom. Ofcom is due to publish its report on the future of radio, with expectations in the industry that it will be in favour of further deregulation. Ofcom has already stated that one of its aims is to "encourage a market-driven approach aimed at delivering a wide range of innovative UK-wide commercial stations".

- New technology and the launch of the second digital multiplex (the likes of Emap and Global Radio will have formats on the multiplex) will provide new revenue streams.