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'UK Commercial Radio Sector: Current Indicators & Forecasts: December 2007' by Grant Goddard

The document provides an analysis of the UK commercial radio sector, detailing revenue trends, profitability, and listening patterns from 1990 to 2007. It highlights that commercial radio revenues have faced a decline since peaking in the early 2000s, and most local stations struggle to achieve profitability. Additionally, the document notes shifts in audience demographics, indicating that while radio listening remains robust overall, commercial radio is losing ground in key age groups.

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UK COMMERCIAL RADIO SECTOR: CURRENT INDICATORS & FORECASTS Grant Goddard radio specialist www.grantgoddard.co.uk December 2007
Grant Goddard Agenda radio specialist  CURRENT INDICATORS  UK commercial radio revenues  UK commercial radio profitability  UK local commercial revenue yields  UK commercial radio listening  BBC radio listening  Digital radio listening  FORECASTS  Assumptions  UK radio listening forecasts  UK commercial radio listening forecasts  UK commercial radio revenues forecasts UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 2
Grant Goddard radio specialist  CURRENT INDICATORS UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 3
Grant Goddard UK commercial radio revenues radio specialist COMMERCIAL RADIO REVENUES (£m 2006 prices) 700 Branded Content 600 National Advertisers Local Advertisers 500 400 300 200 100 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 0 [source: Radio Advertising Bureau] 2005 revenues 2006 revenues Q1 2007 revenues Q2 2007 revenues Q3 2007 revenues down 4% year-on-year down 5% year-on-year down 2% year-on-year up 1% year-on-year up 5% year-on-year UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 down 7% year-on-year (constant prices) down 8% year-on-year (constant prices) 4
Grant Goddard UK commercial radio revenues radio specialist NUMBER OF LOCAL COMMERCIAL RADIO STATIONS 350 COMMERCIAL RADIO REVENUES (£m 2006 prices) 700 [source: Ofcom] 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1974 2007 2005 2003 2001 1999 0 1997 0 1995 100 1993 50 1991 200 1989 100 1987 300 1985 150 1983 400 1981 200 1979 500 1977 250 1975 600 1973 300 [source: Radio Advertising Bureau] The 1990s were a period of commercial radio growth because of a fortuitous combination of:  Unprecedented expansion of the number of local commercial radio stations during the 1990s  Launch of the Radio Advertising Bureau in 1992  Launch of the UK’s first national commercial radio stations in 1992, 1993 and 1995  Early consolidation in the industry reduced the number of commercial buying points  The self-destruction of market leader BBC Radio One in 1993 UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 5
Grant Goddard UK commercial radio revenues radio specialist AVERAGE REVENUES PER COMMERCIAL RADIO STATION (£m 2006 prices) 10 AVERAGE REVENUES PER COMMERCIAL RADIO STATION (£m 2006 prices) 2.0 9 8 1.5 7 6 5 1.0 4 3 0.5 2 National Advertisers 1 Local Advertisers 0 [source: Radio Advertising Bureau/Ofcom/Grant Goddard] 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1974 0.0 [source: Radio Advertising Bureau/Ofcom/Grant Goddard]  Average revenues per radio station have remained relatively constant since the 1990s  Local stations have increasingly concentrated on national advertisers, to the neglect of local advertisers  National advertisers have proven more susceptible to cyclical trends and fads (ie: the internet)  Industry revenues from national advertisers are now more than twice the revenues from local advertisers UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 6
Grant Goddard UK commercial radio profitability 60 radio specialist PROFITABILITY OF LOCAL COMMERCIAL RADIO STATIONS LAUNCHED 1996-2002 (% of stations) 50 40 30 20 10 0 Broke even Broke even in 3 Broke even in w ithin 3 years to 6 years more than 6 years Ever broke even Never broke even No data [source: Ofcom] PROFITABILITY OF LOCAL COMMERCIAL STATIONS coverage area average profits % of stations average population (£k per profitable station age ('000) annum) (years) <50 -3 58 6 50-150 -20 36 8 150-250 65 48 10 250-500 400 65 15 500-1000 865 95 21 1000-5000 1,200 89 15 >5000 1,400 73 14 [source: Ofcom]  The majority of local radio stations launched since 1996 have not yet broken even  Small stations serving populations under 150,000 rarely achieve profitability  Stations’ budgets are dominated by fixed costs (average 70% of total costs)  50% of stations either lose money or make a profit of less than £100,000 per annum  40% of all commercial radio stations lose money UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 7
Grant Goddard UK commercial radio revenue yields RADIO INDUSTRY REVENUE YIELD (£ 2006 prices per 1000 hours listened) radio specialist 30 25 20 15 10 5 0 1999 2000 2001 2002 2003 2004 2005 2006 [source: Radio Advertising Bureau/RAJAR/Grant Goddard] COMMERCIAL RADIO STATION REVENUES revenue (£ per % of total % of industry quarter) commercial revenues stations <250k 63 11 250k-500k 13 10 500k-1m 11 16 >1m 13 63 [source: Ofcom]  The radio industry’s revenue yield has fallen from its peaks in 2000 and 2004  There is a ‘triple whammy’ impact for the industry – not only are total revenues and total hours listened falling, but the revenue yield achieved from each 1000 hours listened is falling too  The ‘cost per thousand’ to advertisers has similarly been falling  A small number of large stations generate most of the commercial radio industry’s revenues UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 8
Grant Goddard UK commercial radio listening radio specialist SHARE OF RADIO LISTENING (% ) SHARE OF RADIO LISTENING (% ) 60 Local Commercial Radio BBC Radio One 50 40 50 40 30 30 20 20 BBC Radio [source: RAJAR] 2007Q2 2006Q2 2005Q2 2004Q2 2003Q2 2002Q2 2001Q2 2000Q2 1999Q2 1998Q2 1997Q2 1996Q2 1995Q2 1994Q2 0 1993Q2 10 2007Q2 2006Q2 2005Q2 2004Q2 2003Q2 2002Q2 2001Q2 2000Q2 1999Q2 1998Q2 1997Q2 1996Q2 1995Q2 1994Q2 1993Q2 10 0 Commercial Radio [source: RAJAR]  BBC Radio lost share dramatically in 1993/4 as a direct result of radical programming changes at Radio One  Local commercial radio benefited directly from this huge loss of listening to BBC Radio One in 1993/4  However, since then, commercial radio has not managed to retain this audience ‘windfall’, and its listening has been eroded by defections to BBC Radios One and Two UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 9
Grant Goddard BBC Radio One listening radio specialist E ndi ng BBC RADIO ONE: % SHARE 30% M ar 1999 E ndi ng 12 BBC RADIO ONE: AVERAGE HOURS/WEEK 2000 10 E ndi ng M ar M ar 2001 E ndi ng 20% M ar 2001 E ndi ng 8 M ar 2002 2002 E ndi ng E ndi ng 15% M ar 2003 6 M ar 2003 E ndi ng E ndi ng M ar 10% 2004 1999 M ar 2000 E ndi ng M ar E ndi ng M ar 25% E ndi ng M ar 4 2004 E ndi ng E ndi ng M ar M ar 2005 5% E ndi ng 2005 2 E ndi ng M ar M ar 2006 0% E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2006 0 [source: RAJAR] E ndi ng 0-14 2007 15-24 25-34 35-44 45-54 55-64 65+ M ar 2007 [source: RAJAR]  The audience for Radio One is becoming significantly older  In the early 1990s, the BBC had re-positioned Radio One as a youth radio station  Since then, the station’s audience is increasingly dominated by 25-34 year olds UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 10
Grant Goddard BBC Radio Two listening radio specialist E ndi ng BBC RADIO TWO: % SHARE 25% 1999 E ndi ng BBC RADIO TWO: REACH (% ) M ar 40% M ar 1999 E ndi ng E ndi ng M ar 2000 M ar 35% 2000 E ndi ng 20% M ar 2001 E ndi ng M ar 30% 2001 E ndi ng M ar 15% 2002 E ndi ng M ar 25% 2002 E ndi ng M ar 2003 10% E ndi ng 20% M ar 2003 E ndi ng M ar 2004 E ndi ng M ar 5% E ndi ng 15% M ar 2004 E ndi ng 10% M ar 2005 E ndi ng M ar 2005 5% E ndi ng M ar 2006 0% E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR] 2006 0% E ndi ng 0-14 15-24 25-34 35-44 45-54 55-64 65+ M ar 2007 [source: RAJAR]  The audience for Radio Two is becoming significantly younger  The station’s audience had been dominated by 50+ year olds  Radio Two has now made huge inroads into the 25-34 and 35-44 age groups UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 11
Grant Goddard BBC Radio Four listening radio specialist E ndi ng BBC RADIO FOUR: % SHARE 25% M ar 1999 18 BBC RADIO FOUR: AVERAGE HRS/WEEK E ndi ng M ar 2000 M ar 2001 E ndi ng M ar 15% 2000 E ndi ng 14 M ar 2001 12 E ndi ng M ar 2002 10 E ndi ng M ar 2003 10% E ndi ng M ar 2003 8 E ndi ng M ar 2004 M ar 6 2004 E ndi ng M ar 5% 2005 E ndi ng M ar E ndi ng 4 M ar 2 E ndi ng 2005 M ar 2006 0% E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR] 1999 M ar 2002 E ndi ng M ar E ndi ng 16 E ndi ng 20% E ndi ng 2006 0 E ndi ng 0-14 15-24 25-34 35-44 45-54 55-64 65+ M ar 2007 [source: RAJAR]  Radio Four has not succeeded in attracting listening from younger age groups  The station has firmly consolidated its position amongst over-55’s, mainly through them spending more time with the station  Radio Four’s increasing dominance of over-55’s makes it harder for commercial radio to try and launch (belatedly) stations targeting this demographic UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 12
