Radio Trading Remains Weak Into Q4 Says Merrill Lynch

The unexpectedly poor Q3 radio trading in the UK appears to be continuing into October, although there is currently very little visibility beyond that, according to analysts at Merrill Lynch.

In an update on the UK radio marketplace, the broker said that Q4 comparables should ease slightly and it hopes to see the market pick up somewhat in November/December, after a set of relatively poor trading statements in the period to September.

Emap’s first half saw revenues down by 7% and Capital Radio’s full year to September showed sales down by 2% after a H1 drop of 7%. GWR Group’s sales were down 2%, as were Scottish Radio Holdings’. Chrysalis Radio continues to outperform the market, with a 9.5% revenue rise in the full year to August.

The Communications Bill will get a reading at the same time as the Queen’s speech on 13 November. Merrill Lynch believes that non-EU ownership of UK radio companies will be allowed and that the regional plurality rules could be relaxed.

When definitive new rules do emerge they will permit operators to plan mergers and acquisitions more effectively, although major activity is not likely in the short-term, due to market conditions, say analysts. A priority for operators are domestic mergers, which will bring with them synergy cost-savings. These are more likely than overseas acquisitions, says the broker’s report.

The trading of the major radio groups relative to the radio market as a whole is shown here.

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