Analysis of Q1 2009 advertising revenues, audience ratings, merger & acquisition transactions, station openings and station closures of the UK commercial radio broadcast sector, written by Grant Goddard in June 2009 for Grant Goddard: Radio Blog.

1. UK COMMERCIAL RADIO IN
NUMBERS: Q1 2009: THE
ANALYSIS
by
GRANT GODDARD
www.grantgoddard.co.uk
June 2009

2. This analysis accompanies my presentation 'UK Commercial Radio In Numbers: Q1 2009'
which contains data for the UK commercial radio industry’s key performance metrics in Q1
2009 for revenues, audiences and radio receiver hardware.
Revenues
Q1 2009 radio revenues were down 19.5% year-on-year, eclipsing the previous quarter’s
14.5% decline (although Q1 2008 had been an exceptionally strong quarter). National
advertising continues to weaken, the last four quarters having declined by 15.9%, 12.2%,
21.2% and 28.8% respectively year-on-year. By comparison, local revenues have proven more
resilient, down 6.4% in Q1 2009 year-on-year.
The gravity of the downturn is demonstrated by the fact that Q1 2009 was the lowest quarter
for revenues since 1999 (at face value – if inflation were factored, the situation would be
worse). The size of the industry is likely to continue to contract throughout 2009 and it will have
to make further, significant cuts to overheads simply to ensure its survival. Public and
parliamentary debate to date has focused upon the economic plight of local newspapers, but
local commercial radio is just as endangered.
John Myers’ local radio report for Digital Britain suggested a number of regulatory and
legislative changes that would potentially ease the financial burden on the commercial radio
sector, but these still remain proposals at present. Until the government’s 'Digital Britain' final
report and Ofcom’s consultation exercises potentially turn these recommendations into action,
the worsening economic pressures on commercial radio are likely to continue to produce
further casualties.
Although some voices are already talking up a future bounce back of revenues after the
recession (whenever that might be), it is important to recognise that the recent advertising
downturn has only exacerbated a downward trend in radio revenues that was already
established. In real terms (removing the impact of inflation), radio revenues peaked in 2000
and had already declined by 25% between 2000 and 2008. The current economic cycle is
merely aggravating the structural decline that was already evident.
Audiences
At the root of commercial radio’s structural problem is the public’s declining consumption of its
output – hours listened during the last four quarters were down 2.3% year-on-year. Radio as a
medium continues to attract significant amounts of listening (22.4 hours per week per listener)
and reaches 90% of the population weekly. Within those impressive totals, commercial radio is
maintaining most of its reach but is losing listener hours. In Q1 2009, the average commercial
radio listener consumed 13.5 hours per week, compared with 15.6 hours per week five years
earlier.
It would be easy to lay the blame for this loss of listening at the door of increasingly
promiscuous 15-24 year olds spending increasing amounts of time using mobile phone
applications, social networking websites and streamed video. Whilst it is true that 15-24 year
olds’ average time spent with commercial radio has fallen to 12.4 hours per week in Q1 2009
from 15.2 hours per week eight years ago, blame must also be shouldered by the other
constituent demographics within commercial radio’s ‘heartland’ 15-44 year old audience.
Reductions in time spent listening to commercial radio have been almost as substantial
amongst 25-34 year olds (12.7 hours per week in Q1 2009, down from 15.5 hours eight years
earlier) and 35-44 year olds (14.2 hours per week in Q1 2009, down from 16.6 hours eight
years ago). Commercial radio’s share of listening amongst both these demographics fell to
49% in Q1 2009, so that BBC radio listening now dominates all age groups except for 15-24
year olds, in which commercial radio still has a 59% share. Only two quarters ago, commercial
radio’s share had been above 50% in all three constituent demographics of its 15-44
UK Commercial Radio In Numbers: Q1 2009: The Analysis page 2
©2009 Grant Goddard