Grant Goddard UK commercial radio listening E ndi ng COMMERCIAL RADIO: % SHARE 80% radio specialist 1999 E ndi ng M ar 70% 2000 E ndi ng M ar 60% 2001 E ndi ng M ar 50% 2002 E ndi ng 40% M ar 2003 E ndi ng 30% M ar 2004 E ndi ng 20% M ar 2005 E ndi ng 10% M ar 2006 0% E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR] E ndi ng COMMERCIAL RADIO: AVERAGE HOURS/WEEK M ar 18 M ar 1999 E ndi ng M ar 2000 16 E ndi ng M ar 2001 14 E ndi ng M ar 12 2002 E ndi ng 10 M ar 2003 8 E ndi ng M ar 2004 6 E ndi ng M ar 4 2005 E ndi ng 2 M ar 0 E ndi ng 2006 M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR]  Commercial radio is losing share dramatically in the key 25-34 and 35-44 age groups  This loss in share is attributable mainly to lower listening levels, rather than reach, amongst these age groups and similarly amongst 15-24 year olds  By 2008, it is likely that 15-24 year olds will remain the only adult demographic in which commercial radio has the dominant share of listening (over the BBC) UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 13
Grant Goddard UK all radio listening radio specialist 100% M ar 1999 E ndi ng ALL RADIO: AVERAGE HOURS/WEEK E ndi ng ALL RADIO: REACH (% ) 30 M ar 1999 E ndi ng E ndi ng 95% M ar 90% E ndi ng 2000 M ar 2000 25 E ndi ng M ar M ar 2001 2001 85% E ndi ng M ar 80% 20 E ndi ng M ar 2002 2002 E ndi ng 75% M ar 70% E ndi ng 15 E ndi ng 2003 M ar 2004 65% M ar 2003 E ndi ng M ar 10 2004 E ndi ng 60% E ndi ng M ar M ar 2005 E ndi ng 55% E ndi ng E ndi ng M ar 50% 2005 5 M ar 2006 2006 M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR] 0 E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR]  Radio listening has held up remarkably well to the challenge of new media (online, personal music players, games)  Radio’s key characteristics as a portable medium (compared to TV or computers) and as a secondary medium (to accompany primary activities such as work or driving) make it more resilient than other traditional media  Radio remains firmly a ‘mass medium’ reaching 90%+ of the adult population each week UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 14
Grant Goddard UK all radio listening – males radio specialist E ndi ng ALL RADIO: REACH (% ) 100% M ar 1999 30 ALL RADIO: AVERAGE HOURS/WEEK M ar 90% E ndi ng 2000 2000 E ndi ng M ar 2001 2001 E ndi ng 1999 M ar 25 M ar 85% M ar E ndi ng E ndi ng 95% E ndi ng 20 E ndi ng 80% M ar M ar 2002 2002 75% E ndi ng M ar 15 E ndi ng M ar 2003 2003 70% E ndi ng M ar 65% 2004 E ndi ng 10 M ar 2004 E ndi ng E ndi ng 60% M ar 2005 55% M ar 5 2005 E ndi ng E ndi ng M ar M ar 50% 2006 0-14 15-24 male 25-34 male 35-44 male 45-54 male 55-64 male 65+ male E ndi ng M ar 2007 [source: RAJAR] 0 2006 0-14 male 15-24 male 25-34 male 35-44 male 45-54 male 55-64 male 65+ male E ndi ng M ar 2007 [source: RAJAR]  Radio’s weekly reach of 15-24 year old males has remained consistent  Hours listened to all radio by 15-24 year old males is in decline, as their time is increasingly constrained by competing entertainment sources (online, mobile phones, socialising)  Radio needs to produce compelling content for this demographic to arrest the decline UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 15
Grant Goddard Digital radio listening 16% radio specialist DIGITAL RADIO HRS LISTENED BY PLATFORM (% ) 8% LISTENING VIA DAB LISTENING VIA TV LISTENING VIA INTERNET DIGITAL UNSPECIFIED 14% 12% DIGITAL RADIO HRS LISTENED BY PLATFORM (% ) COMMERCIAL RADIO 7% BBC RADIO 6% 10% 5% 8% 4% 6% 3% 4% 2% 2% 1% 2007Q2 2007Q1 2006Q4 2006Q3 2006Q2 2006Q1 2005Q4 2005Q3 2005Q2 2005Q1 2004Q4 0% [source: RAJAR] 0% LISTENING VIA DAB LISTENING VIA TV LISTENING VIA INTERNET DIGITAL UNSPECIFIED [source: RAJAR]  Digital radio listening accounts for 13% of all radio listening  DAB radios are the most significant source of digital listening  The BBC dominates DAB radio listening  Listening to radio via the internet remains relatively insignificant (~1%) UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 16
Grant Goddard Digital-only radio stations radio specialist SHARE OF LISTENING TO DIGITAL-ONLY STATIONS (%) LISTENING TO DIGITAL-ONLY RADIO STATIONS 14% reach (%) all adults 12% 100% hours (%) all radio Commercial BBC 10% 75% 8% 50% 6% 4% 25% 2% 2007Q2 2007Q1 2006Q4 2006Q3 2006Q2 2006Q1 2005Q4 2005Q3 2005Q2 2005Q1 2004Q4 2004Q3 2004Q2 2004Q1 2003Q4 2003Q3 2003Q2 2007Q2 2007Q1 2006Q4 2006Q3 2006Q2 2006Q1 2005Q4 2005Q3 2005Q2 2005Q1 2004Q4 2004Q3 2004Q2 2004Q1 2003Q4 2003Q3 2003Q2 2003Q1 [source: RAJAR] 2003Q1 0% 0% [source: RAJAR]  Although listening to digital radio accounts for 13% of all radio listening, 72% of that digital listening is to simulcasts of analogue stations  Less than 4% of ALL listening is to radio stations exclusively available via digital  Commercial radio’s share of listening to digital-only radio stations is falling, while the BBC (despite its later digital launch) is soon likely to dominate the digital radio platform, just as it already dominates the analogue radio platform  The BBC offers only 5 digital-only stations, all available nationally; whereas commercial radio offers 32 digital-only stations, 9 of which are national, with the remainder available on regional/local multiplexes UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 17
Grant Goddard Digital radio industry forecasts radio specialist DAB CUMULATIVE SET SALES (millions) 25 DIGITAL RADIO LISTENING (% of total listening) 100 20 80 15 60 10 40 5 20 RAJAR Platform Survey Ofcom forecast GfK actual [source: GfK & DRDB] 2020 2019 2018 2017 2016 2015 2014 2013 2010 2012 2009 2011 2008 2010 2007 2009 2006 2008 2005 2007 2004 2006 2003 2005 2002 0 2004 DRDB forecast 0 [source: RAJAR & Ofcom]  No analogue switch-off date has yet been fixed for radio  Radio industry projections for DAB receiver sales and digital radio listening are both ambitious  Growth rates to date do not exhibit exponential characteristics UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 18
Grant Goddard DAB radio receiver sales radio specialist DAB RADIO RECEIVER CUMULATIVE SALES ('000s) 6,000 YEAR-ON-YEAR CHANGE IN DAB RADIO SALES (%) 200 12-month moving average 5,000 150 4,000 100 3,000 2,000 50 1,000 Apr-07 Feb-07 Dec-06 Oct-06 Aug-06 Jun-06 Apr-06 Feb-06 Dec-05 Oct-05 Aug-05 Jun-05 Apr-05 Feb-05 Mar-07 Dec-06 Sep-06 Jun-06 Mar-06 Dec-05 Sep-05 Jun-05 Mar-05 Dec-04 Sep-04 Jun-04 Mar-04 Dec-03 Sep-03 Jun-03 Mar-03 Dec-02 [source: GfK/DRDB] Dec-04 0 0 [source: GfK/DRDB]  The growth rate of DAB receiver sales is not emulating the experience of Freeview in TV  By May 2007, the year-on-year annualised growth rate of DAB radio receiver sales had fallen to 13%  Analogue and digital broadcasts are likely to be required simultaneously for some time UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 19
Grant Goddard BBC online listening radio specialist HOURS LISTENED PER QUARTER TO BBC RADIO ONLINE 50,000,000 STREAMING ON DEMAND 40,000,000 PODCASTS 30,000,000 20,000,000 10,000,000 2007Q2 2007Q1 2006Q4 2006Q3 2006Q2 2006Q1 2005Q4 2005Q3 2005Q2 2005Q1 2004Q4 2004Q3 2004Q2 2004Q1 2003Q4 0 [source: BBC]  The BBC has pioneered the offer of radio programming online as simulcast streams, on-demand shows and podcasts  Usage data exhibits an almost linear growth pattern for these services, despite substantial cross-promotion across BBC outlets  BBC Online listening (globally) is currently 72m hours per quarter, whereas total BBC radio listening (in the UK alone) is 7,456m hours per quarter  Commercial radio’s online offerings are not yet as developed as the BBC’s UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 20
Grant Goddard Commercial radio ‘heritage’ FM stations radio specialist COMMERCIAL HERITAGE FM STATIONS (% share listening) 30 Q2 1999 25 Q2 2007 20 15 10 5 Hallam FM 97.4 Rock FM Downtown Radio (DTR) Metro Radio Radio City 96.7 Clyde 1 FM 96.4 BRMB Key 103 (Manchester) LBC 97.3 Radio 95.8 Capital 0 [source: RAJAR, ranked by population coverage]  13% of commercial radio stations earn 63% of industry revenues  ‘Heritage’ FM stations, traditionally the ‘cash cows’ of the industry, have lost huge amounts of listening since the 1990s  Revenues of these stations (owned mainly by GCap and EMAP) are falling substantially UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 21
Grant Goddard Commercial radio ‘heritage’ AM stations radio specialist COMMERCIAL HERITAGE AM STATIONS (% share listening) 14 Q2 1999 12 Q2 2007 10 8 6 4 2 Classic Gold Bristol/Bath/Wiltshire Classic Gold Wolverhampton Magic AM (Sheffield) Magic 1152 (Newcastle) Magic 1548 (Liverpool) Clyde 2 Capital Gold Birmingham Magic 1152 (Manchester) LBC News 1152 London Capital Gold 0 [source: RAJAR, ranked by population coverage]  ‘Heritage’ AM stations have lost listening even more substantially than their FM counterparts  Commercial radio has attributed these declines to users’ preference for FM reception over AM reception  Revenues of these stations (owned mainly by GCap and EMAP) are also falling substantially UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 22
Grant Goddard Commercial radio ‘post-1990’ stations radio specialist POST-1990 COMMERCIAL STATIONS (% share listening) 7 Q2 1999 6 Q2 2007 5 4 3 2 1 London Virgin Radio London) Kismat Radio 1035 (Greater Radio Premier Christian (London) Smooth Radio Sunrise Radio (Greater London) London Choice FM XFM 104.9 Kiss 100 FM Magic 105.4 Heart 106.2 FM 0 [source: RAJAR, ranked by population coverage]  The substantial losses in listening to commercial radio FM and AM stations are not generally the result of audience fragmentation, nor of cannibalisation within the commercial radio sector  Post-heritage commercial radio stations (those launched after 1990) have benefited only marginally from the losses suffered by the heritage stations since 1999 UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 23
