Jazz FM’s Digital Future Raises Share Price. Cool.

Jazz FM, whose share price has stayed as laid back as its programming for the last few months has suddenly witnessed a flurry of activity. Prices ended Monday’s trading at 82½p, just as they had every day of the previous week, but by the end of yesterday’s trading the upward trend of the rest of the week saw shares finish at £1.15½.

The reason for this sudden market enthusiasm appears to be Jazz FM’s inclusion on the Switchdigital’s London multiplex line-up. London’s second multiplex licencees began broadcasting on Monday at 6pm (see Second London Digital Radio Multiplex Prepares To Switch On), adding six new digital-only stations and three digital versions of existing stations (including Jazz FM) to the digital radio offerings for London.

Switchdigital’s launch of the multiplex excitedly stated, “No other city has such a range of digital radio services available to so many people – more than 8 million people aged 15-plus.” However, RAJAR research undertaken last year (see RAJAR Makes Plans For The Measurement Of Digital Radio) estimated that only 30,000 homes in the whole of the UK will have digital radio equipment by the end of this year. Jazz FM may claim over 60% of its listeners are in the sought-after ABC1 market, but can London’s proportion of that 30,000 really attract additional ad revenue to justify share price excitement?

It is thought that a better structure is in place since Clear Channel bought a stake in the two Jazz FM stations last year (see Clear Channel Want A Stake In Jazz FM). However, the real answer may lie in the government’s incentive for existing radio stations to begin digital broadcasting. The arrangement means that if an existing station secures a place on a digital multiplex, whose licences last for twelve years, it automatically renews its existing analogue licence (normally eight years). This means Jazz FM and its shareholders can be sure it will be broadcasting to London, where is currently has a weekly reach of 670,000, including that high proportion of ABC1s, for over five years more.

Jazz FM: 020 7706 4100 RAJAR: 020 7584 3003