UK Radio Industry Looks Ahead At Merrill Lynch Conference
Current UK radio trading remains patchy with all radio companies remaining somewhat cautious, according to a media conference held by Merrill Lynch this week.
Increasing share Radio operators indicated a bright mid-term outlook for the industry, predicted that radio’s current 6.4% share of display advertising could grow to over 8.0%, ‘driven by radio’s cost advantage relative to TV and attractive younger age demographics’.
Longer-term growth may be boosted by digital radio, with set prices targeted to be at around £99 by Christmas this year. Significant market share gains from the BBC’s national stations is possible as digital should allow commercial radio equal spectrum with the BBC, something which it has never had before, notes Merrill Lynch.
Consolidation expected Consolidation is expected following the Draft Communications Bill, with the current eight or so players expected to merge down to just three or four. Radio-radio company mergers are currently seen as more attractive in terms of synergy than radio-poster mergers; radio-TV synergies are favoured slightly more than outdoor mergers.
However, Merrill Lynch analysts do not expect much merger activity before August, when the Joint Select Committee finalises the Bill. The broker believes that the terms of current legislation must be adhered to until after the Queen’s speech in November this year, when the legislation will be formally delivered.
GWR banks on 3G Merrill reports GWR as claiming that the digital ‘killer application’ will be datacasting through mobile phones. This can be complementary with 3G (third generation services) rather than competitive, due to its continuous and mass application nature which is unconstrained by bandwidth.
For reference, the latest UK radio advertising growth forecasts, from the Advertising Association, are shown here.
| Quarterly Commercial Radio And All Advertising Trends And Forecasts | |||||
| Radio Revenue (£m) | YoY Qr Growth | All Display Revenue (£m) | YoY Qr Growth | Quarterly Radio Share | |
| Q1 02 | 115 | -5.0% | 2,042 | -7.1% | 5.6% |
| Q2 02 | 126 | 5.0% | 2,150 | 1.5% | 5.9% |
| Q3 02 | 127 | 6.7% | 2,084 | 5.8% | 6.1% |
| Q4 02 | 147 | 11.4% | 2,453 | 7.4% | 6.0% |
| Q1 03 | 125 | 8.7% | 2,206 | 8.0% | 5.7% |
| Q2 03 | 137 | 8.7% | 2,328 | 8.3% | 5.9% |
| Q3 03 | 139 | 9.4% | 2,247 | 7.8% | 6.2% |
| Source: Advertising Association, December 2001 | |||||
