'The Communications Market 2004 - Radio' by Ofcom

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The first public report by UK media regulator Ofcom about the UK radio broadcasting industry, published in August 2004, including research and analysis by Grant Goddard.

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'The Communications Market 2004 - Radio' by Ofcom

  1. 1. The Communications Market 2004 – Radio Published: August 2004
  2. 2. The Communications Market 2004 – Radio The Communications Market 2004 – Radio Contents Section Page 1 Key facts – radio 7 2 Introduction 8 3 Executive summary 9 4 Recent major developments in the radio industry 11 4.1 A brief history of UK radio 11 4.2 Major industry consolidation yet to happen 12 4.3 Listening via other platforms is growing 13 4.4 New stations launched 14 4.5 Community radio given the go-ahead 16 4.6 BBC Charter Review underway 16 5 The radio industry – new platforms grow in importance 17 5.1 Number of analogue stations is growing 17 5.2 Most local commercial stations provide mainstream output 18 5.3 Regional stations have added to choice 20 5.4 AM radio tends to target older audiences 22 5.5 Ethnic stations broadcast mainly on AM 23 5.6 Demand for RSLs has been steadily increasing 24 5.7 The community radio pilot scheme 25 5.8 Choice via digital platforms continues to grow 28 5.9 DAB digital radio take-up growing rapidly 31 5.10 DAB digital radio coverage improving 32 - 1 -
  3. 3. The Communications Market 2004 – Radio Section Page 5.11 Digital radio drives growth of new “national” stations 37 5.12 Data over DAB digital radio a new growth area 39 5.13 Radio industry revenues have increased rapidly 39 5.14 A small number of large groups dominates UK radio 41 5.15 The rise of quasi-national brands 43 5.16 An overview of the major radio players 44 6 The citizen-consumer – listening continues to increase 64 6.1 Total radio listening is on the increase 64 6.2 What people listen to 68 6.3 Audience share 76 6.4 Listeners’ attitudes to offensive material 78 6.5 Listening in the nations varies significantly 79 6.6 Listening to digital radio stations is growing 81 6.7 DAB digital radio sets sales have increased 82 6.8 A quarter of adults have listened to radio via TV 84 6.9 Radio listening via the internet has increased 85 6.10 Younger audiences listening via mobile ‘phones 86 Appendix Map of commercial radio in the UK: AM and FM 88 - 2 -
  4. 4. The Communications Market 2004 – Radio The Communications Market 2004 – Radio Index of figures Figure Page 1 Major events in radio in the UK 11 2 New analogue stations on air in 2004 15 3 Planned timetable for advertisement of new analogue local commercial radio licences 15 4 Number of analogue radio stations on-air in the UK 17 5 Typical availability of analogue stations by area 18 6 Station styles 18 7 Analogue stations by style (based on number of licences) 19 8 Analogue availability of different radio styles 20 9 Regional commercial radio stations 21 10 Coverage and location of analogue regional licences 22 11 AM radio licences 23 12 Analogue ethnic radio licences 23 13 Growth in the demand for short term RSLs 24 14 Long term RSLs by establishment 25 15 Pilot community radio stations 26 16 Status of pilot community radio stations 27 17 Analogue stations available on alternative platforms 29 18 DAB digital radio only stations by style 29 19 Satellite only stations by style 30 20 Radio stations available via DAB and via digital television platforms 31 21 Number of DAB digital radio multiplexes on air 32 22 New multiplexes coming on air in 2004 32 23 DAB digital radio coverage 33 24 BBC DAB digital radio coverage 34 - 3 -
  5. 5. The Communications Market 2004 – Radio Figure Page 25 Commercial DAB digital radio coverage 34 26 New DAB digital radio transmitters switched on January - June 2004 35 27 UK DAB digital radio multiplex operators 36 28 Regional and local DAB digital radio multiplex ownership 36 29 Typical availability of DAB digital radio stations by area 37 30 Availability of DAB digital radio stations across the UK 38 31 UK Commercial radio revenue (net) and BBC radio spending 39 32 Radio share of display advertising 40 33 Split of revenues for analogue only stations in Q1 2004 41 34 Groups split by number of licences owned 41 35 Audience shares of commercial hours 42 36 Shares of commercial stations revenue 43 37 Positioning of all national radio stations 44 38 Remit and spending of the BBC radio stations 45 39 Audience profile of BBC radio stations 46 40 The BBC’s local radio and nations’ radio services 47 41 Map of Capital Radio Group analogue radio stations 48 42 Positioning of Capital Radio Group’s radio brands 49 43 Map of Chrysalis Radio analogue radio stations 50 44 Positioning of Chrysalis Radio’s radio brands 51 45 Map of Emap’s analogue radio stations 52 46 Positioning of Emap’s radio brands 53 47 Map of GMG’s analogue radio stations 54 48 Map of GWR’s analogue radio stations 55 49 Positioning of GWR’s radio brands 56 50 Map of Saga’s analogue radio stations 57 51 Map of SRH’s analogue radio stations 58 52 Map of SMG’s analogue radio stations 59 - 4 -
  6. 6. The Communications Market 2004 – Radio Figure Page 53 Map of TWG’s analogue radio stations 60 54 Map of UBC’s analogue radio stations 61 55 Map of the Local Radio Company’s analogue radio stations 62 56 Other UK radio groups 63 57 Total listening hours 64 58 Where people listen to radio 64 59 When people listen - weekly average audience 65 60 Average weekly listening by demographic 66 61 Average weekly listening over time 66 62 Split of listening hours by gender 67 63 Split of listening hours by age 67 64 Split of listening hours by demographic 68 65 Frequency with which people say that they listened to the radio 68 66 What people listen to (hours) 69 67 Audience reach by demographic group 69 68 Audience reach – BBC and commercial radio 70 69 Audience reach of commercial radio stations by style 71 70 Audience reach of BBC stations 71 71 Total commercial listening hours within the Adult Mainstream and Chat and Adult Mainstream styles by demographic group 72 72 Total commercial listening hours within the Specialist Music Youth and Chart Led Mainstream styles by demographic group 73 73 Total commercial listening hours within Specialist Music Other and Specialist News and Speech styles by demographic group 74 74 Total commercial listening hours within Ethnic and 35+/Gold styles by demographic group 75 75 Audience share – commercial and BBC 76 76 Commercial radio audience share by station style 77 - 5 -
  7. 7. The Communications Market 2004 – Radio Figure Page 77 BBC radio audience share 77 78 Immediate action taken when offended by a radio programme 78 79 Organisations to complain to about a radio programme 79 80 Share of listening hours by nation 80 81 Frequency of listening by nation 81 82 Household penetration of equipment capable of receiving digital radio services 82 83 Number of DAB digital radio sets sold 83 84 Change in average price of DAB digital radio receivers 83 85 Number of DAB digital radio models available in the UK market 84 86 Proportion of adults who have ever listened to radio via television 85 87 Proportion of adults who have ever listened to radio via the internet 86 88 Proportion of adults who have ever listened to radio via mobiles 86 - 6 -
  8. 8. The Communications Market 2004 – Radio 1. Key facts – radio • The radio industry has annual revenues of £1.1bn, with around 48% accounted for by the commercial sector and 52% by the BBC • The number of hours of radio listening in the UK has increased by 7% over the last 5 years, with over two-thirds (69%) of all listening done at home • At least 3.4% of all radio listening in Quarter 2 2004 was to stations only available on digital (not all digital listening was measured) • 607,000 DAB digital radio sets had been sold up to May 2004 with 176,000 being sold over the 2003 Christmas period • Commercial DAB digital radio is available to over 85% of the population and the BBC expects to reach that level during 2004 • There are 274 analogue commercial radio licensees broadcasting, 5 BBC national networks, 40 local BBC stations and 6 BBC services in the nations. • 130 commercial radio stations are broadcasting on DAB digital radio in the UK, while Sky Digital carries 67 commercial radio stations, Freeview over 20 and the cable networks over 30 • 8 UK radio groups account for 84% of all commercial radio listening and 83% of commercial revenues • 74% of children’s radio listening is to commercial stations with the same percentage of 65+ listening being to BBC stations • 54% of people across the UK listen to radio every day, although the figure is higher in Wales (56%) and England (55%) and lower in Northern Ireland (42%) and Scotland (47%) - 7 -
  9. 9. The Communications Market 2004 – Radio 2. Introduction This is the first in a series of annual Communications Market reports by Ofcom. The main annual Communications Market publication, which from 2005 will be published in May, will be supplemented by quarterly updates, in October, January and August each year, providing the latest available data on each sector, including: • size, structure and financing; • availability, penetration and use of products; • consumer attitudes and behaviour. The report highlights developments during 2003 and the start of 2004 in the radio sector. It also provides the market context for Ofcom’ review of the Radio market, which is considering the future of digital radio and the regulation of analogue radio. It sits alongside similar reviews of television and telecoms. The Communications Market supports Ofcom’s objective to provide best in class research to which stakeholders have regular access. The information set out in this report does not represent any proposal or conclusion by Ofcom in respect of the current or future definition of markets and/or the assessment of significant market power for the purposes of the Communications Act 2003, the Competition Act 1998 or other relevant legislation. In future The Communications Market will be published in hard copy and on the Ofcom website in May each year, covering data for the previous calendar year. This year’s report is published three months later than will be the case in future, due to Ofcom not coming into being until the end of 2003 and the time taken to collect and collate the data. As a result, we are publishing this year’s report on the Ofcom website only. Ofcom welcomes comments on the content and style of The Communications Market to help inform future publication. Comments and queries should be sent via e-mail to market.intelligence@ofcom.org.uk. . . - 8 -
  10. 10. The Communications Market 2004 – Radio 3. Executive summary UK radio is a growing industry that has gone through significant change in the last 18 months, driven by legislation, the launch of new stations and changing listening habits. Recent major developments Growth in radio listening over non-traditional platforms is increasing. Radio in many ways is at the forefront of platform convergence with the listener able to access stations over a wide range of digital platforms, particularly digital television. The internet has made it possible to listen to radio around the world, while the BBC Radio Player enables radio on demand, allowing the listener greater flexibility as to when they listen to their favourite radio programmes. Three analogue commercial radio stations launched in the first half of 2004 and Ofcom has announced the timetable and procedure for the licensing of a further 17 FM radio licences from June 2004 onwards. Although over 1 in 10 of all commercial analogue licences changed hands in the first half of 2004, significant industry consolidation, as allowed for by the Communications Act, has yet to occur. Nevertheless both the industry and industry analysts have high expectations that consolidation will eventually happen. Community radio legislation was passed in July defining and setting out rules for community radio, as well as the framework for the advertisement and award of licences. Ofcom aims to invite applications from September 2004. The radio industry Annual radio revenues in the UK are in excess of £1.1bn, with over half of that figure accounted for by the BBC. The commercial sector has grown significantly over recent years and has been taking an increasing share of advertising spend in the UK. The analogue radio industry has 274 commercial radio licensees broadcasting, 5 BBC national networks, 40 local BBC stations and 6 national BBC services. The UK is the world leader in DAB digital radio, with rapid growth in the number of digital radio stations and the number of digital radio multiplexes on air. There are now two national multiplexes (one BBC and one commercial), each offering a range of stations, and 46 commercial local and regional multiplexes. The Digital One national commercial multiplex covers over 85% of the population in Great Britain while the BBC is available to 80% - both are expected to increase coverage over the coming year. 130 commercial radio stations are broadcasting on DAB digital radio in the UK, while Sky Digital carries 67 commercial radio stations, Freeview carries 21 stations (and additional specific stations for the regions), NTL carries 42 radio stations and Telewest 32.. Data services over DAB digital radio could become a new growth area. Multimedia services such as news, sports, traffic, stock market information and entertainment – possibly including video clips - to handheld devices are expected to launch over Digital One’s multiplex during 2005. - 9 -