Grant Goddard National radio stations radio specialist NATIONAL RADIO STATIONS (% share listening) 16 Q2 1999 14 Q2 2007 12 10 8 6 4 2 Total Virgin Radio talkSPORT Classic FM Live BBC Radio 5 BBC Radio 4 BBC Radio 3 BBC Radio 2 BBC Radio 1 0 [source: RAJAR]  National commercial radio stations have not benefited from the audience losses at heritage local commercial stations  BBC Radio Two has benefited and increased its lead as the most listened to UK radio station (13m listeners per week, 164m hours per week) UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 24
Grant Goddard UK commercial radio ownership COMMERCIAL RADIO OWNERS (% share of commercial radio listening) 35 30 radio specialist 29.2 23.4 25 20 15 11.4 10.8 10 1.7 1.6 1.1 0.8 0.8 0.7 0.4 0.3 0.2 0.1 0.0 0.0 0.0 Lincs FM Group Sunrise Group UKRD Cumberland News Group Tindle Radio Kent Messenger Town & Country Northern Media Group Forward Media CanWest MediaWorks UK Absolute Radio International Laser Broadcasting UTV Radio Guardian Media Group Chrysalis/Global Radio EMAP Radio GCap Media 0 Scottish Media Group 3.4 5 The Local Radio Company 7.0 [source: RAJAR]  Ownership of commercial radio is skewed towards a small number of large groups  Two groups (GCap and EMAP) control more than half of the industry, while three groups (GCap, EMAP and Chrysalis/Global Radio) control almost two-thirds  Further industry consolidation is possible under existing ownership rules UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 25
Grant Goddard UK commercial radio industry targets radio specialist COMMERCIAL RADIO SHARE OF DISPLAY ADVERTISING SPEND (% ) 9% Radio % share RadioCentre targets [Jan07] 8% 7% 6% 5% 4% 3% 2% 1%  Digital platforms’ share of all commercial radio listening  30% by 2009, 50% by 2011 (from 13.7% in Q2 2007) 2011 2010 2009 2008 2007 2006 2005 2004 2003 RadioCentre targets [Jan07] 40 30 20 10 60% 50% 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 0 2000 Commercial radio’s share of listening versus the BBC  46% by 2009, 48% by 2011 (from 43.5% in Q2 2007) COMMERCIAL RADIO % SHARE 50 1999  Radio’s share of display advertising  7% by 2009, 8% by 2011 (from 6% in 2006) 2002 COMMERCIAL RADIO SHARE OF LISTENING (% ) 60  2001 In January 2007, the commercial radio industry adopted a five-year plan with targets for: 2000 1999 0% SHARE OF COMMERCIAL RADIO LISTENING VIA DIGITAL (% ) actual % share RadioCentre targets [Jan07] 40% 30% 20% 10% UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 2011 2010 2009 2008 2006 Q2 2007 [source: RAJAR, RAB, RadioCentre] 2005 2004 0% 26
Grant Goddard radio specialist  FORECASTS UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 27
Grant Goddard Assumptions radio specialist  Existing strategies of the commercial radio groups and the BBC will continue to be pursued  The launch of the second national digital commercial radio multiplex in 2008 will merely cannibalise existing commercial radio listening  Listening to online simulcasts of station broadcasts is included in the forecasts (as it is in RAJAR)  Listening to ‘listen again’ on-demand radio programmes is not included in the forecasts (as RAJAR)  Population changes are based on Statistics Office/Government Actuary 2004-based projections  NB: No forecasts are included for digital versus analogue listening - RAJAR data released to date is too irregular and has used differing methodologies  NB: No forecasts are included for digital versus analogue revenues – limited data released to date is not transparent UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 28
Grant Goddard Population forecast radio specialist 11,000 UK POPULATION PROJECTIONS BY AGE ('000) 10,000 2004 2005 9,000 2006 2007 8,000 2008 2009 2010 7,000 2011 2012 6,000 15-24 25-34 35-44 45-54 55-64 65+ [source: Government Actuary]  The ageing of the population benefits BBC radio, which dominates listening in the 50+ demographics  Commercial radio has very few services targeted at the 50+ demographic UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 29
Grant Goddard Total radio listening forecast radio specialist ALL RADIO - REACH (% ) ALL RADIO LISTENING (average hrs/wk/listener) 95 90.4 90.8 90.4 90.7 90.0 90.1 89.7 89.7 89.6 89.5 89.4 89.3 89.1 90 89.3 29 27 25 23.1 23.8 23 24.4 24.1 24.3 24.4 24.0 23.7 23.3 23.0 22.6 22.3 22.0 21.6 21 85 19 17 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 [source: RAJAR/Grant Goddard] 1999 15 80 [source: RAJAR/Grant Goddard]  Radio continues to be a mass medium, reaching around 90% of the adult population  Time spent listening to radio declines, in the face of competition from other media and entertainment sources UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 30
Grant Goddard Total radio listening forecast radio specialist ALL RADIO REACH: 15-24 (% /wk) 95 91.7 91.6 92.4 91.5 91.3 ALL RADIO LISTENING: 15-24 (hrs/wk) 30 90.5 89.4 89.3 89.2 89.2 89.2 89.2 89.2 89.2 90 25 20.8 21.0 85 21.6 20.9 21.4 21.0 20 80 20.2 19.7 19.2 18.6 18.1 17.6 17.1 16.7 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 15 [source: RAJAR/Grant Goddard]  The latest audience data suggests that the declining reach amongst 15-24 year olds experienced 20012005 has abated  Time spent listening to the radio continues to fall, under pressure from competing leisure opportunities UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 31
Grant Goddard Total radio listening forecast radio specialist ALL RADIO REACH: 25-34 (% /wk) 95 90.7 92.3 91.7 91.5 90.1 89.8 89.7 89.7 90.1 90 90.6 91.0 ALL RADIO LISTENING: 25-34 (hrs/wk) 30 91.5 91.9 92.4 25 21.6 22.3 22.5 22.0 21.8 22.2 22.0 21.1 20.4 20 85 80 19.7 19.0 18.4 17.7 17.1 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 15 [source: RAJAR/Grant Goddard]  Similar to the 15-24 demographic, reach is not the problem amongst 25-34 year olds and is likely to remain within a window between 90 and 93%  Time spent listening continues to decline, with competitive pressure for this age group’s time UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 32
Grant Goddard Total radio listening forecast radio specialist ALL RADIO REACH: 35-44 (% /wk) 92.9 92.5 92.6 91.2 92.0 92.5 92.0 92.1 92.3 92.4 91.5 91.7 91.9 25 90 22.3 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 15 2000 80 23.8 23.5 23.7 23.5 23.3 23.3 23.3 23.2 23.2 23.1 23.1 23.0 20 1999 85 23.0 2001 92.4 ALL RADIO LISTENING: 35-44 (hrs/wk) 30 2000 95 [source: RAJAR/Grant Goddard]  For this age group, reach remains consistent  Time spent listening remains steady too, as this demographic is under less pressure from competing leisure pursuits, and because radio is already embedded in their routine UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 33
Grant Goddard Total radio listening forecast radio specialist ALL RADIO REACH: 45-54 (% /wk) 95 90.9 91.8 ALL RADIO LISTENING: 45-54 (hrs/wk) 30 92.3 92.3 92.4 91.9 92.4 91.8 91.7 91.6 91.5 91.4 91.3 91.2 [source: RAJAR/Grant Goddard] 2012 2011 2010 23.7 23.3 22.9 22.5 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 15 2002 80 25.5 25.4 25.5 25.9 25.4 25.0 24.6 24.1 20 2001 85 2000 25 24.2 1999 90 24.9 [source: RAJAR/Grant Goddard]  Reach remains relatively constant amongst 45-54 year olds  Time spent listening is falling slightly UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 34
Grant Goddard Total radio listening forecast radio specialist ALL RADIO REACH: 55-64 (% /wk) 95 90 88.7 89.8 90.7 90.9 90.5 90.3 ALL RADIO LISTENING: 55-64 (hrs/wk) 30 91.4 91.0 91.0 90.9 90.8 90.8 90.7 90.7 25.4 26.3 26.9 26.6 26.9 27.3 26.6 26.4 26.2 26.0 25.8 25.6 25.4 25.2 25 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 15 2001 80 2000 20 1999 85 [source: RAJAR/Grant Goddard]  Reach remains constant amongst 55-64 year olds  Time spent listening is likely to oscillate between 25 and 27 hours per week UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 35
Grant Goddard Total radio listening forecast radio specialist ALL RADIO REACH: 65+ (% /wk) 95 25 90 86.1 85.9 85.5 85.9 85.7 ALL RADIO LISTENING: 65+ (hrs/wk) 30 24.6 25.5 26.6 26.5 26.6 26.4 26.1 26.0 25.8 25.7 25.5 25.3 25.1 25.0 86.8 85.8 85 83.7 84.9 84.2 83.4 20 82.7 81.9 81.2 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1999 15 80 [source: RAJAR/Grant Goddard]  Reach continues to fall as: • A greater proportion of this demographic is aged 85+ • Stations such as BBC Radio Two and BBC local radio serve this demographic less and less directly • The commercial sector has no specific offerings to attract this demographic  Time spent listening of those who continue to listen remains almost constant UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 36
Grant Goddard Commercial radio listening forecast radio specialist COMMERCIAL RADIO - REACH (% ) 90 COMMERCIAL RADIO LISTENING (average hrs/wk/listener) 20 80 70 65.2 65.2 65.5 65.1 65.2 64.2 62.8 62.1 61.9 61.6 61.3 61.0 60.6 60.3 60 15.1 15 50 15.5 15.5 15.2 15.3 15.2 15.0 14.7 14.5 14.2 14.0 13.7 13.5 13.2 40 30 [source: RAJAR/Grant Goddard]  Time spent listening to commercial radio declines significantly  As a result, commercial radio’s share (versus the BBC) continues to fall 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO % SHARE OF LISTENING 70  Commercial radio’s weekly reach continues its slow decline 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 60 50 47.8 47.0 45.9 45.5 45.2 44.6 43.5 43.1 42.9 42.6 42.3 42.0 41.7 41.4 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 37