3. ‘heartland’ audience whilst, back in 1999, it had been above 60% in all three. These changes
represent the crux of commercial radio’s long-term problem.
Additionally, people under the age of 40 are evidently listening to more ‘audio’ then ever
before, assisted by the take-up of portable audio players and the blossoming integration of
audio applications into mobile phones. However, listening on these new platforms is not being
reflected in the audience data quoted above because the RAJAR radio ratings metric
continues to define ‘radio’ listening in the traditional linear way, excluding time-shifted
consumption (listen again, podcasts) and non-broadcasters ('Last.fm', 'Spotify').
Sooner or later, the industry will have to decide whether RAJAR is to remain merely a
marketing tool to demonstrate the two traditional broadcasters’ (BBC and commercial radio)
continuing dominance of the shrinking market for linear radio; or whether it is more important
for RAJAR to demonstrate that ‘audio’ is a growing consumer medium now shared amongst a
widening group of content providers. Comments made recently by the BBC’s Tim Davie at the
RadioCentre conference offer encouragement in this respect.
Transactions, Openings & Closures
In May 2009, Global Radio finally sold its eight Midlands stations (an OFT requirement of its
acquisition of GCap Media) to former Chrysalis Radio chief executive Phil Riley in a deal
reported to be worth £30m and backed by Lloyds TSB. Global’s rival Bauer Radio was long
anticipated to be the successful buyer, causing some to comment that the transaction has the
hallmarks of a ‘warehousing’ deal that would satisfy current competition issues until media
ownership rules are amended by legislation to allow further radio consolidation and cross-
ownership.
In May 2009, UKRD succeeded in its acquisition of The Local Radio Company [TLRC] in a
deal that valued the latter at £2.88m. UKRD owned six local stations, having closed one and
sold three stations during the last year. TLRC owned 20 stations, having sold eight during the
last year. Since the acquisition, two further TLRC stations have been sold – Bournemouth’s
'Fire FM' to Westward Broadcasting for £40,001, and Macclesfield’s 'Silk FM' to neighbouring
'Dee 106.3' for a nominal amount. In the seven months to April 2009, Fire’s operating loss was
£129k on revenues of £216k, implying an annual cost base of almost £600k, considerable for a
station with a weekly reach of 28,000 adults.
In April 2009, TLRC also sold digital station 'Jazz FM' for £1 to former TLRC chief executive
Richard Wheatly and former finance director Alistair Mackenzie, the station having lost £733k
in the six months to March 2009. In May 2009, the new owners announced a £500k national
poster campaign for the station which broadcasts on Sky, Freesat and regional DAB
multiplexes. To date, no digital radio station has generated an operating profit.
Forward Media finally exited the radio business by selling its last remaining stations, 'Connect
FM' in Kettering and 'Lite FM' in Peterborough, to Adventure Radio (which owns 'Chelmsford
Radio', 'Herts Mercury' and 'Southend Radio') for undisclosed amounts.
In March 2009, Midwest Radio sold its two stations, 'MidWest' Shaftesbury and 'MidWest'
Yeovil, to South West Radio Ltd, the company that had purchased five stations in the West
Country from the administrators last year, following the failure of Laser Broadcasting. Another
former Laser station, 'Fresh Radio' in Skipton, was sold in March 2009 by administrators to
Utopia Broadcasting which includes some station management.
In April 2009, CN Radio sold 'Touch FM' in Banbury to a management buyout team for an
undisclosed amount and the station was relaunched as 'Banbury Sound'. In November 2008,
CN had said it would close its 'Touch FM' stations in both Banbury and Coventry if it did not
find buyers.
April and May 2009 saw the closure of seven local analogue commercial stations, a greater
number than in the previous three years. Ofcom revoked the licence of 'KCR FM' in Knowsley
UK Commercial Radio In Numbers: Q1 2009: The Analysis page 3
©2009 Grant Goddard

4. UK Commercial Radio In Numbers: Q1 2009: The Analysis page 4
©2009 Grant Goddard
from owner Polaris Media, following failure to comply with its format. Sunrise Radio closed two
London stations, 'Time 106.8' in Thamesmead and 'South London Radio' in Lewisham, which
had been up for sale since last year. 'Pennine FM', purchased by John Harding from TLRC last
year, closed in Huddersfield. UTV closed 'Valleys Radio' in South Wales after Ofcom had
rejected a co-location request. Jason Bryant closed 'Radio Hampshire' in Southampton and
Winchester, stations which he had acquired from Southampton Football Club in 2007 and from
Tindle Radio in 2008 respectively.
However, 'Pennine FM' has since been acquired from administration by former station staff
Adam Smith and Steve Buck and relaunched in May 2009. Similarly, internet broadcaster 'Play
Radio' has expressed interest in acquiring the two 'Radio Hampshire' stations from
administration, and a creditors’ meeting is due on 24 June.
On digital platforms, local Stafford station 'Focal Radio' closed in May 2009 with the loss of 23
jobs after local businessman Mo Chaudry, who had invested £80,000 to ‘save’ the station,
withdrew his support after being arrested on corruption charges involving Stoke City Council.
London DAB station 'Zee Radio' (simulcast on 'Spectrum' AM) closed in April 2009 after a year
on-air.
The national DAB multiplex Digital One has three new additions, two temporary. On 20 April
2009, forces radio station 'BFBS' launched a simulcast on the platform, following its earlier
trial. On 1 June 2009, 'Amazing Radio' launched a six-month trial service showcasing
unsigned UK bands as an extension of its 'Amazing Tunes' website. From 27 June 2009,
Folder Media’s 'Fun Kids' station will be simulcasting a 14-week trial, extending its present
availability on DAB in London.
In London, black talk/music station 'Colourful Radio' launched on DAB on 2 March 2009, and
music station 'NME Radio' added DAB on 13 May 2009.
In the coming months, UKRD/TLRC is likely to divest further local stations from its portfolio.
At the top end of the commercial radio business, consolidation has created huge groups of
large local stations whilst, at the bottom end of the market, an increasing number of small local
stations are now being divested from groups to local owners (or closed down). In a small way,
this is returning local commercial radio to its 1970s roots, when it was expected that each
station would be owned by local entrepreneurs. It will be instructive to see how each of these
divergent strategies succeeds in such tough economic times.
[First published by Grant Goddard: Radio Blog as 'UK Commercial Radio In Numbers: Q1 2009', 18 June 2009.]
Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of
experience in the broadcasting industry, having held senior management and consultancy
roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at
http://www.grantgoddard.co.uk