'Radio 2009: Braving The Crisis: The UK Situation' by Grant Goddard

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A presentation made to the egta annual conference in May 2009 by Grant Goddard that analyses the current state of the UK commercial radio sector.

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'Radio 2009: Braving The Crisis: The UK Situation' by Grant Goddard

  1. 1. Radio 2009: Braving The Crisis The UK Situation Grant Goddard radio specialist www.grantgoddard.co.uk egta May 2009
  2. 2. Grant Goddard Grant Goddard radio specialist 30 years’ experience in radio management and consultancy  Strategies for successful radio formats and new radio stations: KISS FM (London), Radio Juventus (Hungary), Radio 7 (Moscow), Radio City (India)  Strategies for radio owners and shareholders: EMAP Radio (London), Metromedia (US), Star TV (India), BBC World Service Trust (Cambodia)  Public broadcasting policy: Radio Authority/Ofcom, Competition Commission, Digital Britain  Writer/journalist on radio, music & broadcasting: 1000+ articles published in trade and consumer magazines Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 2
  3. 3. Agenda Grant Goddard radio specialist  UK commercial radio revenues  UK commercial radio audiences  UK radio receiver sales  UK commercial radio structure Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 3
  4. 4. Grant Goddard radio specialist UK commercial radio revenues Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 4
  5. 5. Grant Goddard UK commercial radio revenues radio specialist 551 603 700 390 434 483 600 300 200 100 47 63 97 121 168 197 180 172 186 205 196 186 200 232 253 264 233 207 219 272 328 500 400 560 800 680 686 716 737 686 631 622 750 Annual revenues - £m per annum at 2008 prices 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 [source: Radio Advertising Bureau, base: RPI] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 5
  6. 6. Grant Goddard UK commercial radio revenues radio specialist Annual revenues by source - £m per annum at 2008 prices 106 110 600 106 104 87 77 90 700 108 77 800 351 166 150 2007 2008 305 350 171 211 2004 2006 419 200 2003 389 426 182 2002 193 417 177 2001 2005 427 183 2000 403 200 1999 340 211 154 174 192 207 1994 1995 1996 1997 100 1998 276 139 1993 175 104 115 1992 133 102 105 1991 108 124 1990 200 216 300 242 400 490 500 0 local advertisers national advertisers branded content [source: Radio Advertising Bureau, base: RPI] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 6
  7. 7. Grant Goddard UK commercial radio revenues radio specialist Revenue yield - average £ per 1000 hours listened at 2008 prices 25.14 27.00 2007 28.48 29.74 28.43 27.18 26.67 24.61 2006 15.67 13.29 1992 15.12 12.84 15 1991 16.21 20 17.72 20.67 25 22.68 25.27 30 26.48 29.71 35 10 5 2008 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1990 0 [source: RAJAR, Radio Advertising Bureau, base: RPI] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 7
  8. 8. Grant Goddard UK commercial radio revenues radio specialist 143 126 122 106 150 107 205 680 686 303 315 288 272 268 255 248 242 750 1,000 750 716 737 686 631 622 603 551 560 500 483 390 100 177 200 172 250 226 300 261 350 310 Number of analogue radio stations and commercial radio revenues at 2008 prices by year 434 328 50 233 207 219 250 272 0 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 0 num ber of analogue local com m ercial radio stations [left axis] com m ercial radio revenues (£m @ 2008 prices) [right axis] [source: RAJAR, Radio Advertising Bureau, base: RPI] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 8