Grant Goddard Commercial radio listening forecast 90 80 COMMERCIAL RADIO REACH: 15-24 (% /wk) 80.3 80.5 81.0 79.7 80.8 79.6 radio specialist COMMERCIAL RADIO LISTENING: 15-24 (hrs/wk) 20 75.7 75.2 75.0 74.9 74.7 74.6 74.4 74.3 70 15 60 14.5 15.2 15.7 15.2 15.6 15.4 14.5 14.2 13.7 50 13.3 12.9 12.5 12.1 11.8 40 30 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 15-24 (% ) 70 61.1  Commercial radio’s reach remains stable amongst 15-24 year olds 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 63.5 63.7 63.1 64.6 64.3 60 61.0 60.7 60.3 59.9 59.6 59.3 59.1 58.9 50  Time spent listening falls dramatically 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 20 1999  Commercial radio’s share falls, but not as dramatically, because 15-24 year olds are listening less to ALL radio, not only commercial radio [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 38
Grant Goddard Commercial radio listening forecast COMMERCIAL RADIO REACH: 25-34 (% /wk) 90 80 76.2 76.2 76.2 73.5 75.1 72.4 70 radio specialist COMMERCIAL RADIO LISTENING: 25-34 (hrs/wk) 20 70.1 69.6 69.5 69.5 69.4 69.3 69.3 69.2 15.8 60 16.2 15.9 15.8 15.6 15.7 15.0 15 14.4 13.7 50 13.0 12.4 11.7 40 30 11.2 10.6 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 25-34 (% ) 70  Similarly to 15-24 year olds, commercial radio’s reach remains fairly constant 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 61.6 60.6 60  Time spent listening falls dramatically 53.2 52.8 51.6 50.6 49.5 48.5 47.5 46.5 50  Commercial radio’s share falls, accelerated by this demographic spending more time with BBC Radio One 59.0 58.5 58.9 57.2 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 39
Grant Goddard Commercial radio listening forecast COMMERCIAL RADIO REACH: 35-44 (% /wk) 90 radio specialist COMMERCIAL RADIO LISTENING: 35-44 (hrs/wk) 20 80 74.2 75.1 75.4 73.7 73.3 72.5 70.8 69.7 68.9 68.1 67.3 66.6 65.9 65.2 70 16.1 16.3 16.7 16.5 16.6 16.1 16.0 15.9 15.9 15.9 15.8 15.7 15.7 15.6 15 60 50 40 30 [source: RAJAR/Grant Goddard]  Time spent listening to commercial radio falls marginally, under competition from BBC Radio Two  Commercial radio’s share continues to fall 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 35-44 (% ) 70  Commercial radio’s reach continues to falls marginally amongst 35-44 year olds 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 58.6 57.6 57.0 55.9 55.3 54.0 53.1 52.0 51.2 50.5 49.8 49.1 48.5 47.8 50 60 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 40
Grant Goddard Commercial radio listening forecast COMMERCIAL RADIO REACH: 45-54 (% /wk) 90 radio specialist COMMERCIAL RADIO LISTENING: 45-54 (hrs/wk) 20 80 70 66.9 66.9 67.0 67.2 66.8 66.6 65.9 65.8 66.0 66.2 66.5 66.8 67.0 67.3 60 15.7 15.7 15.8 15.5 15.4 15.4 15.6 15.7 15.7 15.3 15.2 15.1 15.1 15.0 15 50 40 30 [source: RAJAR/Grant Goddard]  Time spent listening to commercial radio similarly remains constant  Commercial radio’s share increases slowly, as the sector’s audience ages 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 45-54 (% ) 70  Commercial radio’s reach in this demographic remains constant 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 60 48.3 49.1 46.7 47.5 50 46.8 45.6 44.6 45.0 44.6 43.8 44.3 44.5 45.2 46.0 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 41
Grant Goddard Commercial radio listening forecast COMMERCIAL RADIO REACH: 55-64 (% /wk) 90 radio specialist COMMERCIAL RADIO LISTENING: 55-64 (hrs/wk) 20 80 70 60 54.9 55.1 55.4 56.1 56.3 55.5 56.5 55.5 55.1 54.6 54.2 53.8 53.3 52.9 15 14.3 14.5 14.2 13.7 13.9 14.4 14.4 14.3 50 14.0 13.7 13.4 13.1 12.9 12.6 40 30 [source: RAJAR/Grant Goddard]  The commercial radio sector fails to develop a product to persuade this demographic away from BBC radio services 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 55-64 (% ) 70  Reach, time spent listening and share remain relatively static 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 60 50 40 34.9 33.8 30 32.4 31.8 31.8 32.5 33.4 33.0 32.3 31.7 31.0 30.4 29.8 29.2 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 42
Grant Goddard Commercial radio listening forecast radio specialist COMMERCIAL RADIO REACH: 65+ (% /wk) 90 COMMERCIAL RADIO LISTENING: 65+ (hrs/wk) 20 80 70 60 15 13.4 50 40.4 39.5 40.2 13.5 42.7 42.3 42.1 41.7 40.7 40.2 39.9 39.5 39.2 38.9 38.5 30 13.9 13.5 13.6 13.7 13.7 13.8 13.8 13.2 13.1 13.2 13.5 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 1999 40 14.0 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 65+ (% ) 70 60  The 65+ age group’s interest in commercial radio remains marginal 50 40 30 26.4 25.4 25.5 25.8 26.1 26.4 23.9 24.8 24.1 24.5 24.7 24.7 24.9 25.2 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 43
Grant Goddard Commercial radio listening forecast radio specialist RADIO LISTENING ('000 hours per week) 1,250,000 ALL RADIO COMMERCIAL RADIO 1,000,000 750,000 500,000 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 250,000 [source: RAJAR/Grant Goddard]  Total hours listened to all radio is declining by 1% year-on-year  Hours listened to commercial radio will continue to decline by almost 2% year-on-year  Commercial radio’s position is a result of:  The ageing of the population  Increased competition for the leisure time of teens, 20 and 30 year olds, in which commercial radio has traditionally dominated listening  Attrition to commercial radio’s ‘heartland audience’ of 15-44 year olds by BBC Radio One targeting older listeners and BBC Radio Two targeting younger listeners UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 44
Grant Goddard Commercial radio revenues forecast radio specialist COMMERCIAL RADIO REVENUES (£ 2006 prices per 1000 hours listened) 30 £27.40 £24.42 £25.07 25 £22.66 £26.22 £27.43 £26.27 £24.59 £23.90 £23.46 £23.19 £22.80 £22.41 £22.02 20 15 10 5 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 0 [source: RAJAR/Radio Advertising Bureau/Grant Goddard]  Commercial radio’s ability to monetise its listening will become harder because:  Cost per thousands are falling  Inventory has increased substantially with the launch of digital-only commercial stations  ‘Heritage’ stations are no longer delivering such substantial audiences for advertisers  Commercial radio is losing ground in advertisers’ minds to new competitors (online, games, mobile)  Commercial radio is not an exciting, attention-grabbing environment UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 45
Grant Goddard Commercial radio revenues forecast radio specialist COMMERCIAL RADIO REVENUES (£m 2006 prices) 800 691.7 700 600 627.6 632.6 660.0 680.1 632.9 581.7 556.2 558.7 500 539.2 523.9 506.2 489.2 472.6 400 300 200 100 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 0 [source: RAJAR/Radio Advertising Bureau/Grant Goddard]  Our commercial radio revenue forecast predicts continuing year-on-year declines of around 3% per annum in real terms  Commercial radio companies have yet to implement successful strategies to combat audience defection to BBC radio  Increased supply of commercial radio services (such as the launch of the Channel 4 digital radio multiplex in 2008) will not, by itself, increase consumer demand for commercial radio  Commercial radio has been closing more services than it has been opening (GCap – The Storm, Capital Disney, Core, Life; EMAP – 3C; independent – PrimeTime) UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 46
Grant Goddard UK commercial radio share of listening COMMERCIAL RADIO SHARE OF LISTENING (% ) 50 47.8 COMMERCIAL RADIO SHARE OF LISTENING (% ) 60 47.0 45.9 radio specialist COMMERCIAL RADIO % SHARE RadioCentre targets [Jan07] 50 45.5 45.2 45 44.6 43.5 43.1 42.9 42.6 42.3 42.0 41.7 41.4 40 40 30 20 10 35 [Source: RAJAR/Grant Goddard] 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 0 [Source: RAJAR/RadioCentre]  Our forecast predicts a continuing decline in commercial radio’s share of listening (versus the BBC)  There is still no specific commercial radio product to appeal to the growing 50+ demographic  While the number of commercial radio stations has increased, these new services have cannibalised their commercial competitors, rather than competed directly for BBC audiences  Commercial radio formats continue to converge towards the middle ground (ie: GMG’s conversion of the Saga stations to its Smooth format), rather than offering unique content UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 47
Issues for the commercial radio industry Grant Goddard radio specialist  No date has yet been set for digital radio switchover/analogue switch off  The costs of DAB transmission alongside existing analogue services will continue to burden the industry  The costs of transmission contracts with Arqiva/National Grid Wireless require re-negotiation  Music royalty agreements with PRS and PPL require re-negotiation  Radio’s regulatory regime requires reform to level the playing field with new competitors  The 2003 Communications Act requires updating to reflect the emerging media landscape  The DAB platform is in danger of marginalisation without compelling content to drive hardware sales  The commercial radio industry has to work together to reduce its fixed cost base, during a period when revenues will continue to decline in real terms UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 48

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'UK Commercial Radio Sector: Current Indicators & Forecasts: December 2007' by Grant Goddard

  • 1.
    UK COMMERCIAL RADIO SECTOR:CURRENT INDICATORS & FORECASTS Grant Goddard radio specialist www.grantgoddard.co.uk December 2007
  • 2.