  11. 11. The Communications Market 2004 – Radio Urban areas tend to have a wider selection of both analogue and digital radio stations than rural locations. The majority of analogue stations provide mainstream output (e.g. Adult Mainstream or Chart Led Mainstream), however with the growth of digital and satellite only stations, ethnic and specialist music or speech services are increasingly available. UK radio is dominated by the major groups, many of which have developed strong quasi-national brands. The growth in the number of stations and the opportunities provided by digital radio has meant that branding and positioning have become increasingly important to radio groups and their advertisers. The citizen-consumer Total radio listening is on the increase; both the number of people listening and the length of time they listen on average have grown in the past year. Most people listen to radio every day, with the highest audiences occurring at breakfast time and the number of listeners reducing over the course of the day. Perhaps most striking is the growth in listening to stations only available on digital platforms, particularly digital television (Sky, cable and Freeview), but also via DAB digital radio and the internet. In the second quarter of 2004, RAJAR figures show that 3.4% of all radio listening (36.1 million hours in that quarter) was to stations not available to listeners in that area on analogue. (Note: This excludes listening via digital platforms to stations also available on analogue and not all digital-only station listening is recorded by RAJAR, so total digital radio listening is going to be greater than this). Half of all listening is done by people over the age of 45, who take 63% of all BBC hours. Adult1 men account for 48% of all listening with adult women accounting for 45%. Total adult listening is split 49% to 51% between ABC1 and C2DE respectively. The BBC accounts for over half of all listening hours with the BBC network stations taking the majority of that. The older a person is the higher the proportion of their listening hours to the BBC - 74% of children’s listening is to commercial stations and 74% of the over 65’s listening is to the BBC. Across the nations listening varies significantly, with the BBC’s networks being more popular in England and Wales than in Scotland and Northern Ireland. Commercial radio listening is highest in Scotland, with listening to UK-wide stations lowest in Northern Ireland. The number of DAB digital radio sets in the market has increased rapidly with 607,0002 sets having been sold by the end of May 2004 and forecasts of in excess of a million sets being sold by the end of 2004. The variety of sets available has also grown, with 74 different models available at the end of June 2004 and 154 expected to be on sale by the end of the year3 . Prices for DAB digital radio sets have fallen with the industry expecting sub-£50 sets to be available by Christmas 2004. 1 Adults are defined by RAJAR as 15 years and older 2 Source: Digital Radio Development Bureau (DRDB)/GfK 3 Source: DRDB - 10 -
  12. 12. The Communications Market 2004 – Radio 4. Recent major developments in the radio industry The radio industry in the UK is perhaps on the brink of major changes both in the way people listen to radio and in the structure of the industry itself. Over the past year a number of developments have signalled what may be to come. 4.1 A brief history of UK radio The UK radio market today is a product of over 80 years of radio broadcasting in the UK and 30 years of commercial radio broadcasting (figure 1). Since the first commercial radio stations came on air in 1973 successive regulatory regimes have aimed to reduce the burden for radio stations, the number of radio stations has vastly increased and digital radio has launched. Figure 1: Major events in radio in the UK Date Event 1922 BBC radio began broadcasting 1967 BBC Networks re-launched (Radios 1 to 4) and BBC Local Radio began 1972 Sound Broadcasting Act allowed for the start of Independent Local Radio (ILR), commercially funded, regulated by the new Independent Broadcasting Authority (IBA) 1973 Capital and LBC, the first UK commercial radio stations launched – all stations broadcast the same programmes (“simulcast”) on AM and FM 1988 Commercial radio stations encouraged to offer different services on AM and FM services 1990 1990 Broadcasting Act allowed significant liberalisation of the market; The Radio Authority (RAu) replaced the IBA; a points system was introduced to restrict multiple ownership; The RAu no longer provided transmission; RAu no longer pre-vetted programme schedule and; allowed stations to choose the amount of advertising per hour; applicants for licences given greater freedom to propose their own format 1992 Classic FM the first national commercial radio station went on air and RAJAR (the pan-industry audience measurement body) and RAB (the Radio Advertising Bureau) launched 1995 BBC launched DAB digital radio services 1996 The Broadcasting Act removed the ceiling of 35 licences which could be owned by any one company, introducing an overall limit 15% of total “points”; allowed newspapers to own local stations in their local areas subject to a “public interest test”; created the foundations for digital radio development 1999 Digital One, the first national commercial DAB digital radio multiplex launched 2002 Community Radio (Access Radio) pilot scheme began 2003 Communications Act brought Ofcom into being; ownership restrictions further liberalised to allow a minimum of “2 + the BBC” owners in any individual market; new obligation on the regulator to protect “localness” Source: Ofcom - 11 -
  13. 13. The Communications Market 2004 – Radio 4.2 Major industry consolidation yet to happen At the beginning of 2004, the rules governing commercial radio ownership in the UK were significantly relaxed. The new rules set out in the Communications Act 2003 increase the scope for media mergers – both within the radio industry and across media. In effect they allow for radio companies to merge with each other provided there are at least two radio operators (plus the BBC) in any particular developed market4 . The controls over who is allowed to own UK commercial radio stations were also relaxed, allowing for ownership by companies or persons based outside of the European Union and by religious bodies. The points test for ownership of national radio stations was also removed. Following these changes many observers have been expecting consolidation in the UK radio market. So far this has failed to materialise, but industry analysts consider that it is probably only a matter of time before major consolidation takes place. Nevertheless, since the start of 2004 thirty five commercial radio licences have changed hands. Whilst these were generally small stations, it still means that over 10% of all analogue commercial radio licences in the UK went into new ownership within six months. In February 2004 Capital Radio Plc acquired the 81% of Tainside Limited that it did not already own. Tainside owned two London stations Choice FM in Brixton and Choice 107.1 in North London. Capital now controls five analogue licences in London, (the two Choice stations, Capital FM, Capital Gold London and Xfm). Sunrise Radio Limited, which already held two London analogue licences (Sunrise and Easy Radio) as well as operating the Sunrise and Yarr digital services, bought Time 106.8 (based in Thamesmead) and Fusion 107.3 (in Lewisham) from Milestone Group plc. Sunrise also bought the Soul City FM licence for Havering in East London, re-branding both this and Fusion 107.3 as Time. In June 2004 - Tristar Broadcasting which owned the FM licence for Slough and Windsor (broadcasting under the Star Brand) was acquired from UKRD. In January 2004 The Wireless Group acquired Forever Broadcasting. Prior to the acquisition, TWG controlled 13 analogue licences including the national talkSPORT station. Forever controlled three analogue radio licences: Tower FM (Bolton & Bury), The Wolf (Wolverhampton) and Peak FM (Chesterfield). In April 2004 North Wales Newspapers sold its shareholding in Radio Ceredigion to Tindle Newspapers. Tindle Radio now owns 8 local radio stations. Also in April 2004 Southampton Leisure Holdings, owners of Southampton Football Club, took control of South City FM (Southampton). The station is now broadcasting as The Saint which previously only broadcast on local DAB digital radio and satellite. In May 2004, Radio Investments Limited was sold by its 3 shareholders (GWR, GMG and Caledonian Investments) in a buy out backed by City institutions. Radio Investments Limited comprised 22 local radio stations in the UK and changed its name to The Local Radio Company before floating on AIM. 4 For the specific rules referring to this see the Media Ownership (local radio and appointed news provider) order SI 2003 / 3299 - 12 -
  14. 14. The Communications Market 2004 – Radio In June 2004 Chrysalis sold its stake in Telford FM to the Midlands News Association owner of a number of newspaper titles in the West Midlands. In addition to these full changes of control on the ownership of the stations, Emap acquired 27.8% of Scottish Radio Holdings in January 2004. Emap commenting on the transaction said "We believe that there will be opportunities for consolidation within the UK radio sector now the Communication Bill has been enacted. Against this background, we regard the stake in SRH as an attractive strategic asset."5 4.3 Listening via other platforms is growing One of the most significant changes in radio over the past couple of years has been the growth of listening to radio via digital platforms; particularly digital television (Sky, cable and Freeview), but also via DAB digital radio and the internet. In the second quarter of 2004, RAJAR figures show that 3.4% of all radio listening (36.1 million hours in that quarter from a total of 1,072 million) was to stations not available to listeners in that area on analogue. In addition, there was almost certainly a significant amount of listening via digital platforms to stations that were also available on analogue to those listeners (e.g. the BBC networks and Classic FM) although at present listening figures for this are not separable from analogue listening. Further information is given in section 6 below. Since the start of 2002 the total amount of listening to national (UK-wide) commercial stations has risen by 27.6%, driven completely by the arrival of new national digital- only stations, such as Smash Hits. Measured listening to these new national stations rose more than 17-fold over this period. The share of commercial national stations listening taken by the three analogue commercial networks fell from 98% to 72% over this period. While much of the increase in digital listening has been due to listening via digital television, for DAB digital radio things are also looking up. After several years of high expectations by the radio industry but disappointing results, DAB digital radio coverage and take-up by the public increased significantly during 2003 and 2004. Four new local commercial multiplexes (also carrying BBC Local Radio) have launched so far during 2004. Meanwhile Digital One, operator of the UK-wide commercial multiplex, opened 6 new transmitters, increasing coverage to over 85%, and the BBC increased the DAB digital radio coverage of its networks to 80%. Further increases in coverage are planned by the BBC during 2004 to bring coverage of its DAB digital radio networks up to that of Digital One. (See section 5 below). By the end of May 2004 a total of 607,0006 DAB digital radio receivers had been sold, a rise of 227% over the last 12 months, with 176,000 being sold over the Christmas period (December and January). In May 2004 GWR and BT Wholesale announced a partnership to provide multimedia datacasts, such as news, sports, traffic, stock market information or entertainment – possibly including video clips - to handheld devices such as mobile phones and PDAs. The new venture will utilise Digital One’s digital broadcasting capacity, running alongside the eight national digital radio stations. Further information is given in section 4. 5 Regulatory News Service 16/01/04 6 Source: GfK / DRDB - 13 -