  9. 9. Grant Goddard radio specialist UK commercial radio listening Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 9
  10. 10. Grant Goddard UK total radio listening radio specialist Radio weekly reach (% of 15+ population) 100 89.1 90.1 90.9 90.5 90.8 89.7 90.0 90.4 89.3 89.7 64.4 64.1 65.5 65.2 65.2 63.8 62.6 62.9 61.0 61.5 75 50 25 0 1999 Q4 2000 Q4 2001 Q4 2002 Q4 2003 Q4 2004 Q4 2005 Q4 2006 Q4 2007 Q4 2008 Q4 all radio: w eekly reach (%) com m ercial radio: w eekly reach (%) [source: RAJAR] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 10
  11. 11. Grant Goddard UK total radio listening radio specialist Radio average usage per listener (hours per week) 30 23.6 24.0 24.7 24.2 24.5 24.0 23.9 23.5 22.6 22.3 14.0 13.7 20 15.2 15.5 15.3 15.3 15.4 14.9 14.7 14.6 10 0 1999 Q4 2000 Q4 2001 Q4 2002 Q4 2003 Q4 2004 Q4 2005 Q4 2006 Q4 2007 Q4 2008 Q4 all radio: average hours/w eek com m ercial radio: average hours/w eek [source: RAJAR] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 11
  12. 12. Grant Goddard UK commercial radio listening radio specialist Commercial radio weekly reach (%) by age 39.5 50 40 41.2 54.2 60 56.0 65.6 64.7 69.0 74.3 69.5 70 75.5 71.0 80 78.6 90 30 20 10 0 15-24 2000 Q4 25-34 2002 Q4 35-44 45-54 2004 Q4 55-64 2006 Q4 65+ 2008 Q4 [source: RAJAR] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 12
  13. 13. Grant Goddard UK commercial radio listening radio specialist Commercial radio average usage per listener (hours per week) by age 13.0 13.7 15.1 15.2 16.0 15.9 14.6 13.1 12.8 15 13.1 15.3 16.1 20 10 5 0 15-24 2000 Q4 25-34 2002 Q4 35-44 45-54 2004 Q4 55-64 2006 Q4 65+ 2008 Q4 [source: RAJAR] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 13
  14. 14. Grant Goddard UK commercial radio listening radio specialist 205 226 242 248 255 261 268 272 288 310 315 303 Number of analogue local commercial radio stations and commercial radio listening (‘000 hours per annum) by year 50,000,000 350 300 172 177 250 106 107 122 126 143 200 100 50 9 16 19 19 19 19 26 33 38 42 48 49 49 50 60 76 150 30,000,000 20,000,000 10,000,000 0 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 40,000,000 num ber of analogue local com m ercial radio stations [left axis] volum e of listening to com m ercial radio ('000 hrs/annum ) [right axis] [source: RAJAR, Ofcom] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 14
  15. 15. Grant Goddard UK commercial radio listening radio specialist 100 126 150 122 43 143 49 50 48 205 177 200 172 50 305 315 310 288 272 268 255 248 242 250 226 300 261 Number of analogue local commercial radio stations and commercial radio’s share of radio listening (%) by year 100 350 80 60 49 47 46 45 46 45 44 43 43 40 42 42 38 20 50 0 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 0 num ber of analogue local com m ercial radio stations [left axis] com m ercial radio % share of total radio listening year-end [right axis] [source: RAJAR, Ofcom] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 15
  16. 16. Grant Goddard UK commercial radio listening radio specialist Listening to commercial radio by platform (% of listening) digital: internet, digital: unspecified, 1.9% 3.0% digital: DTV, 4.2% digital: DAB, 9.9% unspecified, 13.2% Satellite all analogue, 67.8% Dial-up [source: RAJAR, Q4 2008] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 16