    Grant Goddard Agenda radio specialist CURRENT INDICATORS  UK commercial radio revenues  UK commercial radio profitability  UK local commercial revenue yields  UK commercial radio listening  BBC radio listening  Digital radio listening  FORECASTS  Assumptions  UK radio listening forecasts  UK commercial radio listening forecasts  UK commercial radio revenues forecasts UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 2
  • 3.
    Grant Goddard radio specialist CURRENT INDICATORS UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 3
  • 4.
    Grant Goddard UK commercialradio revenues radio specialist COMMERCIAL RADIO REVENUES (£m 2006 prices) 700 Branded Content 600 National Advertisers Local Advertisers 500 400 300 200 100 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 0 [source: Radio Advertising Bureau] 2005 revenues 2006 revenues Q1 2007 revenues Q2 2007 revenues Q3 2007 revenues down 4% year-on-year down 5% year-on-year down 2% year-on-year up 1% year-on-year up 5% year-on-year UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 down 7% year-on-year (constant prices) down 8% year-on-year (constant prices) 4
  • 5.
    Grant Goddard UK commercialradio revenues radio specialist NUMBER OF LOCAL COMMERCIAL RADIO STATIONS 350 COMMERCIAL RADIO REVENUES (£m 2006 prices) 700 [source: Ofcom] 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1974 2007 2005 2003 2001 1999 0 1997 0 1995 100 1993 50 1991 200 1989 100 1987 300 1985 150 1983 400 1981 200 1979 500 1977 250 1975 600 1973 300 [source: Radio Advertising Bureau] The 1990s were a period of commercial radio growth because of a fortuitous combination of:  Unprecedented expansion of the number of local commercial radio stations during the 1990s  Launch of the Radio Advertising Bureau in 1992  Launch of the UK’s first national commercial radio stations in 1992, 1993 and 1995  Early consolidation in the industry reduced the number of commercial buying points  The self-destruction of market leader BBC Radio One in 1993 UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 5
  • 6.
    Grant Goddard UK commercialradio revenues radio specialist AVERAGE REVENUES PER COMMERCIAL RADIO STATION (£m 2006 prices) 10 AVERAGE REVENUES PER COMMERCIAL RADIO STATION (£m 2006 prices) 2.0 9 8 1.5 7 6 5 1.0 4 3 0.5 2 National Advertisers 1 Local Advertisers 0 [source: Radio Advertising Bureau/Ofcom/Grant Goddard] 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1974 0.0 [source: Radio Advertising Bureau/Ofcom/Grant Goddard]  Average revenues per radio station have remained relatively constant since the 1990s  Local stations have increasingly concentrated on national advertisers, to the neglect of local advertisers  National advertisers have proven more susceptible to cyclical trends and fads (ie: the internet)  Industry revenues from national advertisers are now more than twice the revenues from local advertisers UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 6
  • 7.
    Grant Goddard UK commercialradio profitability 60 radio specialist PROFITABILITY OF LOCAL COMMERCIAL RADIO STATIONS LAUNCHED 1996-2002 (% of stations) 50 40 30 20 10 0 Broke even Broke even in 3 Broke even in w ithin 3 years to 6 years more than 6 years Ever broke even Never broke even No data [source: Ofcom] PROFITABILITY OF LOCAL COMMERCIAL STATIONS coverage area average profits % of stations average population (£k per profitable station age ('000) annum) (years) <50 -3 58 6 50-150 -20 36 8 150-250 65 48 10 250-500 400 65 15 500-1000 865 95 21 1000-5000 1,200 89 15 >5000 1,400 73 14 [source: Ofcom]  The majority of local radio stations launched since 1996 have not yet broken even  Small stations serving populations under 150,000 rarely achieve profitability  Stations’ budgets are dominated by fixed costs (average 70% of total costs)  50% of stations either lose money or make a profit of less than £100,000 per annum  40% of all commercial radio stations lose money UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 7
  • 8.
    Grant Goddard UK commercialradio revenue yields RADIO INDUSTRY REVENUE YIELD (£ 2006 prices per 1000 hours listened) radio specialist 30 25 20 15 10 5 0 1999 2000 2001 2002 2003 2004 2005 2006 [source: Radio Advertising Bureau/RAJAR/Grant Goddard] COMMERCIAL RADIO STATION REVENUES revenue (£ per % of total % of industry quarter) commercial revenues stations <250k 63 11 250k-500k 13 10 500k-1m 11 16 >1m 13 63 [source: Ofcom]  The radio industry’s revenue yield has fallen from its peaks in 2000 and 2004  There is a ‘triple whammy’ impact for the industry – not only are total revenues and total hours listened falling, but the revenue yield achieved from each 1000 hours listened is falling too  The ‘cost per thousand’ to advertisers has similarly been falling  A small number of large stations generate most of the commercial radio industry’s revenues UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 8
  • 9.
    Grant Goddard UK commercialradio listening radio specialist SHARE OF RADIO LISTENING (% ) SHARE OF RADIO LISTENING (% ) 60 Local Commercial Radio BBC Radio One 50 40 50 40 30 30 20 20 BBC Radio [source: RAJAR] 2007Q2 2006Q2 2005Q2 2004Q2 2003Q2 2002Q2 2001Q2 2000Q2 1999Q2 1998Q2 1997Q2 1996Q2 1995Q2 1994Q2 0 1993Q2 10 2007Q2 2006Q2 2005Q2 2004Q2 2003Q2 2002Q2 2001Q2 2000Q2 1999Q2 1998Q2 1997Q2 1996Q2 1995Q2 1994Q2 1993Q2 10 0 Commercial Radio [source: RAJAR]  BBC Radio lost share dramatically in 1993/4 as a direct result of radical programming changes at Radio One  Local commercial radio benefited directly from this huge loss of listening to BBC Radio One in 1993/4  However, since then, commercial radio has not managed to retain this audience ‘windfall’, and its listening has been eroded by defections to BBC Radios One and Two UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 9
  • 10.
    Grant Goddard BBC RadioOne listening radio specialist E ndi ng BBC RADIO ONE: % SHARE 30% M ar 1999 E ndi ng 12 BBC RADIO ONE: AVERAGE HOURS/WEEK 2000 10 E ndi ng M ar M ar 2001 E ndi ng 20% M ar 2001 E ndi ng 8 M ar 2002 2002 E ndi ng E ndi ng 15% M ar 2003 6 M ar 2003 E ndi ng E ndi ng M ar 10% 2004 1999 M ar 2000 E ndi ng M ar E ndi ng M ar 25% E ndi ng M ar 4 2004 E ndi ng E ndi ng M ar M ar 2005 5% E ndi ng 2005 2 E ndi ng M ar M ar 2006 0% E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2006 0 [source: RAJAR] E ndi ng 0-14 2007 15-24 25-34 35-44 45-54 55-64 65+ M ar 2007 [source: RAJAR]  The audience for Radio One is becoming significantly older  In the early 1990s, the BBC had re-positioned Radio One as a youth radio station  Since then, the station’s audience is increasingly dominated by 25-34 year olds UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 10
  • 11.
    Grant Goddard BBC RadioTwo listening radio specialist E ndi ng BBC RADIO TWO: % SHARE 25% 1999 E ndi ng BBC RADIO TWO: REACH (% ) M ar 40% M ar 1999 E ndi ng E ndi ng M ar 2000 M ar 35% 2000 E ndi ng 20% M ar 2001 E ndi ng M ar 30% 2001 E ndi ng M ar 15% 2002 E ndi ng M ar 25% 2002 E ndi ng M ar 2003 10% E ndi ng 20% M ar 2003 E ndi ng M ar 2004 E ndi ng M ar 5% E ndi ng 15% M ar 2004 E ndi ng 10% M ar 2005 E ndi ng M ar 2005 5% E ndi ng M ar 2006 0% E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR] 2006 0% E ndi ng 0-14 15-24 25-34 35-44 45-54 55-64 65+ M ar 2007 [source: RAJAR]  The audience for Radio Two is becoming significantly younger  The station’s audience had been dominated by 50+ year olds  Radio Two has now made huge inroads into the 25-34 and 35-44 age groups UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 11
  • 12.
    Grant Goddard BBC RadioFour listening radio specialist E ndi ng BBC RADIO FOUR: % SHARE 25% M ar 1999 18 BBC RADIO FOUR: AVERAGE HRS/WEEK E ndi ng M ar 2000 M ar 2001 E ndi ng M ar 15% 2000 E ndi ng 14 M ar 2001 12 E ndi ng M ar 2002 10 E ndi ng M ar 2003 10% E ndi ng M ar 2003 8 E ndi ng M ar 2004 M ar 6 2004 E ndi ng M ar 5% 2005 E ndi ng M ar E ndi ng 4 M ar 2 E ndi ng 2005 M ar 2006 0% E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR] 1999 M ar 2002 E ndi ng M ar E ndi ng 16 E ndi ng 20% E ndi ng 2006 0 E ndi ng 0-14 15-24 25-34 35-44 45-54 55-64 65+ M ar 2007 [source: RAJAR]  Radio Four has not succeeded in attracting listening from younger age groups  The station has firmly consolidated its position amongst over-55’s, mainly through them spending more time with the station  Radio Four’s increasing dominance of over-55’s makes it harder for commercial radio to try and launch (belatedly) stations targeting this demographic UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 12
  • 13.
    Grant Goddard UK commercialradio listening E ndi ng COMMERCIAL RADIO: % SHARE 80% radio specialist 1999 E ndi ng M ar 70% 2000 E ndi ng M ar 60% 2001 E ndi ng M ar 50% 2002 E ndi ng 40% M ar 2003 E ndi ng 30% M ar 2004 E ndi ng 20% M ar 2005 E ndi ng 10% M ar 2006 0% E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR] E ndi ng COMMERCIAL RADIO: AVERAGE HOURS/WEEK M ar 18 M ar 1999 E ndi ng M ar 2000 16 E ndi ng M ar 2001 14 E ndi ng M ar 12 2002 E ndi ng 10 M ar 2003 8 E ndi ng M ar 2004 6 E ndi ng M ar 4 2005 E ndi ng 2 M ar 0 E ndi ng 2006 M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR]  Commercial radio is losing share dramatically in the key 25-34 and 35-44 age groups  This loss in share is attributable mainly to lower listening levels, rather than reach, amongst these age groups and similarly amongst 15-24 year olds  By 2008, it is likely that 15-24 year olds will remain the only adult demographic in which commercial radio has the dominant share of listening (over the BBC) UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 13
  • 14.