  15. 15. The Communications Market 2004 – Radio Around the world digital radio is gathering momentum In the US the FCC adopted In-band On-channel (IBOC) as its digital radio standard (i.e. different standard from the European DAB digital radio Eureka 147 standard) in October 2002. In April 2004 it invited comments on “what rule changes and amendments are necessary due to the advent of digital audio broadcasting”. Italy is introducing legislation which will regulate the entire communications sector. The Italian Communications agency will have to present regulation for the issue of a regular licensing regime for DAB digital radio broadcasting within 3 months of the issue of the law. The French Parliament is scrutinising the Paquet Telecoms Bill which will include consideration of DAB digital radio and is expected to create a regulatory framework for digital broadcasting to evolve. In Sweden in 2003 the parliament allocated a national DAB digital radio multiplex to the public broadcaster (Swedish Radio) and most of the capacity on 19 regional multiplexes to commercial broadcasters. The effect on the radio industry will be evaluated in 2008. In May 2003, Korea's Ministry of Commerce, Industry and Energy announced support for a project to develop Digital Media Broadcasting (DMB) receiver technology. Over the next five years, the Korean government intends to invest W46 billion in DMB, a technology that provides high-quality audio and high definition TV services on the move via DAB digital radio. Terrestrial DMB will allow multimedia services, especially mobile TV services to be available in Korea using Eureka 147 technology. Government support of DMB in South Korea has led to a unilateral backing of the system from broadcasters, manufacturers and research institutes. In Singapore, the first commercial DAB digital radio-only services in Asia were launched by MediaCorp Radio Singapore in April 2003. Seven audio stations are available, including a wide selection of stations such as Chinese Evergreens, Japanese and Korean pop, Planet Bollywood together with club music, and news and financial updates from Bloomberg. The multiplex also simulcasts the FM classical station Symphony. In April 2004 China said that it “is in the procedure to select DRM for its use on medium-wave/AM and short-wave”7 , emphasising a commitment to digital radio. In July 2003, the Federal Government in Australia established a Digital Radio Study Group to assess the suitability of a range of digital radio platforms for the Australian market. The Australian Broadcasting Authority (ABA) confirmed its digital radio trials policy in December 2003 to encourage trials of new broadcast technology. While confirming the ‘open’ nature of trials (i.e. they are not restricted to incumbents) it also increases the emphasis on the temporary and non-pre-emptive nature of trials. 4.4 New stations launched The Radio Authority awarded a number of analogue licences during its final year. Six stations had not launched before Ofcom replaced the Radio Authority - five of these are now on air, with the final station, Saga in Glasgow, expected to launch in September (figure 2). 7 Source: Asia-Pacific Broadcasting Union - 14 -
  16. 16. The Communications Market 2004 – Radio Figure 2: New analogue stations on air in 2004 Station Area On air Date High Peak Radio Buxton, Glossop, Chapel-en-le-Frith, New Mills, Furness Vale, Hope Valley and Whaley Bridge April 2004 Kerrang! West Midlands June 2004 97.1 Radio Carmarthenshire Carmarthenshire June 2004 97.5 Scarlet FM Llanelli & the Carmarthenshire coast June 2004 Cuillin FM Skye & Lochalsh July 2004 Saga 105.2 Glasgow Expected September 2004 Source: Ofcom Note: Radio Carmarthenshire and Scarlet FM and provided under a single licence In many parts of the country the FM spectrum is now fully used. However a number of frequencies and areas for new stations have been identified and Ofcom plans to licence these where possible. A total of at least 30 new FM licences will be issued over the next three years. Figure 3 shows the timetable announced for advertising new FM licences over the next 12 months. These licences range in size from small local areas, such as Ballymena, to regions, such as the Solent. Figure 3: Planned timetable for advertisement of new analogue local commercial radio licences Month 'Larger' licence 'Smaller' licence June 2004 Edinburgh Blackburn July 2004 Ashford, Kent August 2004 Kidderminster September 2004 Belfast Cornwall October 2004 Durham November 2004 Manchester Banbury December 2004 Norwich January 2005 Ballymena February 2005 Solent Region Torbay March 2005 Swindon April 2005 Barrow-in-Furness May 2005 Swansea Northallerton Source: Ofcom - 15 -
  17. 17. The Communications Market 2004 – Radio 4.5 Community Radio given the go-ahead The Communications Act made provision for the launch of permanent community radio stations and the Community Radio Order became law on 20 July 2004. It set out a definition and some rules for community radio as well as the framework for the advertisement and award of licences. A pilot scheme for “access radio”, now known as community radio, was launched by the Radio Authority in 2002. 14 of the 16 original stations are currently operating and the licences are due to expire at the end of 2004. (see section 5 for further details and research into their effectiveness) Community radio stations will generally cover very limited geographical areas (typically with a radius of 5km). They will be run for social gain and to allow community access - they will not be run for profit. Ofcom has consulted on the proposed licensing process and commissioned primary research into community radio. Ofcom aims to invite applications for new licences from 1 September 2004. 4.6 BBC Charter Review underway The BBC's activities are governed by a Royal Charter. The current Charter is due to end in 2006 and the Department for Culture, Media and Sport (DCMS) has begun a process to review the Charter and decide what changes, if any, should be made for the new Charter period. The decision on the BBC’s future, including the future of the BBC’s analogue and digital radio services, is ultimately for Parliament. In addition to work on the BBC’s Charter Review, the DCMS is also currently carrying out an independent review of the BBC’s new digital-only radio services for the Secretary of State. This review is to consider whether, “in providing its digital radio services the BBC is acting in accordance with the facts and assurances on the basis of which approval to proceed with the services was given, and that the conditions imposed by the Secretary of State have been satisfied, it has to produce an assessment of the market impact of the digital services under review and it has to provide, within the context of the review of the BBC’s Charter, any views on how these digital services might develop in future”8 . 8 Source: Terms of reference of the independent review of the BBC digital services - 16 -
  18. 18. The Communications Market 2004 – Radio 5. The radio industry – new platforms grow in importance 5.1 Number of analogue stations is growing The past ten years have seen significant growth in the number of radio stations in the UK with over a hundred new analogue (AM and FM) stations coming on air (figure 4). By the end of July 2004, there were 212 local FM commercial radio stations broadcasting, together with 59 local AM licences, one national FM commercial station (Classic FM) and two national AM commercial stations (talkSPORT and Virgin Radio) In addition, the BBC broadcasts 5 analogue radio networks, 40 local radio stations in England and 2 national services for each of Scotland, Wales and Northern Ireland. Figure 4: Number of analogue radio stations on-air in the UK f commercial radio, stations were licensed to cover cities or parts ease in the number of stations has been an increase in the as 325322315309 302296 280 259 231226218 0 100 200 300 400 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Jul '04 Number of Stations BBC Local (including Nations) BBC National National Commercial Local and regional Commercial Source: Ofcom / BBC In the early years o counties, with the aim of providing a single commercial local service to as many of the UK as possible. Once this objective had been achieved, further licences were issued to extend choice by providing for stations covering smaller areas, or larger, regional areas and stations offering different formats than those already broadcasting in a particular area. he result of the incrT choice of listening available, while the growth in the number of smaller stations h also meant an increased local focus of the station. - 17 -
  19. 19. The Communications Market 2004 – Radio Figure 5: Typical availability of analogue stations by area e.g. Luton Manchester Bristol Northampton Hereford Barnstaple % of Pop 12 7 25 27 12 14 3 Source: RAJAR/Ofcom Listeners in Greater London and the Home Counties currently have the greatest choice of analogue stations, with over 25 available (figure 5). Rural areas, with around 10 stations have the least choice, with only one local station in addition to commercial national services and the BBC. 5.2 Most local commercial stations provide mainstream output Each station’s licence contains a description of its format. There is no strict definition of a format – it is up to each licensee to devise its own in its application - but for the purposes of the analysis in this report, it is possible to group stations into the broad styles in figure 6. Figure 6: Station styles Style Description Chart Led Mainstream "Top 40" radio - includes many of the “heritage” Independent Local Radio FM stations – e.g. Radio City Adult Mainstream "Softer" music aimed at a slightly older audience than Chart Led Mainstream –e.g. Heart FM Adult Mainstream and Chat Includes Contemporary Hit Radio and Adult Contemporary, but usually with more speech. Tend to be small town / rural stations or large regional stations – e.g. Century 106 0 5 10 15 20 25 30 Greater London Home Counties Metropolitan Large tow n Medium tow n Small tow n Rural Number of Stations Regional / local commercial National commercial BBC local BBC national - 18 -
  20. 20. The Communications Market 2004 – Radio Style Description 35+/Gold Music predominantly from the 1960s-80s. Many are on AM – e.g. Capital Gold 1152 Specialist Music – Youth Orientated Niche and more specialist music genres for younger audiences, such as Dance, RnB and Alternative Rock – e.g. Galaxy 102 Specialist Music – Other Music rich stations covering more specialist genres (e.g. Jazz, Country) focused on an older audience – e.g. Jazz FM Specialist News and speech Stations playing very little or no music – e.g. LBC Ethnic Ethnic stations target specific ethnic audiences, most are currently targeted at Asian audiences – e.g. Sabras Sound Source: Ofcom The majority (52%) of stations on analogue frequencies fall into the Adult Mainstream style (figure 7). Figure 7: Analogue stations by style (based on number of licences) ource: OfcomS Adult Ma nstre 19 1%am Chart led % News and Speech3% Ethnic i 52% Music (Youth) 5% Adult Mainstream 16% Music (Other) 1% 35+/Gold Specialist 8% & Chat 3% - 19 -
