Capital Remains Cautious Despite Healthy Profits
Capital Radio has increased revenue by 4% to £199.9 million and group profit by 4% to £23.7 million for the year, but has warned that the advertising market has shown signs of slowing in the last few months.
Reporting its preliminary financial results for the year to the end of September, the radio group revealed the most significant revenue rise for four years following a strong performance in London from Xfm and the recently acquired Choice FM.
The launch of alternative music station Xfm across the UK and its subsequent sale to national advertisers also gave the group an impressive boost, as did the extension of the Capital Gold Network and the continued success of the Century FM Network.
However, Capital, which is currently ironing out details of its £711 million merger with GWR, also warned that the fourth quarter of this year looks more challenging as the market experiences a slowdown in spend from key FMCG advertisers.
The group claims that revenue dipped by 7% year on year during October and looks to be down by around 5% for November. December is showing a slight improvement on this trend but is still likely to record a marginal loss year on year.
Capital Radio chief executive, David Mansfield, said: “In 2004, we delivered the Group’s best year on year growth performance for four years and retained commercial brand leadership in the important London market. We continue to strengthen our brands and we will be stepping up our investment in Xfm and Choice FM during 2005.”
He added: “Despite a tough advertising quarter, we remain confident in the prospects for radio. We believe our proposed merger will bring benefits to listeners, advertisers and shareholders and leave us well-positioned to compete more effectively against the BBC.”
Earlier this week Capital’s merger partner GWR revealed that it had seen profits rise by 12% to £6.9 million in the six months to September. However, it also said the radio advertising market remained weak due to increasing competition for audiences (see GWR Profits Up Despite Weak Advertising Market).
Capital Radio: 020 7766 6000 www.capitalradiogroup.co.uk
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