Weak Ad Conditions Push Capital Radio Profits Down 18%

Despite the protracted weak markets, the group says that it is now seeing signs of slight improvement in the UK advertising sector. Chief executive David Mansfield today said that there is greater visibility and positive revenue growth is forecast for the current quarter, the first of its financial year.

Mansfield also acknowledged the problems faced by the company’s flagship London station, 95.8 Capital FM. The station has suffered a steady decline in audiences and is soon to lose its lynchpin breakfast presenter Chris Tarrant (see Capital Holds Up Despite DJ Departure), who will be replaced Johnny Vaughan.

“We recognised this year that our London flagship station 95.8 Capital FM, required greater creative and programming focus at a senior level. We initiated structural, management and programming changes to tackle increased competition and declining audiences, that culminated in September with the announcement of Johnny Vaughan as the station’s new breakfast show presenter. We are confident that in time, these moves will reverse the recent decline in audience figures at 95.8 Capital FM,” said Mansfield.

Outside London the group’s Century network is performing well, achieving record reach and share across the network, with 105.4 Century FM becoming the Northwest’s leading commercial radio station.

Outlook Capital says it is encouraged by recent signs of optimism in the media marketplace, with industry forecasts for revenue growth of approximately 5% in the year to September 2004. However, it remains cautious on the timing of a full advertising sector recovery.

Revenue in October was up by approximately 8% against a weak performance during the same period last year and November looks likely to be up 4%. Booking levels are providing greater visibility for December and indicate that the month will be positive, which will represent six consecutive months of growth.

On the downside, the group sees limited short term effect on revenue from the recent audience figures for 95.8 Capital FM.

“We continue to believe that sustained growth will return to the radio advertising market over time and that radio will continue to outperform the display advertising market,” concludes Mansfield.

Shares in Capital Radio were up by 7.1% at 462.5p by mid-morning today.