    Grant Goddard UK allradio listening radio specialist 100% M ar 1999 E ndi ng ALL RADIO: AVERAGE HOURS/WEEK E ndi ng ALL RADIO: REACH (% ) 30 M ar 1999 E ndi ng E ndi ng 95% M ar 90% E ndi ng 2000 M ar 2000 25 E ndi ng M ar M ar 2001 2001 85% E ndi ng M ar 80% 20 E ndi ng M ar 2002 2002 E ndi ng 75% M ar 70% E ndi ng 15 E ndi ng 2003 M ar 2004 65% M ar 2003 E ndi ng M ar 10 2004 E ndi ng 60% E ndi ng M ar M ar 2005 E ndi ng 55% E ndi ng E ndi ng M ar 50% 2005 5 M ar 2006 2006 M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR] 0 E ndi ng M ar 0-14 15-24 25-34 35-44 45-54 55-64 65+ 2007 [source: RAJAR]  Radio listening has held up remarkably well to the challenge of new media (online, personal music players, games)  Radio’s key characteristics as a portable medium (compared to TV or computers) and as a secondary medium (to accompany primary activities such as work or driving) make it more resilient than other traditional media  Radio remains firmly a ‘mass medium’ reaching 90%+ of the adult population each week UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 14
  • 15.
    Grant Goddard UK allradio listening – males radio specialist E ndi ng ALL RADIO: REACH (% ) 100% M ar 1999 30 ALL RADIO: AVERAGE HOURS/WEEK M ar 90% E ndi ng 2000 2000 E ndi ng M ar 2001 2001 E ndi ng 1999 M ar 25 M ar 85% M ar E ndi ng E ndi ng 95% E ndi ng 20 E ndi ng 80% M ar M ar 2002 2002 75% E ndi ng M ar 15 E ndi ng M ar 2003 2003 70% E ndi ng M ar 65% 2004 E ndi ng 10 M ar 2004 E ndi ng E ndi ng 60% M ar 2005 55% M ar 5 2005 E ndi ng E ndi ng M ar M ar 50% 2006 0-14 15-24 male 25-34 male 35-44 male 45-54 male 55-64 male 65+ male E ndi ng M ar 2007 [source: RAJAR] 0 2006 0-14 male 15-24 male 25-34 male 35-44 male 45-54 male 55-64 male 65+ male E ndi ng M ar 2007 [source: RAJAR]  Radio’s weekly reach of 15-24 year old males has remained consistent  Hours listened to all radio by 15-24 year old males is in decline, as their time is increasingly constrained by competing entertainment sources (online, mobile phones, socialising)  Radio needs to produce compelling content for this demographic to arrest the decline UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 15
  • 16.
    Grant Goddard Digital radiolistening 16% radio specialist DIGITAL RADIO HRS LISTENED BY PLATFORM (% ) 8% LISTENING VIA DAB LISTENING VIA TV LISTENING VIA INTERNET DIGITAL UNSPECIFIED 14% 12% DIGITAL RADIO HRS LISTENED BY PLATFORM (% ) COMMERCIAL RADIO 7% BBC RADIO 6% 10% 5% 8% 4% 6% 3% 4% 2% 2% 1% 2007Q2 2007Q1 2006Q4 2006Q3 2006Q2 2006Q1 2005Q4 2005Q3 2005Q2 2005Q1 2004Q4 0% [source: RAJAR] 0% LISTENING VIA DAB LISTENING VIA TV LISTENING VIA INTERNET DIGITAL UNSPECIFIED [source: RAJAR]  Digital radio listening accounts for 13% of all radio listening  DAB radios are the most significant source of digital listening  The BBC dominates DAB radio listening  Listening to radio via the internet remains relatively insignificant (~1%) UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 16
  • 17.
    Grant Goddard Digital-only radiostations radio specialist SHARE OF LISTENING TO DIGITAL-ONLY STATIONS (%) LISTENING TO DIGITAL-ONLY RADIO STATIONS 14% reach (%) all adults 12% 100% hours (%) all radio Commercial BBC 10% 75% 8% 50% 6% 4% 25% 2% 2007Q2 2007Q1 2006Q4 2006Q3 2006Q2 2006Q1 2005Q4 2005Q3 2005Q2 2005Q1 2004Q4 2004Q3 2004Q2 2004Q1 2003Q4 2003Q3 2003Q2 2007Q2 2007Q1 2006Q4 2006Q3 2006Q2 2006Q1 2005Q4 2005Q3 2005Q2 2005Q1 2004Q4 2004Q3 2004Q2 2004Q1 2003Q4 2003Q3 2003Q2 2003Q1 [source: RAJAR] 2003Q1 0% 0% [source: RAJAR]  Although listening to digital radio accounts for 13% of all radio listening, 72% of that digital listening is to simulcasts of analogue stations  Less than 4% of ALL listening is to radio stations exclusively available via digital  Commercial radio’s share of listening to digital-only radio stations is falling, while the BBC (despite its later digital launch) is soon likely to dominate the digital radio platform, just as it already dominates the analogue radio platform  The BBC offers only 5 digital-only stations, all available nationally; whereas commercial radio offers 32 digital-only stations, 9 of which are national, with the remainder available on regional/local multiplexes UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 17
  • 18.
    Grant Goddard Digital radioindustry forecasts radio specialist DAB CUMULATIVE SET SALES (millions) 25 DIGITAL RADIO LISTENING (% of total listening) 100 20 80 15 60 10 40 5 20 RAJAR Platform Survey Ofcom forecast GfK actual [source: GfK & DRDB] 2020 2019 2018 2017 2016 2015 2014 2013 2010 2012 2009 2011 2008 2010 2007 2009 2006 2008 2005 2007 2004 2006 2003 2005 2002 0 2004 DRDB forecast 0 [source: RAJAR & Ofcom]  No analogue switch-off date has yet been fixed for radio  Radio industry projections for DAB receiver sales and digital radio listening are both ambitious  Growth rates to date do not exhibit exponential characteristics UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 18
  • 19.
    Grant Goddard DAB radioreceiver sales radio specialist DAB RADIO RECEIVER CUMULATIVE SALES ('000s) 6,000 YEAR-ON-YEAR CHANGE IN DAB RADIO SALES (%) 200 12-month moving average 5,000 150 4,000 100 3,000 2,000 50 1,000 Apr-07 Feb-07 Dec-06 Oct-06 Aug-06 Jun-06 Apr-06 Feb-06 Dec-05 Oct-05 Aug-05 Jun-05 Apr-05 Feb-05 Mar-07 Dec-06 Sep-06 Jun-06 Mar-06 Dec-05 Sep-05 Jun-05 Mar-05 Dec-04 Sep-04 Jun-04 Mar-04 Dec-03 Sep-03 Jun-03 Mar-03 Dec-02 [source: GfK/DRDB] Dec-04 0 0 [source: GfK/DRDB]  The growth rate of DAB receiver sales is not emulating the experience of Freeview in TV  By May 2007, the year-on-year annualised growth rate of DAB radio receiver sales had fallen to 13%  Analogue and digital broadcasts are likely to be required simultaneously for some time UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 19
  • 20.
    Grant Goddard BBC onlinelistening radio specialist HOURS LISTENED PER QUARTER TO BBC RADIO ONLINE 50,000,000 STREAMING ON DEMAND 40,000,000 PODCASTS 30,000,000 20,000,000 10,000,000 2007Q2 2007Q1 2006Q4 2006Q3 2006Q2 2006Q1 2005Q4 2005Q3 2005Q2 2005Q1 2004Q4 2004Q3 2004Q2 2004Q1 2003Q4 0 [source: BBC]  The BBC has pioneered the offer of radio programming online as simulcast streams, on-demand shows and podcasts  Usage data exhibits an almost linear growth pattern for these services, despite substantial cross-promotion across BBC outlets  BBC Online listening (globally) is currently 72m hours per quarter, whereas total BBC radio listening (in the UK alone) is 7,456m hours per quarter  Commercial radio’s online offerings are not yet as developed as the BBC’s UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 20
  • 21.
    Grant Goddard Commercial radio‘heritage’ FM stations radio specialist COMMERCIAL HERITAGE FM STATIONS (% share listening) 30 Q2 1999 25 Q2 2007 20 15 10 5 Hallam FM 97.4 Rock FM Downtown Radio (DTR) Metro Radio Radio City 96.7 Clyde 1 FM 96.4 BRMB Key 103 (Manchester) LBC 97.3 Radio 95.8 Capital 0 [source: RAJAR, ranked by population coverage]  13% of commercial radio stations earn 63% of industry revenues  ‘Heritage’ FM stations, traditionally the ‘cash cows’ of the industry, have lost huge amounts of listening since the 1990s  Revenues of these stations (owned mainly by GCap and EMAP) are falling substantially UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 21
  • 22.
    Grant Goddard Commercial radio‘heritage’ AM stations radio specialist COMMERCIAL HERITAGE AM STATIONS (% share listening) 14 Q2 1999 12 Q2 2007 10 8 6 4 2 Classic Gold Bristol/Bath/Wiltshire Classic Gold Wolverhampton Magic AM (Sheffield) Magic 1152 (Newcastle) Magic 1548 (Liverpool) Clyde 2 Capital Gold Birmingham Magic 1152 (Manchester) LBC News 1152 London Capital Gold 0 [source: RAJAR, ranked by population coverage]  ‘Heritage’ AM stations have lost listening even more substantially than their FM counterparts  Commercial radio has attributed these declines to users’ preference for FM reception over AM reception  Revenues of these stations (owned mainly by GCap and EMAP) are also falling substantially UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 22
  • 23.
    Grant Goddard Commercial radio‘post-1990’ stations radio specialist POST-1990 COMMERCIAL STATIONS (% share listening) 7 Q2 1999 6 Q2 2007 5 4 3 2 1 London Virgin Radio London) Kismat Radio 1035 (Greater Radio Premier Christian (London) Smooth Radio Sunrise Radio (Greater London) London Choice FM XFM 104.9 Kiss 100 FM Magic 105.4 Heart 106.2 FM 0 [source: RAJAR, ranked by population coverage]  The substantial losses in listening to commercial radio FM and AM stations are not generally the result of audience fragmentation, nor of cannibalisation within the commercial radio sector  Post-heritage commercial radio stations (those launched after 1990) have benefited only marginally from the losses suffered by the heritage stations since 1999 UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 23
  • 24.