  21. 21. The Communications Market 2004 – Radio Figu alogue avail rent radio styles opt the Adult Mainstream style. addition to the national stations, Virgin, talkSPORT and Classic FM, Chart Led ainstream and 35+/Gold local stations are available in most parts of the country. .3 Regional stations have added to choice he first Regional station, Jazz FM (as it was then called) in the North West, unched in 1994 with the latest, Kerrang! in the West Midlands, launching in June 004. Regional stations tend to offer more varied formats than local stations (figure ), as they were awarded to complement the existing stations, which tended to be hart-led mainstream. They also have a larger listener base which can support ore specialist formats, but limited frequencies mean that the formats available in ach region vary widely. re 8: An ability of diffe 90% 61% 21% 33% 32% 76% 37% 97% 0% 20% 40% 60% 80% 100% Ch rt Led Adult Chat 35+/Gold Specialist Specialist Specialist ch Ethnic Adult Mainstream % of population a Mainstream & Music Youth Music Other News/Spee Source: Ofcom There is not a direct correlation between the number of stations of a particular style and the availability of such stations (figures 7 and 8) – e.g. there are more Adult Mainstream stations than any other style, but they only cover around 76% of the population, as they are largely either regional or small town stations. There is little duplication of formats in individual analogue markets. This is largely due to the statutory requirement that licences are awarded with regard to the extent that the choice of services available in the area is broadened. Where there is duplication, it tends to be a local Chart Led Mainstream (on FM) or 35+/Gold (often on AM) services competing with a larger station of the same format from the nearest big city. Where Chart Led Mainstream and 35+/Gold stations were already available (a legacy of original ILR stations splitting frequencies in the late 80s / early 90s) new entrants to the market, whether serving a smaller area within an existing licence or a regional station, have tended ad In M 5 T la 2 9 c m e - 20 -
  22. 22. The Communications Market 2004 – Radio There has been strong competition for the award of regiona Midlands licence, awarded to Emap’s “Kerrang!”, had 11 ap l licences. The third West plicants offering a wide variety of formats – five rock applications, two talk, jazz, children’s, asian and country. Regional licences currently cover much of the UK (figure 10), although there are a number of geographical areas which only have national and/or local commercial services. Figure 9: Regional commercial radio stations Region Station Format Owner Start Date Beat 106 Specialist Music – Youth Orientated Capital Nov ‘99Central Scotland Real Radio Adult Mainstream and chat GMG Sep ‘94 Galaxy 105-106 Specialist Music – Youth Orientated Chrysalis Jun ‘99 100-102 Century Adult Mainstream and chat Capital Sep ‘94 North East TBA Smooth Specialist Music – Other GMG Sep ’94North West 105.4 Century Adult Mainstream and chat Capital Sep ’98 Galaxy 105 Specialist Music – Youth Orientated Chrysalis Feb ’97Yorkshire Real Radio Adult Mainstream and chat GMG Mar ’02 100.7 Heart fm Adult Mainstream Chrysalis Sep ’94 Saga 35+/Gold Saga Group Oct ’01 West Midlands Kerrang! 105.2 Specialist Music – Youth Emap Jun ‘04 Orientated 106 Century Adult Mainstream and chat Capital Sep ’97East Midlands Saga 106.6 FM 35+/Gold Saga Group Feb ’03 East Vibe 105-108 Specialist Music – Youth Orientated SRH Nov ’97 Wave 105 FM Adult Mainstream and chat SRH Jun ’98Solent TBA Severn Estuary Vibe 101 Specialist Music – Youth Orientated SRH Sep ’94 South Wales Real Radio Adult Mainstream and chat GMG Oct ‘00 Source: Ofcom - 21 -
  23. 23. The Communications Market 2004 – Radio Figure 10: Coverage and location of analogue regional licences Source: Ofcom 5.4 AM radio targ T re two na l and talkSP commercial AM stations in the UK. Perhaps because of the lower soun AM stations tend to have lower audiences and are generally targeted at older audiences than FM. However there are wide variations in reach a e across the individual AM Of the local statio 9 lo b fou g pital m , Classic Gold Digita cott Radio Holdings ( in the 35+/Gold ca T er audien nco ding of A s As a re fo ita and Gold) carry signi f s am Apart from the four main groups, out ns serve either ethnic audiences or rur here the O t he op . tends to et older audiences here a tional commercia AM stations (Virgin ORT) and 5 d quality the 9 local nd shar stations ns, 41 of the 5 cal AM licences are operated y one of r roups – Ca (Capital Gold), E figure 11) and the ap (Magic) majority are l and S tegory. ish he low ces affect the i me and therefore the spen ability M tations. sult, three of the ficant amounts o ur major groups (Magic, Cap yndicated (networked) progr l Gold ming. Classic side London, most statio re is little FM competition.al areas, w fcom is curren ly looking at t tions for further AM licensing - 22 -
  24. 24. The Communications Market 2004 – Radio Figure 11: AM radio licences Source: Ofcom 5.5 Ethnic stations broadcast mainly on AM The majority of stations for ethnic audiences are on AM although most would prefer to be on FM. Most tend to focus on urban areas (figure 12). Figure 12 – Analogue ethnic radio licences Source: Ofcom / BBC - 23 -
  25. 25. The Communications Market 2004 – Radio In addition to those stations on an stations for ethnic audiences in L alogue there are also further DAB digital radio ondon, Leicester and Bradford. There are also 26 ethnic radio services available via the Sky Digital Television platform. A number of commercial analogue stations which have a focus on a different style also produce programming aimed at an ethnic audience e.g. Star 106.6 (in Slough Windsor and Maidenhead) has a largely Adult Mainstream style, however it also has the “Asian Star” programmes on the weekend which are targeted at Asian audiences. 5.6 Demand for RSLs has been steadily increasing There are two main types of Restricted Service Licence (RSL) stations: • Short-term RSLs broadcast at low power over a fairly small area for a limited period – a maximum of 28 days. They tend to be of three types: • Groups wishing to apply for a permanent licence to allow them to “test the water” and gain experience • Digital stations wishing to advertise their permanent digital service by broadcasting it for a limited period on analogue • Stations linked to a particular festival, sports coverage or a religious festival (e.g. Ramadan) • Long-term RSLs – Single-site services (e.g. Hospital Radio, University Radio) Stations can be either on AM or FM, depending on frequency availability. The band 87.5 – 88.0 MHz has been reserved for RSLs. The demand for short term RSLs has continued to increase over recent years (figure Source: Ofcom 13) and in 2003 493 short term RSLs were awarded. Figure 13: Growth in the demand for short term RSLs Number of licenses 178 188 318 324 393 423 493 450 262 350 464 343 241 0 100 200 300 400 500 600 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 - 24 -
  26. 26. The Communications Market 2004 – Radio Long term RSLs are given to non-commercial establishments, as shown in figure the majority of which are currently hospitals. As of June 2004 there were 124 long term RSLs on air. 14 Source fc 5.7 The community radio pilot scheme ermanent community on 20 July 2004. It sets r (the ‘first tier’); Figure 14 - Long term RSLs by establishment Number of licenses : O om Community Radio can offer highly localised services catering for a particular area or ommunity of interest. In 2002 the Radio Authority set up a community radio pilotc project (then called “access radio”). The first station launched in February 2002 and was followed by a further 15 across the UK as shown in figure 15. Fourteen of the original pilot stations are still on air (figure 16). The Communications Act made provision for the launch of p radio stations and the Community Radio Order became law out a definition and some rules for community radio as well as the framework for the advertisement and award of licences. Ofcom has consulted on the proposed licensing process and aims to invite applications from 1 September 2004. There will be a twelve week period between the invitation for applications and the closing date of 23 November 2004 after which the awards will be made in batches on a rolling basis over several months. Decisions on the licence awards will be made by the Radio Licensing Committee based on eight criteria which have been laid down by parliament9 . The likely effect of the proposed service on the economic viability of any local commercial radio service was the area which led to the most feedback during the Ofcom consultation process. The Community Radio Order now sets out three rules relating to this issue: (a)There should be no community service stations licensed which would overlap by 50% or more with the coverage area of an existing commercial radio station with a measured coverage area (MCA) of 50,000 adults or fewe 9 See “Licensing Community Radio” on the Ofcom website for full details of the criteria. 33 7 0 10 20 H chool 53 50 60 40 18 30 13 ospital University Forces College S - 25 -
  27. 27. The Communications Market 2004 – Radio (b)Any community radio station which would overlap by 50% or more with the coverage area of an existing commercial radio station with an MCA of greater than 50,000 adults and fewer than 150,001 adults will not be allowed to take any paid-for advertising or programme sponsorship (the ‘second tier’); (c)Ofcom should have regard to the need to ensure that any community radio service does not prejudice unduly the economic viability of any other local service (‘third tier’). Figure 15 - Pilot community radio stations Source: Ofcom Ofcom commissioned primary research10 looking at four of the community stations which were running in order to assess the overall impact of community radio in terms f who is listening and what benefits these listeners feel are being delivered, both on ed to station articipants to see what they have gained out of the pilot and to community leaders neral. ities of interest and communities of place as well as a range of eographical locations and socio-economic settings. o a personal and social level. Audience research is not the only measure of the performance for community radio and the research agency also talk p to explore the impact they have seen the stations have on the community in ge The four stations11 were selected to represent a mix of community radio projects, serving both commun g ich are published on the Ofcom website (“Licensing Community Radio” Anne10 Details of wh x 1) 11 The four stations were Forest of Dean Radio, ALL FM, Awaz FM and Angel Radio - 26 -
  28. 28. The Communications Market 2004 – Radio The research data indicated that the community radio experiment has had some positive results: • areas • id enhanced their personal well-being and sense of community • community leaders typically saw community radio as delivering tangible Overall, at the public typically perceived community radio as ell-run, relevant and entertaining - and clearly different to the existing radio product ers. However, it appeared from the results of the research that the concept of community radio was easier to communicate to a target audience that was linked by interests, than to an audience that was linked by area: • in the former instance, relevant groups quickly identified that the station was “for them” and spotted that participation/involvement was being invited • communities of interest expressed an emotional investment in their community, as well as clear reference parameters for identifying relevance and meaning in broadcast content • communities of place suffered from variable coherence in terms of their sense of community - some communities were more conceptual than actual, while others suffered from blurred boundaries and the absence of a core philosophy with which to bind the audience together. Consequently, listeners seemed to take much longer to recognise that the station was “for them” and that participation/involvement was being sought. Figure 16: Status of pilot community radio stations Station Area and description Date started significant numbers of the radio-listening population in the four station are aware of, and listening to, community radio both those listening to, and participating in, community radio generally sa that it benefits for their local communities. the research found th w offered by either commercial or public broadcast ALL FM 96.9 MHz Ardwick, Longsight and Levenshulme, Manchester. Caters for the whole community in this culturally diverse area 5 June 2002 Angel Radio 101.1 MHz Havant, Hampshire. Aimed at the over-60s. 1 March 2002 Awaz FM 107.2 MHz Central Glasgow. For the Asian population. 29 April 2002 BCB 96.7 MHz Inner-city Bradford. Service for the diverse communities of Bradford. 1 March 2002 Cross Rhythms City Radio 101.8 MHz Stoke on Trent. Community Radio from a Christian perspective. 28 February 2002 Desi Radio 02 kHz Southall, West London. For the Punjabi population. 10 May 2002 16 Forest of Dean Radio 1521 & 1503 kHz Forest of Dean, Gloucestershire. Serving a population spread over a large rural area. 19 July 2002 - 27 -