  17. 17. 2007Q2 2007Q3 0% 2007Q4 Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 2008Q1 2008Q2 2008Q3 digital: unspecified digital: internet digital: DTV digital: DAB unspecified 2.8% 3.1% 3.1% 3.1% 3.1% 3.2% 3.0% 1.4% 1.5% 1.7% 1.9% 1.8% 2.2% 1.9% 3.3% 4.3% 4.3% 4.3% 4.5% 4.2% 4.2% 6.3% 8.0% 9.0% 9.3% 9.0% 9.2% 9.9% 21.2% 13.6% 9.8% 9.6% 12.5% 12.7% 13.2% 13.8% 16.8% 18.1% 18.4% 18.4% 18.9% 19.0% 20% all digital all analogue 80% 65.0% 69.6% 72.1% 72.0% 69.2% 68.4% 67.8% UK commercial radio listening Grant Goddard radio specialist Commercial radio adult (15+) hours listened by platform (%) 60% 40% 2008Q4 [source: RAJAR] 17
  18. 18. Grant Goddard UK commercial radio listening radio specialist Adult (15+) listening to commercial digital-only radio stations 3.6 3.9 3.3 3.2 3.0 5.2 5.5 4.6 4.7 30% 33% 30% 28% 26% 2.3 2.1 40% 36% 27% 24% 20% 10% 0.7 1 0.6 2 1.9 2.1 2.1 3 3.0 2.7 3.4 4 3.5 4.0 5 50% 5.1 5.0 5.5 6 0% 2008Q4 2008Q3 2008Q2 2008Q1 2007Q4 2007Q3 2007Q2 2007Q1 2006Q4 2006Q3 2006Q2 2006Q1 2005Q4 2005Q3 2005Q2 2005Q1 2004Q4 2004Q3 2004Q2 2004Q1 2003Q4 2003Q3 2003Q2 2003Q1 0 listening to commercial digital-only radio stations as % of all commercial radio listening [left axis] listening to commercial digital-only radio stations as % of digital listening to commercial radio [right axis] [source: RAJAR] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 18
  19. 19. Grant Goddard radio specialist UK radio receiver sales Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 19
  20. 20. Grant Goddard UK radio receiver sales radio specialist UK radio receiver sales – four quarter moving average (‘000 per annum) DAB receivers as percentage of total receiver sales 2,006 2,114 2,174 2,180 8,140 8,209 8,227 8,030 Q4 2007 Q1 2008 Q2 2008 Q3 2008 1,824 1,761 7,854 Q2 2007 7,906 1,734 7,978 Q1 2007 Q3 2007 1,680 8,062 9,892 Q2 2006 Q4 2006 10,169 Q1 2006 10,000 1,575 1,407 10,550 Q4 2005 1,566 1,208 10,657 Q3 2005 1,493 1,051 12% 13% 14% 14% 17% 18% 18% 19% 20% 20% 21% 21% 10,611 9% 10% Q2 2005 8% 951 12,000 9,495 6,000 10,678 8,000 4,000 2,000 [source: GfK/DRDB] analogue radio unit s ale s ('000) Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 Q3 2006 Q1 2005 0 DAB radio unit s ale s ('000) 20
  21. 21. Grant Goddard UK DAB radio receiver sales radio specialist 964 Quarterly DAB receiver sales (‘000 per quarter) 1,000 200 865 179 796 162 750 121 119 160 681 153 140 120 299 366 357 363 382 308 287 338 294 34 134 102 111 183 80 60 28 205 245 500 38 17 40 18 13 5 21 40 19 4 20 1 -10 53 39 100 490 510 101 250 180 0 0 quarterly DAB receiver sales ('000) [left axis] 2008 Q4 2008 Q3 2008 Q2 2008 Q1 2007 Q4 2007 Q3 2007 Q2 2007 Q1 2006 Q4 2006 Q3 2006 Q2 2006 Q1 2005 Q4 2005 Q3 2005 Q2 2005 Q1 2004 Q4 2004 Q3 2004 Q2 2004 Q1 2003 Q4 2003 Q3 2003 Q2 -20 year-on-year change (%) [right axis] [source: GfK/DRDB] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 21
  22. 22. Grant Goddard radio specialist UK commercial radio structure Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 22
  23. 23. Grant Goddard UK commercial radio listening radio specialist Market share of commercial radio owner – Q4 2008 (% of total commercial radio listening) 45 40.0 40 35 30 25.8 25 20 15 11.4 10 1.7 1.3 1.1 0.9 0.8 0.7 0.7 0.4 0.4 0.2 0.1 0.1 0.1 0.0 0.0 The Local Radio Company Planet Rock UKRD Sunrise Radio Cumberland News Group Tindle Radio Kent Messenger Radio Town & Country Broadcasting Northern Media Group Forward Media Absolute Radio International Midwest Radio Adventure Radio Midland News Association UTV Radio Guardian Media Group Bauer Radio Global Radio 0 TIML Golden Square 3.2 5 Lincs FM Group 6.8 [source: RAJAR, grey columns are publicly quoted companies] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 23