    Grant Goddard National radiostations radio specialist NATIONAL RADIO STATIONS (% share listening) 16 Q2 1999 14 Q2 2007 12 10 8 6 4 2 Total Virgin Radio talkSPORT Classic FM Live BBC Radio 5 BBC Radio 4 BBC Radio 3 BBC Radio 2 BBC Radio 1 0 [source: RAJAR]  National commercial radio stations have not benefited from the audience losses at heritage local commercial stations  BBC Radio Two has benefited and increased its lead as the most listened to UK radio station (13m listeners per week, 164m hours per week) UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 24
  • 25.
    Grant Goddard UK commercialradio ownership COMMERCIAL RADIO OWNERS (% share of commercial radio listening) 35 30 radio specialist 29.2 23.4 25 20 15 11.4 10.8 10 1.7 1.6 1.1 0.8 0.8 0.7 0.4 0.3 0.2 0.1 0.0 0.0 0.0 Lincs FM Group Sunrise Group UKRD Cumberland News Group Tindle Radio Kent Messenger Town & Country Northern Media Group Forward Media CanWest MediaWorks UK Absolute Radio International Laser Broadcasting UTV Radio Guardian Media Group Chrysalis/Global Radio EMAP Radio GCap Media 0 Scottish Media Group 3.4 5 The Local Radio Company 7.0 [source: RAJAR]  Ownership of commercial radio is skewed towards a small number of large groups  Two groups (GCap and EMAP) control more than half of the industry, while three groups (GCap, EMAP and Chrysalis/Global Radio) control almost two-thirds  Further industry consolidation is possible under existing ownership rules UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 25
  • 26.
    Grant Goddard UK commercialradio industry targets radio specialist COMMERCIAL RADIO SHARE OF DISPLAY ADVERTISING SPEND (% ) 9% Radio % share RadioCentre targets [Jan07] 8% 7% 6% 5% 4% 3% 2% 1%  Digital platforms’ share of all commercial radio listening  30% by 2009, 50% by 2011 (from 13.7% in Q2 2007) 2011 2010 2009 2008 2007 2006 2005 2004 2003 RadioCentre targets [Jan07] 40 30 20 10 60% 50% 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 0 2000 Commercial radio’s share of listening versus the BBC  46% by 2009, 48% by 2011 (from 43.5% in Q2 2007) COMMERCIAL RADIO % SHARE 50 1999  Radio’s share of display advertising  7% by 2009, 8% by 2011 (from 6% in 2006) 2002 COMMERCIAL RADIO SHARE OF LISTENING (% ) 60  2001 In January 2007, the commercial radio industry adopted a five-year plan with targets for: 2000 1999 0% SHARE OF COMMERCIAL RADIO LISTENING VIA DIGITAL (% ) actual % share RadioCentre targets [Jan07] 40% 30% 20% 10% UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 2011 2010 2009 2008 2006 Q2 2007 [source: RAJAR, RAB, RadioCentre] 2005 2004 0% 26
  • 27.
    Grant Goddard radio specialist FORECASTS UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 27
  • 28.
    Grant Goddard Assumptions radio specialist Existing strategies of the commercial radio groups and the BBC will continue to be pursued  The launch of the second national digital commercial radio multiplex in 2008 will merely cannibalise existing commercial radio listening  Listening to online simulcasts of station broadcasts is included in the forecasts (as it is in RAJAR)  Listening to ‘listen again’ on-demand radio programmes is not included in the forecasts (as RAJAR)  Population changes are based on Statistics Office/Government Actuary 2004-based projections  NB: No forecasts are included for digital versus analogue listening - RAJAR data released to date is too irregular and has used differing methodologies  NB: No forecasts are included for digital versus analogue revenues – limited data released to date is not transparent UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 28
  • 29.
    Grant Goddard Population forecast radiospecialist 11,000 UK POPULATION PROJECTIONS BY AGE ('000) 10,000 2004 2005 9,000 2006 2007 8,000 2008 2009 2010 7,000 2011 2012 6,000 15-24 25-34 35-44 45-54 55-64 65+ [source: Government Actuary]  The ageing of the population benefits BBC radio, which dominates listening in the 50+ demographics  Commercial radio has very few services targeted at the 50+ demographic UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 29
  • 30.
    Grant Goddard Total radiolistening forecast radio specialist ALL RADIO - REACH (% ) ALL RADIO LISTENING (average hrs/wk/listener) 95 90.4 90.8 90.4 90.7 90.0 90.1 89.7 89.7 89.6 89.5 89.4 89.3 89.1 90 89.3 29 27 25 23.1 23.8 23 24.4 24.1 24.3 24.4 24.0 23.7 23.3 23.0 22.6 22.3 22.0 21.6 21 85 19 17 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 [source: RAJAR/Grant Goddard] 1999 15 80 [source: RAJAR/Grant Goddard]  Radio continues to be a mass medium, reaching around 90% of the adult population  Time spent listening to radio declines, in the face of competition from other media and entertainment sources UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 30
  • 31.
    Grant Goddard Total radiolistening forecast radio specialist ALL RADIO REACH: 15-24 (% /wk) 95 91.7 91.6 92.4 91.5 91.3 ALL RADIO LISTENING: 15-24 (hrs/wk) 30 90.5 89.4 89.3 89.2 89.2 89.2 89.2 89.2 89.2 90 25 20.8 21.0 85 21.6 20.9 21.4 21.0 20 80 20.2 19.7 19.2 18.6 18.1 17.6 17.1 16.7 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 15 [source: RAJAR/Grant Goddard]  The latest audience data suggests that the declining reach amongst 15-24 year olds experienced 20012005 has abated  Time spent listening to the radio continues to fall, under pressure from competing leisure opportunities UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 31
  • 32.
    Grant Goddard Total radiolistening forecast radio specialist ALL RADIO REACH: 25-34 (% /wk) 95 90.7 92.3 91.7 91.5 90.1 89.8 89.7 89.7 90.1 90 90.6 91.0 ALL RADIO LISTENING: 25-34 (hrs/wk) 30 91.5 91.9 92.4 25 21.6 22.3 22.5 22.0 21.8 22.2 22.0 21.1 20.4 20 85 80 19.7 19.0 18.4 17.7 17.1 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 15 [source: RAJAR/Grant Goddard]  Similar to the 15-24 demographic, reach is not the problem amongst 25-34 year olds and is likely to remain within a window between 90 and 93%  Time spent listening continues to decline, with competitive pressure for this age group’s time UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 32
  • 33.
    Grant Goddard Total radiolistening forecast radio specialist ALL RADIO REACH: 35-44 (% /wk) 92.9 92.5 92.6 91.2 92.0 92.5 92.0 92.1 92.3 92.4 91.5 91.7 91.9 25 90 22.3 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 15 2000 80 23.8 23.5 23.7 23.5 23.3 23.3 23.3 23.2 23.2 23.1 23.1 23.0 20 1999 85 23.0 2001 92.4 ALL RADIO LISTENING: 35-44 (hrs/wk) 30 2000 95 [source: RAJAR/Grant Goddard]  For this age group, reach remains consistent  Time spent listening remains steady too, as this demographic is under less pressure from competing leisure pursuits, and because radio is already embedded in their routine UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 33
  • 34.
    Grant Goddard Total radiolistening forecast radio specialist ALL RADIO REACH: 45-54 (% /wk) 95 90.9 91.8 ALL RADIO LISTENING: 45-54 (hrs/wk) 30 92.3 92.3 92.4 91.9 92.4 91.8 91.7 91.6 91.5 91.4 91.3 91.2 [source: RAJAR/Grant Goddard] 2012 2011 2010 23.7 23.3 22.9 22.5 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 15 2002 80 25.5 25.4 25.5 25.9 25.4 25.0 24.6 24.1 20 2001 85 2000 25 24.2 1999 90 24.9 [source: RAJAR/Grant Goddard]  Reach remains relatively constant amongst 45-54 year olds  Time spent listening is falling slightly UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 34
  • 35.
    Grant Goddard Total radiolistening forecast radio specialist ALL RADIO REACH: 55-64 (% /wk) 95 90 88.7 89.8 90.7 90.9 90.5 90.3 ALL RADIO LISTENING: 55-64 (hrs/wk) 30 91.4 91.0 91.0 90.9 90.8 90.8 90.7 90.7 25.4 26.3 26.9 26.6 26.9 27.3 26.6 26.4 26.2 26.0 25.8 25.6 25.4 25.2 25 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 15 2001 80 2000 20 1999 85 [source: RAJAR/Grant Goddard]  Reach remains constant amongst 55-64 year olds  Time spent listening is likely to oscillate between 25 and 27 hours per week UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 35
  • 36.
    Grant Goddard Total radiolistening forecast radio specialist ALL RADIO REACH: 65+ (% /wk) 95 25 90 86.1 85.9 85.5 85.9 85.7 ALL RADIO LISTENING: 65+ (hrs/wk) 30 24.6 25.5 26.6 26.5 26.6 26.4 26.1 26.0 25.8 25.7 25.5 25.3 25.1 25.0 86.8 85.8 85 83.7 84.9 84.2 83.4 20 82.7 81.9 81.2 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1999 15 80 [source: RAJAR/Grant Goddard]  Reach continues to fall as: • A greater proportion of this demographic is aged 85+ • Stations such as BBC Radio Two and BBC local radio serve this demographic less and less directly • The commercial sector has no specific offerings to attract this demographic  Time spent listening of those who continue to listen remains almost constant UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 36
  • 37.
    Grant Goddard Commercial radiolistening forecast radio specialist COMMERCIAL RADIO - REACH (% ) 90 COMMERCIAL RADIO LISTENING (average hrs/wk/listener) 20 80 70 65.2 65.2 65.5 65.1 65.2 64.2 62.8 62.1 61.9 61.6 61.3 61.0 60.6 60.3 60 15.1 15 50 15.5 15.5 15.2 15.3 15.2 15.0 14.7 14.5 14.2 14.0 13.7 13.5 13.2 40 30 [source: RAJAR/Grant Goddard]  Time spent listening to commercial radio declines significantly  As a result, commercial radio’s share (versus the BBC) continues to fall 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO % SHARE OF LISTENING 70  Commercial radio’s weekly reach continues its slow decline 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 60 50 47.8 47.0 45.9 45.5 45.2 44.6 43.5 43.1 42.9 42.6 42.3 42.0 41.7 41.4 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 37
  • 38.