  29. 29. The Communications Market 2004 – Radio Station Area and Description Date Started GTFM Pontypridd. Two partners, a resid 106.9 MHz association and the University, run a service aimed at the whole community. ents’ 27 April 2002 N 98.7 MHz ew Style Radio Central Birmingham. African- Caribbean 14 August 2002 community. Northe Radio 100.6 H rn Visions Belfast. A speech-oriented service for the 9 March 200212 M z whole community. Shine 106.1 H month project FM M z Banbridge, Northern Ireland. A Christian group operated a service for the whole community. (This was a 3- 21 September 200213 only.) Sound Radio 1503 kHz East London. Catering for the diverse population of the area. 26 July 2002 Radio Faza Nottingham. Two partners (the As 97.1 MHz Women’s Project and the Karimia Insitute) serve the South Asian community of Nottingham. ian 25 March 2002 R 1 esonance FM South Bank and Bankside 04.4 H , central London. 1 May 2002 M z The London Musician’s Collective run a project of experimental sound and music. Takeo r 103.2 H ve Radio M z Leicester. A service for children and their families. 23 March 2002 Wythensh FM 97 awe Wythenshawe, Manchester. For the whole 6 May 2002 .2 MHz community. Source: Ofc 5.8 Cho he increase in the number of radio stations available on digital platforms such as l radio has been one of the logue sta of platforms as shown in alf of al lable s e 45% o AB digital radio. ening b ion om ice via digital platforms continues to grow T digital television, combined with the growth in DAB digita most significant trends in UK radio over the past couple of years. Many ana tions are now available on a wide variety l analogue commercial stations are avai f analogue stations are also available on D figure 17 - h internet and treamed on th stDetails on li to radio on the internet and on television can e found in sect 6. 12 Finished June 2003 13 Finished December 2002 - 28 -
  30. 30. The Communications Market 2004 – Radio Figure 17: Analog m Source: CRCA/Ofcom On analogue frequencies (AM and FM) the majority (52%) of stations fall into the Adult Mainstream style. However, as competing platforms increase the number of available stations, for less mainstream markets may be addressed. Half of the DAB digital radio only stations are specialist stations (figure 18). Of the 65 satellite-only stations, ethnic stations account for 39% while specialist speech and music stations account for a further 43% (figure 19) Although there are still coverage gaps, the growth of digital radio is starting to address the disparity between different urban areas with typically around 30 stations being made available through DAB digital radio (up to ten on each of the BBC, Digital One, and the regional and local multiplexes). Figure 18: DAB digital radio only stations by style ue stations available on alternative platfor s 45% 5% 1% 50% 7% 0% 10% 20% 30% 40% 50% 60% Internet DAB Satellite Cable Freeview Source: Ofcom Chart led 12% Music (Other) 22% Music (Youth) 18% Adult Mainstream & Chat 9% Ethnic 9% 35+/Gold 9% News and Speech 9% Adult Mainstream 12% Specialist 50% - 29 -
  31. 31. The Communications Market 2004 – Radio Figure 19: Satellite only stations by style vis Chart le 2% Ad pecialist 43% h) 35+/G 2% d Speech % d 6% Adult Mainstream 8% Ethnic 39% ult Mainstream & Chat 6%old News an Music (Other) 14% S Music (Yout 23 Source: Ofcom Of the digital tele (figure 20). ion platforms Sky provides the largest number of radio stations - 30 -
  32. 32. The Communications Market 2004 – Radio Figure 20: Radio stations available via DAB and via digital television platforms Radio station NTL Telewest Sky Freeview DAB Radio station NTL Telewest Sky Freeview DAB BBC 1Xtra Jazz FM BBC 6 Music Kerrang! BBC 7 Kiss 100 BBC Asian Network LBC 97.3 BBC Radio 1 Lyric FM BBC Radio 2 Magic Radio BBC Radio 3 Mojo Radio BBC Radio 4 Oneword BBC Radio 4 LW Panjab Radio BBC Radio Cymru* Planet Rock BBC Radio Five Live Premier Christian Radio BBC Radio Five Live Sports Extra Primetime Radio BBC Radio nan Gaidheal* Pure Dance BBC Radio Scotland* Q Radio BBC Radio Ulster* BBC Radio Wales* Raidió na Gaeltachta Real Radio C World Service RTÉ Europe Sunrise Radio talkSPORT The Villan TWR - Trans World Radio UCB Bible Easy Radio 1035 UCB Talk EWTN Global Catholic Radio Virgin Radio Family Radio WRN Euromax English FCUK FM XFM 104.9 Galaxy 105 Yarr Radio Gaydar Radio relevant Local Radio station(s) Heart 106.2 FM * Only available in relevant nation on Freeview Heat Radio DAB availability varies by area BB BBC World Service Extra RTÉ Radio 1 BBC Radio Foyle* RTÉ Radio 2 Akash Radio SBN Amrit Bani Smash Hits! Apple FM Solar Radio Asian Gold Radio Spectrum 1 Big Blue Sukh Sagar Radio Calvary Chapel Capital Disney Capital FM The Arrow Capital Gold 1548 The Hits Radio Century FM The Mix Choice FM 96.9 The Saint Classic FM The Storm Classic Gold Digital lub AsiaC Core Cross Rhythms UCB Europe Desi Radio UCB Inspirational Source: Ofcom 5.9 DAB digital radio take-up growing rapidly The BBC launched the first DAB digital radio broadcasts in September 1995 with simulcasts of its existing national analogue stations and in 2002 it launched five new digital only services on the national multiplex. Digital One was awarded a national commercial multiplex licence in 1998 and went on air in November 1999. Since then, local and regional commercial multiplexes have been steadily licensed and have come on air (figure 21). - 31 -
  33. 33. The Communications Market 2004 – Radio Figure 21: Number of DAB digital radio multiplexes on air o date 47 commercial digital multiplexes have been awarded: one national multiplex operated by Digital One, with the rest local or regional. So far this year five new local multiplexes have come on air with a further two expected later in the year (figure 22). All 47 licences will then be operating. Figure 22: New multiplexes coming on air in 2004 Operator Area Date Source: Ofcom T Capital Radio Digital Sussex Coast January 2004 Capital Radio Digital Kent April 2004 Now Digital Nottingham April 2004 TWG EMAP Digital Stoke-on-Trent April 2004 Now Digital Reading & Basingstoke July 2004 Now Digital Cambridge Expected Sept 2004 Now Digital Plymouth & Cornwall Expected Sept 2004 Source: Ofcom There are still a number of gaps in local coverage, partly due to a lack of frequencies at present and partly because those areas where frequencies are available, such as the Scottish Borders, were regarded as being commercially unviable by the Radio Authority and prospective applicants for the multiplex licences. Ofcom will consider currently unserved areas as part of its review of digital radio due this autumn. 5.10 UK DAB digital radio coverage improving DAB digital radio coverage of households has been improving over recent years, with the majority of the population now being covered as shown in figure 23. The BBC 47 6 16 28 37 44 0 5 10 15 20 25 30 35 40 45 50 Q2 '00 Q3 '00 Q4 '00 Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q3 '04 Number of Multiplexes Q3 '99 Q4 '99 Q1 '00 47 6 16 28 37 44 0 5 10 15 20 25 30 35 40 45 50 Q2 '00 Q3 '00 Q4 '00 Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q3 '04 Number of Multiplexes Q3 '99 Q4 '99 Q1 '00 - 32 -
  34. 34. The Communications Market 2004 – Radio initially launched DAB digital radio across the UK with the commercial sector driving the next phase of growth of DAB digital radio coverage with the BBC improving its coverage particularly in the last two years : DAB digital radio coverage Number of transmitters (as at June 2004) Population coverage Figure 23 UK England Wales Scotland Northern Ireland BBC 71 Approx. 80% n/a n/a n/a n/a Digital One 83 86%14 89% 76% 53% n/a Local commercial15 190 85% 88% 92% 74% 100% Source: BBC, Digital One, Ofcom The BBC has continued to increase its digital coverage, although it still lags behind the coverage of both the local commercial digital stations and Digital One. With the switch on of the Charing Hill DAB digital radio transmitter in Kent in June 2004 it brought coverage up to 80% of the population and has a target of 85% coverage by the end of 2004 (figure 24). The significant increase in the number of transmitters that the BBC has switched on in 2004, as shown in figure 26 is part of a specific project started in 2003 to increase BBC DAB digital radio coverage to 85% by mid 2004. 14 Percentage coverage of Great Britain (Digital One does not have a licence for Northern Ireland) 15 Population coverage for local commercial digital multiplexes shows the percentage of the population living within licensed areas. Not everyone living within these areas will be able to receive the services at present as transmitter networks are not complete. Actual coverage varies by multiplex and ranges between around 70% and 95% of the licensed area. - 33 -
  35. 35. The Communications Market 2004 – Radio Figure 24: BBC DAB digital radio coverage Source: BBC Digital One, with its transmission partner NTL, reached 85% coverage in July 2003 (figure 24). The company has switched on 7 transmitters so far in 2004 and plans to witch on another in Tunbridge Wells later this yes ar. Figure 25: Commercial DAB digital radio coverage S N ource: Ofcom ote: Digital One does not have a licence to cover Northern Ireland - 34 -
  36. 36. The Communications Market 2004 – Radio Figure 26: New DAB digital radio transmitters switched on January - June 2004 BBC Digital One (National commercial) Local Trans rea covered Transmitter Area coveredmitter Area covered Transmitter A Beacon Hill Torbay Ashford East Kent Ashford Kent Bincombe Hill East Kent Bluebell Hill KentWest Dorset Chartham Charing Hill East Kent ChelmsfordDanbury Chatham Kent Danbury Chelmsford m East Kent Thanet KentFaversha Darvel Ayrshire Stoke Holy Cross rfol sa Bank No k Al gers Stoke-on-Trent Durris berdeenshire et Ken Pye Green S -on-TrA Than East t toke ent Fenham tle Stoke tford Sutto Common -on-TrNewcas upon Tyne Lark Stra on-Avon - n Stoke ent Keighley ighley Tick -on-TKe Hill Stoke rent Kirkton Maile Mapperley Ridge Nottinghamshirer Perth Lanca Waltham Nottinghamshirester Lancaster Lark S asttoke Warwickshire Beddingham Hill Sussex Co Madingley Cambridge Whitehawk Hill Brighton Meldr astum Aberdeenshire Burton Down Sussex Co More Bay Furness astcambe Barrow-in- Findon Sussex Co Mount Eagle Inverness Hastings Sussex Coast Pendle Forest N E Lancs Carmel Swansea Ridge Hill Herefordshire Kilvey Hill Swansea Sandale N Cumbria & Dumfries St Hilary Swansea St Thomas Exeter Exeter Stockland Hill East Devon Wickhambrook West Suffolk Source: BBC, Digital One, Ofcom Currently all of the DAB digital radio multiplexes are owned or controlled by the large analogue radio groups either directly or as part of a consortium (figures 27 and 28). Typically the local multiplex owner is the same as the owner of the local heritage, R station. Under the terms of the Broadcasting Act 1996, the local andanalogue IL nations’ BBC stations have a right to be carried on the relevant local commercial ultiplexm . Almost all of these rights have been exercised. - 35 -
  37. 37. The Communications Market 2004 – Radio Figure 27: UK DAB digital radio multiplex operators Type Number Operator (Number) National 2 BBC (1), Digital One (1) Regional 6 Switch Digital (1), MXR (5) Local 40 CE Digital (3), Capital (4), Digital Radio Group (1), Emap (7), Now Digital (13), Now Digital (East Midlands) (1) Score Digital (6) , Switchdigital (2), TWG (1), TWG/Emap (2) Source: Ofcom Figure 28: Regional and local DAB digital radio multiplex ownership Source: Ofcom Listener choice is greatest where there are local and regional commercial multiplexes in addition to the national ones but there are significant areas where choice is limited or non-existent, (figure 29). - 36 -