  24. 24. Grant Goddard UK commercial radio listening radio specialist Change in market share of local commercial radio stations Q4 2001 to Q4 2008 (absolute change in % share of listening) by size of station survey area (‘000 population 15+) 20 absolute change in % share 10 0 0 4,000 -10 8,000 12,000 station survey area ('000) -20 [source: RAJAR] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 24
  25. 25. Grant Goddard UK local commercial radio station closures radio specialist Local commercial radio station closures since 2006 station Star FM River FM Fen Radio Gold Talk 107 Abbey FM KCR Time 106.8 South London Radio Pennine FM Valleys Radio market Stroud Livingston Wisbech Exeter/Torbay Edinburgh Barrow Knowsley Thamesmead Lewisham Huddersfield South Wales owner UKRD Kingdom Radio Group UKRD Global Radio UTV CN/TLRC/Radio Business Polaris Media Sunrise Radio Sunrise Radio John Harding UTV Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 launch date closure date 29 November 1998 29 September 2006 3 September 2003 29 January 2007 4 November 2003 31 July 2008 1 January 1995 31 August 2008 14 February 2006 23 December 2008 16 October 2006 30 January 2009 16 June 2001 1 April 2009 18 March 1990 3 April 2009 8 February 1999 3 April 2009 1 March 1998 16 April 2009 23 November 1996 30 April 2009 25
  26. 26. Grant Goddard UK commercial radio station numbers radio specialist Number of operational local commercial radio stations by coverage area size (15+ adults) 300 250 200 150 100 50 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 <250k 250k-500k >500k [source: Ofcom] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 26
  27. 27. Grant Goddard UK commercial radio station profitability radio specialist Operating profits of local commercial radio stations by market size (£ ‘000 per annum) 1,600 percentage of total num ber of com m ercial radio stations ………..……….63%........................ .....13%..... …...11%..... ………...13%............ 1,400 1,400 1,200 1,200 1,000 865 800 600 400 400 200 65 -3 -20 <50k 50-150k 0 -200 150-250k 250-500k 500k-1m 1-5m >5m [source: Ofcom, 2007] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 27
  28. 28. UK commercial radio profitability Grant Goddard radio specialist A recent internal report commissioned by RadioCentre, the commercial radio trade body, found that: “current estimates suggest the industry as a whole is now loss-making.” It noted that: “the larger groups are marginally profitable before interest payments are taken into account (these payments are very substantial in some instances); all of the smaller groups are either marginally profitable or loss-making.” [source: Ingenious Consulting. Commercial Radio: The Drive to Digital, January 2009, p.2.] ] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 28
  29. 29. UK commercial radio Grant Goddard radio specialist A recent report on the future of commercial radio commissioned by the UK government noted: “…. there is little doubt that, in the immediate future, the industry is likely to pass through a difficult period of station closures and group re-structuring. Sadly, this is a reality in a market where too many radio stations compete for a limited amount of advertising revenues. I believe that there is a real possibility of at least 50 local stations closing down during the next two years, a phenomenon that will not be prevented by either regulatory or government intervention.” [source: John Myers, An Independent Review Of The Rules Governing Local Content On Commercial Radio, April 2009] ] Radio 2009: Braving The Crisis – The UK Situation © Grant Goddard: May 2009 29

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