Feature: Bigger Is Not Always Better In Radio
The age-old adage that bigger is always better applies to many things, but not, it seems, to radio, with the latest round of financial results showing that some of the UK’s smaller commercial operators experienced stronger advertising revenue growth than their larger competitors.
Amongst the UK’s key commercial radio companies the smaller, but by no means minor, Scottish Radio Holdings and Chrysalis reported better trading figures than their behemothic rivals GWR, Emap and Capital Radio.
Scottish Radio Holdings, which has been identified as a possible takeover target for Glasgow-based SMG following the relaxation of the media ownership regulations, saw its first half revenues rise by 5.3% year on year, with national spend up by 8% and local up by 3% for the six months to 31 March.
After vowing to play a leading role in the formation of the UK radio landscape over the next few years, Chrysalis saw an impressive 19.8% jump in airtime revenues in the full year to March. This helped it to outperform the radio industry as a whole, which is believed to have delivered growth of around 2%.
Meanwhile, things were less positive over at Capital Radio, which has been plagued by speculation over the future of its lynch-pin presenter, Chris Tarrant. The UK’s largest radio group gave little away in its first half financial results, but analysts put adspend down by 5% for the period, in a market which is thought to have been up by 2% in the six months to March.
Rival radio giant, Emap, which is preparing to take on the BBC in the battle for dominance of the digital radio market, faltered slightly in the full year to March, with airtime revenues down by 1%, in a market up by 3%.
In the same period, GWR experienced a drop of 2.3% overall, with national spend up by 0.6% and local down by 6.6%. Ralph Bernard’s radio group was dealt a further blow last month when it was forced to sell its stake in Vibe Radio Services to Scottish Radio Holdings after having its acquisition of Bristol-based Vibe 101 blocked by the Competition Commission.
Analysis of the latest RAJAR data for the first quarter of 2003 reveals no such correlation between size and performance, with smaller radio groups seeing their overall weekly reach fluctuate alongside that of their larger rivals.
Of the key radio operators to have recently reported financial results, SRH managed to notch-up the strongest growth in terms of listening, with its total weekly reach rising by 2.8% period on period to just over 3 million. GWR also recorded some positive movement with its group total (excluding national station Classic FM) improving by 0.8% to around 5.4 million.
Things were less rosy for Emap and after losses at its key Magic 105.4 and Kiss 100 stations, the group saw its total weekly reach decline by 1.4% to 6.5 million. Capital Radio was also hit by the declining fortunes of its flagship 95.8 FM in London, which helped to bring the group’s total weekly reach down by 0.9% period on period to 7.7 million. Meanwhile, despite acquiring LBC and NewsDirect for £23.5 million, Chrysalis saw its total weekly reach slip by 1.3% to just over 5.6 million.
The radio advertising market has faced a rough ride over the last few years, with the economic downturn taking its toll on the industry’s key players, large or small. Analysts at Merrill Lynch estimate that the UK radio sector under performed the television market in 2002 with revenue growing by 2.5% during the year, compared to around 4.1% for its main broadcast rival.
However, latest figures from the RAB show that commercial radio saw adspend rise to record levels, with £138.9 million being spent on the medium in the first three months of this year. The latest forecast from the Advertising Association also brings good news to the sector, predicting that radio will outperform the overall display advertising market throughout the year.
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