  38. 38. The Communications Market 2004 – Radio 9: i i sta chester Bristol Northampt C 25 27 12 : Ofco Dig io driv s growth f new “n tional” sta ons digital radio has allowed the introduction of new national n f qu si-national stations (figure 30). f the 130 commercial radio stations broadcasting on DAB digital radio, three are mmercial stations (Classic FM, Virgin and talkSPORT), alogue stations (e.g. Figure 2 Typical availab lity of DAB d gital radio tions by area e.g. Luton 0 19 29 43 54 Greater London Home Metropolitan Large tow n Medium tow all tow n Rural ta 8 36 0 10 20 30 40 50 60 Counties n Sm Number of S tions Loca Com l mercial (DAB) BBC (DAB) Natio Comm nal erical B)(DA Man on Carlisle aernarfon % of Pop 12 7 14 3 Source m 5.11 ital rad e o a ti Across the stations a country DAB d a number o a O simulcasts of the national co 2 are digital-only stations (e.g. Gaydar), 14 offer existing an3 Kiss) to new areas of the country and 81 are DAB digital radio simulcasts of existing analogue stations within their local licence areas (e.g. BRMB). The BBC offers local or nations stations on 45 of the 46 local multiplexes (note: the BBC has guaranteed capacity for its local and nations stations on local commercial multiplexes). - 37 -
  39. 39. The Communications Market 2004 – Radio Figure 30: Availability of DAB digital radio stations across the UK ource: Ofcom NI Station LO Live Manchester Lancashire Sheffield Leeds Br EYorks&NLincs Teesside ast ire Torbay &Cornwall e th Newport Swans Ayrs Glasgow Edinburgh Dundee&Perth Aberdeen Inverness NIreland 3C A Plus Abracadabra Access Channel Access Radio Taysid Capital Disney Capital Gold Century Classic FM Classic Gold Core DNN Galaxy Gaydar Heart Heat Jazz FM Kent Digital Extra Kerrang! Kiss Life Magic Oneword Panjab Radio Passion for the Planet Planet Rock Prime Time Real Radio Saga SBN Smash Hits Smooth Soton Hosp Bcast Storm Sunrise Swale Sound Swindon FM TalkSport The Arrow The Hits The Mix Travel Now UCA Radio Urban Choice Virgin Radio Virgin Classic Rock Virgin Groove XFM YARR Zeta Other analogue Local stations 4 1 2 1 3 3 3 3 1 1 2 1 2 2 2 1 2 2 3 1 1 2 4 1 2 1 2 1 1 1 1 2 2 4 3 2 4 2 4 BBC Local 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 2 2 2 2 2 2 2 2 1 Total 42 27 25 27 28 28 24 27 27 27 28 28 27 13 17 17 17 15 19 16 15 15 18 14 17 15 16 18 16 26 22 21 18 26 25 16 17 5 9 Station only available on digital in this area st Wales ScotlandS WestSouth WestNDON rpool adford Tyne&Wear Birmingham Wolv/Shrop Coventry Stoke Leicester Nottingham Peterborou Cambridge Norwich Essex Kent SussexCo SHampsh Reading Bournemouth Exeter& Plymouth Swindon WWiltshir Bristol&Ba Cardiff& ea hire gh S e 1 1 1 1 Station available on analogue in this area N We W Midlands E Mids Easast tYorks N E - 38 -
  40. 40. The Communications Market 2004 – Radio 5.12 Data over DAB digital radio a new growth area ata on DAB digital radio is currently at a basic level often only providing, “Now and ext” information about programmes and tracks. The BBC is allowed to use up to s can ther data to AB digital radio sets. In May 2004 GWR and BT Wholesale announced a partnership to provide multimedia datacasts over the Digital One national multiplex. The new venture will utilise Digital One’s digital broadcasting capacity, running alongside the eight national digital radio stations. They plan to launch their services in the M25 area during 2005 with national services by the end of 2006. The services will use digital radio capacity to transmit, multi-media content, such as news, sports, traffic, stock market information or entertainment, to handheld devices such as mobile phones and PDAs. 5.13 Radio industry revenues have increased rapidly over the last decade Net commercial radio revenues16 rose over the period 1994 to 2000, before falling back slightly during the advertising recession of 2000-01 (figure 31). In 2003, total industry revenue was £1.1bn, of which commercial radio revenue accounted for £543m. This represented an increase for commercial revenue of 6.7% over the previous year (Indications for 2004 are positive as net commercial revenues for the year to March 2004 were £553m). The fastest growing sector was local advertising which grew by 11.6% in 2003 although at £306m national advertising was still the most significant source of commercial radio revenues. igure 31: UK Commercial radio revenue (net) and BBC radio spending D N 10% of its own multiplex capacity for data, while the commercial operator provide up to 20% on theirs. Currently there is still capacity to provide fur D F £m 163 146141145149153 ource: RAB/Ofcom/BBCS Note: net radio revenue excludes commission16 219 264 330 293 291 306 200 400 543 536 587569 1,130 1,0771,0201,044 600 800 1,200 924867 1,000 509495 413372 525 509 510495 75716261 0 '98 '99 '00 '01 '02 '03 Local (commercial) National (commercial) Sponsorship (commercial) Total Commercial BBC expenditure Total - 39 -
  41. 41. The Communications Market 2004 – Radio The BBC is a significant financial element in the UK radio industry. However commercial radio revenue is increasing and in 2003 stood at £543m (figure 31), not far short of the BBC’s £587m. Radio’s share of total display advertising has increased over the last decade and in 2003 stood at 4.5%17 (figure 32). Indications from the first half of 2004 show this figure to have risen further. This increase in the share has been due to a combination of the efforts of the Radio Advertising Bureau and the increase in the number of commercial stations, particularly the regional stations. Figure 32: Radio share of display advertising Source: The Advertising Association 41% of analogue commercial radio revenue in 2003 was taken by the stations in the Chart-led mainstream style (figure 33). The large share arises because they tend to be the well-established original ILR, or “heritage”, stations (such as BRMB and Radio City) and are targeted at the age-group most attractive to advertisers. However, new entrants are increasingly taking a share of the market. 13.1 12.812.5 13.1 11.9 11.0 10.2 9.4 8.5 7.8 7.1 4.5%4.3%4.3%4.6% 4.4% 4.2% 3.8% 3.7% 3.5% 3.1% 2.8% 2 4 6 8 10 12 14 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 £ ('000m) 0% 1% 2% 3% 4% 5% Total display advertising Radio share of total 17 Note: The display advertising market as defined by the Advertising Association includes ispla ss, television spot advertising (not sponsorship), direct mail, outdoor & transport, dio spot advertising (not sponsorship), cinema and internet (it excludes all sponsorship and ss classified advertising). nt definition to that adopted by the Radio Advertising Bureau which includes radio sponsorship and promotions and excludes direct mail, cinema and internet d ra y pre promotion and pre This is a differe - 40 -
  42. 42. The Communications Market 2004 – Radio Figure 33: Split of revenues for analogue only stations in Q1 2004 f more Figure 34: Groups split by number of licences owned 35+/Gold Specialist 17% 7% Chart Led and Chat Adult Mainstream 28% Ethnic 1% Adult Mainstream Mainstream 41% 6% Source: Ofcom 5.14 A small number of large groups dominates UK radio The UK commercial radio landscape is dominated by a number of major groups. Over half of all analogue stations in the UK are in the 7 groups which consist o than 10 stations (figure 34). Emap 6% Capital 8% Classic Gold 8% SRH 8% GWR 12% 2 to 5 stations in group 9% Local Radio Company 8% Independents 18% TWG 6% 6 to 10 stations in group 17% Total ‘other’ 44% Source: Ofcom - 41 -
  43. 43. The Communications Market 2004 – Radio In addition to the 7 groups with more than 10 stations, 3 other groups have a significant impact on the industry either through their share of listening hours or their ownership of key stations (figure 35). Chrysalis owns 8 analogue licences, which are ll London or regional stations with brands such as Heart and Galaxy, which gives it f nds. g hours. Figure 35: Audience shares of commercial hours ource: RAJAR Q1 2004 evenues split broadly in line with audience share (figure 36), although Capital takes a 11% of all listening hours. GMG with 5% of all listening hours is significant in the radio landscape due to its wide coverage of the UK through its ownership of four o the regional licences which carry the Real Radio, Jazz FM and Smooth bra SMG, owner of the Scottish and Grampian Television licences, is also important in radio with ownership of Virgin Radio, which takes 3% of all listenin Capital 15% Emap 14% GWR 21% SRH 8% Independents and other groups 16% GMG 5% Chrysalis 11% TWG 7% SMG 3% S R more advertising than its audiences would suggest due to the premium which the UK’s oldest commercial radio station, Capital FM, still attracts. Meanwhile GWR with its ownership of Classic FM and medium-sized local stations attracts a smaller revenue share than audiences would suggest. - 42 -
  44. 44. The Communications Market 2004 – Radio Figure 36: Shares of commercial stations revenue ise of quasi-national brands he growth in the number of stations and the opportunities presented by digital radio itical pital, Emap and GWR have the largest brand ortfolios. The charts in the following individual company sections map the brands’ The growth of quasi-national brands (albeit with locally produced programmes) such as Century and Galaxy, has allowed more sophisticated programming and larger promotional budgets which may have an effect on listening levels and loyalty. As yet there is no sign that such branding allows stations to charge higher rates, although it is making it easier for advertisers to target markets. BBC radio’s audience tends to be older, wealthier and more male than that of commercial radio. However with growing segmentation, commercial stati as Saga) are increasingly serving the needs of these listeners. Capital 20% Emap 15% GWR 15% SRH 8% Other 17% GMG 4% Chrysalis 12% TWG 5% SMG 4% Source: Ofcom Q1 2004 5.15 The r T has meant that branding and positioning of stations have become increasing cr to the commercial radio industry in order to ensure that it can satisfy the needs of advertisers. f the commercial groups, CaO p relative size and demographic positioning. ons (such - 43 -
  45. 45. The Communications Market 2004 – Radio Figure 37 - Positioning of all national radio stations 1 egments which are less well served by the national commercial stations (figure 37). 5.16 An overview of the major radio players BBC radio The BBC has 5 UK-wide networks, 40 local radio stations in England and 6 stations for the nations, all broadcasting on analogue frequencies. In addition it has 5 digital only stations which are carried on DAB digital radio as well as cable, satellite and Freeview. The BBC’s Local and Nations’ stations have guaranteed capacity on the appropriate local commercial DAB digital radio multiplex. The remits for each BBC service are shown in figure 38. ch 1 egments which are less well served by the national commercial stations (figure 37). 5.16 An overview of the major radio players BBC radio The BBC has 5 UK-wide networks, 40 local radio stations in England and 6 stations for the nations, all broadcasting on analogue frequencies. In addition it has 5 digital only stations which are carried on DAB digital radio as well as cable, satellite and Freeview. The BBC’s Local and Nations’ stations have guaranteed capacity on the appropriate local commercial DAB digital radio multiplex. The remits for each BBC service are shown in figure 38. Radio 1 Radio 2 Radio 3 Radio 4 Radio 5 6 Music 1Xtra BBC7 Capital Disney Capital Gold The Arrow Classic Gold Core Galaxy heat Heart The Hits Jazz Kerrang! Kiss LBC Magic Easy Radio Mojo oneword Planet Rock Q Primetime Smash Hits The Storm Sunrise talkSPORT Virgin Xfm Yaar Radio Classic FM Increasing Proportion of 15-44 Increasing proportion of ABC1s Commercial digital BBC Analogue Source: RAJAR Q1 2004/RAB Note: Due to the relatively small audiences of some of the national stations their position from quarter to quarter may change significantly With the exception of Classic FM, the most widely available commercial FM services are targeted at younger audiences, while those aiming for older audiences are mu more limited in their availability. The majority of national radio stations in the UK target the younger, less ABC1 market segments. The BBC stations tend to focus more on older more ABC ely available commercial FM services are targeted at younger audiences, while those aiming for older audiences are mu more limited in their availability. The majority of national radio stations in the UK target the younger, less ABC1 market segments. The BBC stations tend to focus more on older more ABC ch ss - 44 -