    Grant Goddard Commercial radiolistening forecast 90 80 COMMERCIAL RADIO REACH: 15-24 (% /wk) 80.3 80.5 81.0 79.7 80.8 79.6 radio specialist COMMERCIAL RADIO LISTENING: 15-24 (hrs/wk) 20 75.7 75.2 75.0 74.9 74.7 74.6 74.4 74.3 70 15 60 14.5 15.2 15.7 15.2 15.6 15.4 14.5 14.2 13.7 50 13.3 12.9 12.5 12.1 11.8 40 30 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 15-24 (% ) 70 61.1  Commercial radio’s reach remains stable amongst 15-24 year olds 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 63.5 63.7 63.1 64.6 64.3 60 61.0 60.7 60.3 59.9 59.6 59.3 59.1 58.9 50  Time spent listening falls dramatically 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 20 1999  Commercial radio’s share falls, but not as dramatically, because 15-24 year olds are listening less to ALL radio, not only commercial radio [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 38
  • 39.
    Grant Goddard Commercial radiolistening forecast COMMERCIAL RADIO REACH: 25-34 (% /wk) 90 80 76.2 76.2 76.2 73.5 75.1 72.4 70 radio specialist COMMERCIAL RADIO LISTENING: 25-34 (hrs/wk) 20 70.1 69.6 69.5 69.5 69.4 69.3 69.3 69.2 15.8 60 16.2 15.9 15.8 15.6 15.7 15.0 15 14.4 13.7 50 13.0 12.4 11.7 40 30 11.2 10.6 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 25-34 (% ) 70  Similarly to 15-24 year olds, commercial radio’s reach remains fairly constant 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 61.6 60.6 60  Time spent listening falls dramatically 53.2 52.8 51.6 50.6 49.5 48.5 47.5 46.5 50  Commercial radio’s share falls, accelerated by this demographic spending more time with BBC Radio One 59.0 58.5 58.9 57.2 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 39
  • 40.
    Grant Goddard Commercial radiolistening forecast COMMERCIAL RADIO REACH: 35-44 (% /wk) 90 radio specialist COMMERCIAL RADIO LISTENING: 35-44 (hrs/wk) 20 80 74.2 75.1 75.4 73.7 73.3 72.5 70.8 69.7 68.9 68.1 67.3 66.6 65.9 65.2 70 16.1 16.3 16.7 16.5 16.6 16.1 16.0 15.9 15.9 15.9 15.8 15.7 15.7 15.6 15 60 50 40 30 [source: RAJAR/Grant Goddard]  Time spent listening to commercial radio falls marginally, under competition from BBC Radio Two  Commercial radio’s share continues to fall 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 35-44 (% ) 70  Commercial radio’s reach continues to falls marginally amongst 35-44 year olds 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 58.6 57.6 57.0 55.9 55.3 54.0 53.1 52.0 51.2 50.5 49.8 49.1 48.5 47.8 50 60 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 40
  • 41.
    Grant Goddard Commercial radiolistening forecast COMMERCIAL RADIO REACH: 45-54 (% /wk) 90 radio specialist COMMERCIAL RADIO LISTENING: 45-54 (hrs/wk) 20 80 70 66.9 66.9 67.0 67.2 66.8 66.6 65.9 65.8 66.0 66.2 66.5 66.8 67.0 67.3 60 15.7 15.7 15.8 15.5 15.4 15.4 15.6 15.7 15.7 15.3 15.2 15.1 15.1 15.0 15 50 40 30 [source: RAJAR/Grant Goddard]  Time spent listening to commercial radio similarly remains constant  Commercial radio’s share increases slowly, as the sector’s audience ages 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 45-54 (% ) 70  Commercial radio’s reach in this demographic remains constant 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 60 48.3 49.1 46.7 47.5 50 46.8 45.6 44.6 45.0 44.6 43.8 44.3 44.5 45.2 46.0 40 30 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 41
  • 42.
    Grant Goddard Commercial radiolistening forecast COMMERCIAL RADIO REACH: 55-64 (% /wk) 90 radio specialist COMMERCIAL RADIO LISTENING: 55-64 (hrs/wk) 20 80 70 60 54.9 55.1 55.4 56.1 56.3 55.5 56.5 55.5 55.1 54.6 54.2 53.8 53.3 52.9 15 14.3 14.5 14.2 13.7 13.9 14.4 14.4 14.3 50 14.0 13.7 13.4 13.1 12.9 12.6 40 30 [source: RAJAR/Grant Goddard]  The commercial radio sector fails to develop a product to persuade this demographic away from BBC radio services 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 55-64 (% ) 70  Reach, time spent listening and share remain relatively static 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 60 50 40 34.9 33.8 30 32.4 31.8 31.8 32.5 33.4 33.0 32.3 31.7 31.0 30.4 29.8 29.2 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 42
  • 43.
    Grant Goddard Commercial radiolistening forecast radio specialist COMMERCIAL RADIO REACH: 65+ (% /wk) 90 COMMERCIAL RADIO LISTENING: 65+ (hrs/wk) 20 80 70 60 15 13.4 50 40.4 39.5 40.2 13.5 42.7 42.3 42.1 41.7 40.7 40.2 39.9 39.5 39.2 38.9 38.5 30 13.9 13.5 13.6 13.7 13.7 13.8 13.8 13.2 13.1 13.2 13.5 [source: RAJAR/Grant Goddard] 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 10 1999 40 14.0 [source: RAJAR/Grant Goddard] COMMERCIAL RADIO SHARE: 65+ (% ) 70 60  The 65+ age group’s interest in commercial radio remains marginal 50 40 30 26.4 25.4 25.5 25.8 26.1 26.4 23.9 24.8 24.1 24.5 24.7 24.7 24.9 25.2 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 20 [source: RAJAR/Grant Goddard] UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 43
  • 44.
    Grant Goddard Commercial radiolistening forecast radio specialist RADIO LISTENING ('000 hours per week) 1,250,000 ALL RADIO COMMERCIAL RADIO 1,000,000 750,000 500,000 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 250,000 [source: RAJAR/Grant Goddard]  Total hours listened to all radio is declining by 1% year-on-year  Hours listened to commercial radio will continue to decline by almost 2% year-on-year  Commercial radio’s position is a result of:  The ageing of the population  Increased competition for the leisure time of teens, 20 and 30 year olds, in which commercial radio has traditionally dominated listening  Attrition to commercial radio’s ‘heartland audience’ of 15-44 year olds by BBC Radio One targeting older listeners and BBC Radio Two targeting younger listeners UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 44
  • 45.
    Grant Goddard Commercial radiorevenues forecast radio specialist COMMERCIAL RADIO REVENUES (£ 2006 prices per 1000 hours listened) 30 £27.40 £24.42 £25.07 25 £22.66 £26.22 £27.43 £26.27 £24.59 £23.90 £23.46 £23.19 £22.80 £22.41 £22.02 20 15 10 5 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 0 [source: RAJAR/Radio Advertising Bureau/Grant Goddard]  Commercial radio’s ability to monetise its listening will become harder because:  Cost per thousands are falling  Inventory has increased substantially with the launch of digital-only commercial stations  ‘Heritage’ stations are no longer delivering such substantial audiences for advertisers  Commercial radio is losing ground in advertisers’ minds to new competitors (online, games, mobile)  Commercial radio is not an exciting, attention-grabbing environment UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 45
  • 46.
    Grant Goddard Commercial radiorevenues forecast radio specialist COMMERCIAL RADIO REVENUES (£m 2006 prices) 800 691.7 700 600 627.6 632.6 660.0 680.1 632.9 581.7 556.2 558.7 500 539.2 523.9 506.2 489.2 472.6 400 300 200 100 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 0 [source: RAJAR/Radio Advertising Bureau/Grant Goddard]  Our commercial radio revenue forecast predicts continuing year-on-year declines of around 3% per annum in real terms  Commercial radio companies have yet to implement successful strategies to combat audience defection to BBC radio  Increased supply of commercial radio services (such as the launch of the Channel 4 digital radio multiplex in 2008) will not, by itself, increase consumer demand for commercial radio  Commercial radio has been closing more services than it has been opening (GCap – The Storm, Capital Disney, Core, Life; EMAP – 3C; independent – PrimeTime) UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 46
  • 47.
    Grant Goddard UK commercialradio share of listening COMMERCIAL RADIO SHARE OF LISTENING (% ) 50 47.8 COMMERCIAL RADIO SHARE OF LISTENING (% ) 60 47.0 45.9 radio specialist COMMERCIAL RADIO % SHARE RadioCentre targets [Jan07] 50 45.5 45.2 45 44.6 43.5 43.1 42.9 42.6 42.3 42.0 41.7 41.4 40 40 30 20 10 35 [Source: RAJAR/Grant Goddard] 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 0 [Source: RAJAR/RadioCentre]  Our forecast predicts a continuing decline in commercial radio’s share of listening (versus the BBC)  There is still no specific commercial radio product to appeal to the growing 50+ demographic  While the number of commercial radio stations has increased, these new services have cannibalised their commercial competitors, rather than competed directly for BBC audiences  Commercial radio formats continue to converge towards the middle ground (ie: GMG’s conversion of the Saga stations to its Smooth format), rather than offering unique content UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 47
  • 48.
    Issues for thecommercial radio industry Grant Goddard radio specialist  No date has yet been set for digital radio switchover/analogue switch off  The costs of DAB transmission alongside existing analogue services will continue to burden the industry  The costs of transmission contracts with Arqiva/National Grid Wireless require re-negotiation  Music royalty agreements with PRS and PPL require re-negotiation  Radio’s regulatory regime requires reform to level the playing field with new competitors  The 2003 Communications Act requires updating to reflect the emerging media landscape  The DAB platform is in danger of marginalisation without compelling content to drive hardware sales  The commercial radio industry has to work together to reduce its fixed cost base, during a period when revenues will continue to decline in real terms UK Commercial Radio Sector: Current Indicators & Forecasts © Grant Goddard: December 2007 48