  46. 46. The Communications Market 2004 – Radio Figure 38: Remit and spending of the BBC radio stations Station Spending 2003-04 Remit18 BBC Radio 1 £17.6m BBC Radio 1 aims to offer an exciting, high-quality serv a young UK audien ice for ce. It is committed to playing the best new music and delivering a comprehensive range of live studio sessions, concerts and festival broadcasts. The network aims to cover all young music genres with a wide-ranging playlist and a strong line-up of specialist DJs. Music programming is augmented by tailored speech output – including news, documentaries and advice campaigns. BBC Radio 2 £21.7m BBC Radio 2 aims to bring a broad range of popular and specialist music, with particular support for new and established British artists; live music, through concerts and studio sessions; and song-writing. The network also offers news, current affairs, documentaries, comedy, readings, religious output and social action, designed to appeal to a broad audience. BBC Radio 3 £32.1m BBC Radio 3 aims to provide a broad spectrum of classical music, jazz, world music, drama and arts discussions. It focuses on presenting live and specially recorded music from across the UK and beyond, including contributions from the BBC’s own performing groups. BBC Radio 4 £69.9m BBC Radio 4’s remit is to use the power of the spoken word to offer programmes of depth which are surprising, searching, revelatory and entertaining. The network aims to offer in-depth and thoughtful news and current affairs and seeks to engage and inspire its audience with a rich mix of factual programmes, dy.drama, readings and come BBC Radio £51.5m BBC Radio Five Live broadcasts live news and sport 24 hours a day, aiming to present events as they happen in a modern, dynamic and accessible style. It sets out to cover national and depth, using wide-ranging analysis tertain and involve news and sports lds. e, ons and portfolio of sports rights. Five Live international subjects in and debate to inform, en fans of all ages, with particular emphasis on 25–44 year o The network also provides extensive live events coverag supported by the BBC’s global newsgathering operati BBC Five £1.7m BBC Five Live Sports Extra is a part-time extension of BBC ice of action from lready owned by the BBC by offering alternative commentaries to those provided on Five Live. Live Sports Extra Radio Five Live, aimed at bringing a greater cho to sports fans. It extracts more value for licence payers sports rights a 1Xtra £5.1m 1Xtra aims to play the best of contemporary black music a strong emphasis on delivering high-quality live mus supporting new British artists. 1Xtra also brings listeners a bespoke news service, regular discussion programmes a specially commissioned , with ic and nd documentaries, plus information and advice relevant to the young target audience, particularly – rities.although not exclusively – those from ethnic mino BBC Annual report and accounts 2003/0418 - 45 -
  47. 47. The Communications Market 2004 – Radio Station Spending 2003-04 Remit19 BBC 6 Music £4.1m BBC 6 Music offers lovers of popular music current releases outside the mainstream, new concert and session tracks, and unique access to the work of artists from the last 40 years through the BBC Sound Archive. It aims to provide a social music news, documentaries and providing interactive content. and cultural context through debate, and is committed to BBC 7 £4.3m BBC 7 is a speech-based service providing pure ain to attract ch radio. The network offers comedy, drama and readings, mainly from the . It also aims to be the home of children’s speech radio, with daily live programming for youngsters. entert ment a new audience to spee BBC archive BBC Asia Network BBC Asian Network offers music, n entertainment and drama for British primarily in English but by UK Asian n £4.1m ews, sport, debate, Asians. It broadcasts also in a range of languages spoken s. It aims to be the main forum for debating issues concerning British Asian communities. Na Regional and Local Radio £133.4 Stations aim to reflect their local area or nation, broa a range of output fo tional dcasting cused on speech Source: BBC Figure 39: Audience profile of BBC radio stations20 BBC Radio 2 Radio 4 Radio Five Live Radio 7 oportionof C1 BBC Asian Network UK Radio 1 Radio Five Live Sports Extra1Xtra reasingpr AB Radio 3 Inc Radio 6 Music Increasingly female 19 BBC Annual report and accounts 2003/04 20 Note: In each of the profile charts the size of the circles indicate the relative number of adult listening hours - 46 -
  48. 48. The Communications Market 2004 – Radio BBC BBC Asian Network UK Radio 2 Radio 3 Radio 4 1Xtra Inc Radio 1 creasingly female Radio Five Live Radio Five Live Sports Extra Radio 6 Music Radio 7 In reasingproporti 35+ onof Source: Ofcom / RAJAR Q1 2004 e wor Asian Network and Radio 4 h (figure 39). On the whole the Listening to th BBC Net k stations is more prevalent among men with only the aving a noticeably higher proportion of female listeners BBC Network stations tend to attract older listeners. Figure 40: The BBC’s local radio and nations’ radio services Source: BBC/Ofcom - 47 -
  49. 49. The Communications Market 2004 – Radio Capital Radio Group wns 22 t d has few interests outside radio. It has been t ldin ta entur 2003 it gained control of Cho stake). Capital also operates a numb E Digit as ma station, joint In January 2004 in response between GWR and Capital R t wa disc Figure 41: Map of Capital R Capital o analogue s ui ations an pursuing a stra including Capi egy of b l FM, C g brands targeted at different segments of the audience y in the North and Midlands and Xfm. In November ice FM in London (having previously owned a minority er of digital radio multiplexes, some in partnership with alEmap (C Disney al). It h a digital de a move into children’s radio through the Capit venture with Disney. to press speculation regarding “formal discussions adio”, GWR issued a formal notice to the stock market stating that i s not in ussions with Capital. adio Group analogue radio stations Source: Ofcom * Note: Beat is marketed as part of the Capital FM Network. However, unlike the other stations in the brand it has a specialist youth oriented format - 48 -
  50. 50. The Communications Market 2004 – Radio Figure 42: Positioning of Capital Radio Group’s radio brands Capital Xfm Choice Capital FM Network Capital Gold NetworkCapital Disney Century Network Increasingly female Increasingproportion ofABC1 Capital Capital FM Network Choice Network Capital Disney Century Network Xfm Increasingly female Increasingproport of35+ Capital Gold ion Source: Ofcom / RAJAR Q1 2004 Capital see their brands as a key to their business, “To drive the value of our business and to position Capital Radio for growth, we recognise the need for a complementary portfolio of radio stations in our broadcasting areas” 21 . Their stated strategy for long-term future growth includes investing in brands and expanding them onto new platforms, exploiting new technologies and pursuing strategic acquisitions. 21 Capital Radio plc Annual report 2003 - 49 -
  51. 51. The Communications Market 2004 – Radio Chrysalis Radio Originally a music publishing and recording company, Chrysalis is a relative newcomer to the radio industry. It owns 8 analogue stations, with three brands (Heart, Galaxy and LBC), all of which re large scale. In June 2004 it sold its stake in the Telford FM stations to the sition of most listened to Digital Radio licences and the digital only station The Arrow Figure 43: Map of Chrysalis Radio analogue radio stations a Midlands News agency. The company is growing share organically and has been successful in doing so - eart in London is vying with Capital FM for the poH commercial station in London - and the recently acquired and revamped22 LBC stations are also growing audiences. The company has said that, following the sale of its TV business, it will be in a strong position to look for acquisitions in the UK adio sector.R Chrysalis also has a 39% stake in MXR, which holds several regional Source: Ofcom 22 LBC was acquired in September 2002 for £23.5m and was relaunched on 6 January 2003 - 50 -
  52. 52. The Communications Market 2004 – Radio Figure 44: Positioning of Chrysalis Radio’s radio brands Chrysalis Galaxy Network Heart Network LBC Network Increasingly female Increasingproportionof ABC1 Chrysalis Galaxy Network LBC Network Heart Network Increasingly female Increasingproportionof 35+ Source: Ofcom / RAJAR Q1 2004 Chrysalis emphasises the importance of managing and extending their portfol brands in their annual report. io of - 51 -
  53. 53. The Communications Market 2004 – Radio Emap Emap Performance manages the Emap group’s music brands covering radio magazines, digital television and branded products and events. Within this, E says that radio remains its core bu , music map siness. Emap also has major interests in dio stations including Magic, Kiss and the Big City network dio radio ne d magazine brands into analogue radio for the first time. The station ocal multiplexes, either in its own ght or in partnership with Capital or The Wireless Group. Figure 45: Map of Emap’s analogue radio stations magazine publishing, both consumer and B2B and has significant media interests in France. he group owns 18 UK raT (comprising the large traditional commercial FM stations) in the North of England, where it is the market leader. The company is also building its magazine linked ra stations and its other radio brands on a quasi-national basis on digital radio and via TV. It recently won the third West Midlands regional licence for Kerrang!, extending o of its digital an launched in June 2004. Emap also operates a number of Digital Radio l ri Source: Ofcom - 52 -
  54. 54. The Communications Market 2004 – Radio Figure 46: Positioning of Emap’s radio brands ultiple platforms, for example Mojo, Q and Heat, all established Emap magazine rands, launched as radio stations during 2003 and joined Kerrang! and Smash Hits which were magazine brands launched as radio stations in the previous year The Hits radio station was a brand extension from television and was launched as a sister station to the eponymous music television station Emap Kiss Big City Network Q Magic Network Kerrang! Mojo Smash Hits The Hits Increasingly female Increasingproportionof 35+ Emap The Hits Big City Network Kiss Q Magic Network Kerrang! Mojo Smash Hits Increasingly female Increasingproportionof ABC1 Source: Ofcom / RAJAR Emap Performance has extended a number of Emap’s magazine brands across m b - 53 -
  55. 55. The Communications Market 2004 – Radio GMG Radio (Guardian Media Group) t. Its he company owns five stations and operates three brands – Jazz FM (which it zz o holds an 18% stake in MXR which holds several regional Digital Radio cences. The Guardian Media Group (GMG) has acquired a number of radio stations in the past couple of years and is now the sixth largest player in the UK radio marke management has stated that it is looking for further radio acquisitions. T acquired in 2002), Real Radio (Adult mainstream and chat, targeted at a 35-44 year- old audience) and the recently renamed Smooth FM in the North West (formerly Ja FM). GMG als li The Group’s status as a trust means that it cannot itself be the target of an acquisition. Figure 47: Map of GMG’s analogue radio stations Source: Ofcom - 54 -
  56. 56. The Communications Market 2004 – Radio GWR Group cal stations plus the only national FM commercial radio licence, Classic FM. During 2003 it disposed of its international radio interests. The local stations operate in medium and small towns across the East of England, the Midlands, the South West and North Wales. The company has no stations in the large metropolitan areas (although it did formerly own LBC), which means that it has generally faced less competition than some of the other major groups. Around a fifth of the GWR’s revenue is derived from Classic FM, with the majority of the rest from other UK Radio stations23 . The group sold its AM “Classic Gold” “network” to UBC, but retains a stake in its former network. GWR also owns Digital One the UK National Digital Radio multiplex holder and has been awarded a number of local multiplex licences. Figure 48: Map of GWR’s analogue radio stations GWR has grown by acquisition and now owns 34 lo Source: Ofcom 23 Classic FM provided 21.9% of GWR group revenues in 2003/04 and the Local Radio Group provided 69.3%, Source: GWR Group Plc Annual Report 2004 - 55 -
  57. 57. The Communications Market 2004 – Radio The Daily Mail and General Trust (DMGT) which owns 29.9% of GWR, won two radio cences in Australia in the first quarter of 2004. The group bid $106 million (c.£43.8 969 which that it was not in discussions with Capital. : Positioning of GWR’s radio brands li million) for a new commercial FM radio licence to serve Sydney at an Australian Broadcasting Authority auction. The group also obtained a new commercial FM radio licence to serve Brisbane for $80 million. The new stations are likely to launch in 004 using the infrastructure of DMGT's existing Sydney station, Nova2 was launched in April 2001. In January 2004 in response to press speculation regarding “formal discussions between GWR and Capital Radio”, GWR issued a formal notice to the stock market tatings Figure 49 GWR Classic FM Planet Rock Storm The Mix Network Core Increasingly female Increasingproporti ABC1 onof GWR The Mix Network Core Classic FM Storm Planet Rock Increasingly female Increasingproportionof 35+ ource: OfcomS / RAJAR he Classic FM brand has been extended across a number of different media with ere now being Classic FM TV, Classic FM branded CDs and a DVD, books, sponsored concerts and a Classic FM branded DAB digital radio set. T th - 56 -
  58. 58. The Communications Market 2004 – Radio Saga Radio In 2001, after a number of attempts at bidding for analogue licences, Saga Radio launched the second regional licence for the West Midlands. This was followed by a aunch in the Eal st Midlands in 2003. The third Saga station will launch in Glasgow igure 50: Map of Saga’s analogue radio stations later in 2004. Saga stations are also available on a number of DAB digital radio multiplexes including London and Glasgow. The company also operates the Primetime national DAB digital radio station on Digital One, targeting “50-something” audiences. F Source: Ofcom - 57 -
  59. 59. The Communications Market 2004 – Radio Scottish Radio Holdings Scottish Radio Holdings (SRH) owns 20 analogue stations, including the market leaders in each of the major Scottish cities. In recent years the company has expanded south of the border, with the Vibe Dance brand in the East of England and around the Severn Estuary and Wave 105 around the Solent and into Northern Ireland, with the acquisition of Downtown Radio. In January 2004 Emap acquired 29.9% of the company. Figure 51: Map of SRH’s analogue radio stations Source: Ofcom - 58 -
  60. 60. The Communications Market 2004 – Radio Scottish Media Group Rock (which replaced Liquid) and The Groove which Scottish Media Group’s (SMG’S) main interest lies in the ITV licences for Scotland (Scottish TV and Grampian TV) as well an outdoor and cinema advertising. However it also owns Virgin Radio which has a national AM licence and a FM licence in London and Virgin Classic are digital only stations. Figure 52: Map of SMG’s analogue radio stations Source: Ofcom - 59 -
  61. 61. The Communications Market 2004 – Radio The Wireless Group The Wireless Group (TWG) is 20% owned by News Corporation. Following its launch the group disposed of some of its radio stations, including the Solent region’s “Wave” to SRH and “Scot FM” (now Real Radio) to GMG. In January 2004 The Wireless Group acquired Forever Broadcasting. Forever Bury), The Wolf olverhampton) and Peak FM (Chesterfield). ding the national talkSPORT station on AM. Figure 53: Map of TWG’s analogue radio stations controls three analogue radio licences: Tower FM (Bolton & (W The company now controls 16 analogue licences inclu Source: Ofcom - 60 -
  62. 62. The Communications Market 2004 – Radio UBC - Classic Gold In September 2000, GWR sold 12 of its 17 Classic Gold stations to Classic Gold Digital Ltd, a company owned 80% by UBC Media Group plc - GWR retains the other 0%. UBC paid GWR just over £2m for the stations with 5 million shares also going rtime for the network through its OPUS sales-house. BC is also part shareholder in Oneword, the national digital broadcaster. UBC on of digital and analogue n and the provision of audio and data services to the radio, internet and telecommunications industries. Figure 54: Map of UBC’s analogue radio stations 2 to GWR. GWR sold the stations on the agreement that they can buy back 55% of the new company anywhere between five and eight years after the deal was done. GWR continues to sell ai U Media’ principal business is the ownership and operati commercial radio stations, radio programme productio Source: Ofcom - 61 -
  63. 63. The Communications Market 2004 – Radio Local Radio Company ments Limited from s three shareholders. To fund the deal the Local Radio Company floated on AIM. orkshire nd along the south coast with one in Scotland. In May 2004, the Local Radio Company bought all of Radio Invest it The Local Radio Company owns 22 small local stations, concentrated in Y a Figure 55: Map of the Local Radio Company’s analogue radio stations ource: OfcomS - 62 -
  64. 64. The Communications Market 2004 – Radio Other groups There are a number of other groups operating commercial radio stations across the UK. The stations owned by individual groups tend to be based in the same broad geographical area. Some of these groups have other interests in addition to radio particularly in local ewspapers e.g. the Kent Messenger Group, CN Group and Tindle have localn newspaper interests, Milestone group has television and publishing interests. Oth are primarily radio groups e.g. Lincs FM or UKRD. Figure 56: Other UK radio groups ers Source: Ofcom - 63 -
  65. 65. The Communications Market 2004 – Radio 6. The citizen-consumer – listening rease . Over the last 5 years (Q2 1999 to Q2 2004) total listening has grown by 7% (figure 57). Figure 57: Total listening hours Source: RAJAR Over two thirds of all radio listening occurs in the home (figure 58) with the majority of that listening being at breakfast, highlighting the importance of the breakfast shows to the financial performance of radio stations. The proportions of where people listen to radio have stayed broadly constant since 1999 when the current RAJAR series began. Figure 58: Where people listen to radio Source: RAJA continues to increase 6.1 Total radio listening is on the inc There has been an overall upward trend in total radio listening in recent years 1072 10471053 1088 1030 1000 920 940 960 980 1000 1020 1040 1060 1080 1100 1120 Q2 '99 Q3 '99 Q4 '99 Q1 '00 Q2 '00 Q3 '00 Q4 '00 Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Hours ('000s) 1072 10471053 1088 1030 1000 920 940 960 980 1000 1020 1040 1060 1080 1100 1120 Q2 '99 Q3 '99 Q4 '99 Q1 '00 Q2 '00 Q3 '00 Q4 '00 Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Hours ('000s) R Q1 2004 Work 13% Home 69% Car 16% Elsewhere 2% - 64 -
  66. 66. The Communications Market 2004 – Radio The BBC networks take the largest share of breakfast listening, but by mid-morning, ry for example on average the audience in the evening is 30% of e size of the breakfast show audience, for Virgin it is 38% for talkSPORT it is 45% hat audience Source: RAJAR Q1 2004 On average radio listeners listen to 22.9 hours of radio per week (adults listen to 24.7 hours25 ), although average listening fluctuates the trend has been upwards with listening having increased 5 per cent from 21.9 hours since June 2000. Children listen to the least radio with an average of 11.9 hours per week with ase as people get older, particularly with people over the age of 44. On average, men’s weekly radio listening is higher than women’s and C2DE’s higher than ABC1s (figure 60). Adult listening per household has increased over the last 5 years, between 1999 and 2003 adult radio listening by household increased from 41.2 hours per household per week to 43.5 hours, a 6% increase. local commercial stations match the BBC’s networks’ audiences. While listening generally declines during the day, the relative audience size by time of day does va by station (figure 59) th and for Classic FM it is 60%24 . In comparison for BBC local and regional stations t proportion is 23%. igure 59: When people listen - weekly averageF listening tending to incre 24 Source: RAJAR Q1 2004 25 Note: These figures are for Q1 2004, the average adult listening figure from RAJAR was 24.4 hours in Q2 2004 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Breakfast Peak Mid Morning Afternoon PM Drive Evening Overnight '000s of listeners All BBC Network Radio BBC Local/Regional All National Commercial All Local Commercial - 65 -
  67. 67. The Communications Market 2004 – Radio Figure 60: Average weekly listening by demographic Source: RAJAR Q1 2004 Average weekly listening is highest for the BBC (figure 61), with BBC network radio getting the most listening at 16 hours, within which Radio 2 and Radio 4 get the most listening with 12.9 and 12.8 hours respectively. BBC local and regional radio listening is boosted by older listeners (55+) who listen to those stations on average for 14.9 hours per week, significantly higher than the listening in other age brackets. Figure 61: Average weekly listening over time Source: RAJAR, all adults (aged 15+) 48% of all radio listening is by men, with 45% by women and 7% by children26 . Men also form the majority of the BBC’s listeners – 51%. The BBC is listened to less by children than the commercial sector; children only listen to 3% of all BBC hours compared to 11% of all commercial hours (figure 62). 26 This compares to split of 41% men, 44% women, and 15% children in the RAJAR population 21.6 22.5 23.5 26.6 11. 23.023.326.2 0 5 10 15 20 25 30 Children 15-24 25-34 35-44 45-54 55-64 65+ Adult Men Adult Women Children ABC1 Adults C2DE Adults Hours 26.926.4 27.5 11.99 Average listening 22.9 hours 17.0 17.3 17.0 17.4 17.6 15.5 15.2 15.415.4 15.4 .8 23.9 15.3 15.8 15.8 15.2 14.9 15.4 15.3 14.7 14.3 14.4 8.3 7.67.77.87.77.6 23.6 24.6 24.0 24.4 10.1 11.8 11.8 11.6 11.7 11.5 5 7 9 11 13 15 17 19 21 23 25 Q2 '99 Q3 '99 Q4 '99 Q1 '00 Q2 '00 Q3 '00 Q4 '00 Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Averag weekly hourse 14 All BBC All BBC Network Radio All Commercial All Local Commercial All National Commercial All Radio BBC Local/Regional 17.0 17.3 17.0 17.4 17.6 15.5 15.2 15.415.4 15.4 .8 23.9 15.3 15.8 15.8 15.2 14.9 15.4 15.3 14.7 14.3 14.4 8.3 7.67.77.87.77.6 23.6 24.6 24.0 24.4 10.1 11.8 11.8 11.6 11.7 11.5 5 7 9 11 13 15 17 19 21 23 25 Q2 '99 Q3 '99 Q4 '99 Q1 '00 Q2 '00 Q3 '00 Q4 '00 Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Averag weekly hourse 14 All BBC All BBC Network Radio All Commercial All Local Commercial All National Commercial All Radio BBC Local/Regional - 66 -
  68. 68. The Communications Market 2004 – Radio Figure 62: Split of listening hours by gender Children 7% Adult Men 48% Adult Women 45% Children 3% Adult Men 51% Adult Women 46% Children 11% Adult Women 44% Adult Men 45% Total BBC Commercial Source: RAJAR Q1 2004 Across the different age groups, over 65s listen to the most radio accounting for 19% of all hours, under 15s with 7% listen to radio the least27 . Older listeners are particularly attracted to the BBC with almost half (47%) of all BBC hours listened to by over 55s. In contrast commercial radio attracts younger listeners with almost half (45%) of all commercial listening being done by those under the age of 35, compared to 22% of all BBC hours (figure 63). Figure 63: Split of listening hours by age Children 7% 15-24 13% 25-34 13% 35-44 17% 45-54 16% 55-64 15% 65+ 19% 15-24 8% 25-34 11% 35-44 15% 45-54 16% 55-64 19% 65+ 28% Children 3% Children 11% 15-24 18% 25-34 16% 35-44 19% 45-54 15% 55-64 11% 65+ 10% Total BBC Commercial Source: RAJAR Q1 2004 Listening is split evenly across socio-economic classifications28 (figure 64). The BBC attracts a larger proportion of ABC1 listeners, while commercial radio attracts a higher proportion of C2DEs. In the RAJAR population there are 17% over 65s, 12% are 55 to 64, 13% are 45 to 54, 16% are 35 to 44, 14% are 25 to 34, 13% are 15 to 24 and 15% are under 15s, re 51% ADC1 Adults and 49% C2DE Adults 27 28 In the adult RAJAR population there a - 67 -

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