News story about Capital Radio plc's 2003/4 preliminary financial results and its assertion that the BBC is to blame for UK commercial radio's audience losses, written by Grant Goddard in November 2004 for The Radio Magazine.

1. NEWS: CAPITAL RADIO BLAMES
BBC FOR U.K. COMMERCIAL
RADIO AUDIENCE LOSSES
by
GRANT GODDARD
www.grantgoddard.co.uk
November 2004

2. Unveiling its preliminary financial results, Capital Radio described 2003/4 as a
“challenging year for commercial radio” and attributed blame for the industry’s
declining audiences to the “resurgent” BBC, which had achieved its highest-
ever RAJAR share of radio listening. Despite the lower audiences for its
flagship stations – Capital FM, Capital Gold and BRMB – the Capital Group’s
like for like revenue increased 4% year on year to £119.9m, although pre-tax
profit was down 5% to £12.6m.
Capital remains optimistic that “advertising market conditions began to show
some signs of improvement,” though it warns that October revenue was down
7% year-on-year, November was down 5% and December will be down
“marginally”. Revenues at London’s Choice FM have increased by 20% since
Capital acquired the station in March this year, while the Century FM network
and Xfm both showed year-on-year revenue increases of 35%.
Prior savings made from cuts to live sports commentaries are being diverted to
Xfm and Choice FM, whose marketing budget will be doubled to £1.5m. Over
the next six months, this will pay for an advertising campaign for Xfm and
unspecified programming improvements at Choice FM. Acknowledging the
vulnerability of the group to the main Capital FM brand and high-profile DJs
such as Chris Tarrant, Capital chief executive David Mansfield told The
Guardian that the planned growth of the Xfm and Choice FM brands “will end
in a situation where the company is not overly dependent for its revenues on
one station and one breakfast show.”
Turnover from Capital’s DAB stations improved 35% year on year to almost
£1m, although the pre-tax loss from digital operations widened to £5.4m.
Capital Disney now attracts 248,000 listeners, while Life’s audience remains
unmeasured by RAJAR. The Capital Gold brand will be “revitalised” and “re-
established as a growth business” through its inclusion on digital platforms, as
Capital believes the network’s audience and advertisers have become
“increasingly challenged” by its AM broadcasts.
Although the Group’s staff numbers increased over the year from 662 to 677,
the accounts include £560,000 for staff redundancy payments, in addition to
£9.2m for on-air presenters employed on short-term and part-time contracts.
Pressuring Ofcom to review the BBC’s public service remit, Capital argues that
“BBC programming should be complementary to commercial TV and radio”
which, it says, would create a more level playing field and widen consumer
choice. Mansfield pledges that the proposed merger with GWR would “leave
us well-positioned to compete more effectively against the BBC,” though
Capital continues to be the UK’s most listened to commercial radio group,
attracting 7.8 million listeners per week.
[First published in 'The Radio Magazine' as 'Capital Blames BBC For Commercial Radio's Audience Losses', #660, 4
December 2004]
News: Capital Radio Blames BBC For UK Commercial Radio Audience Losses page 2
©2004 Grant Goddard

3. News: Capital Radio Blames BBC For UK Commercial Radio Audience Losses page 3
©2004 Grant Goddard
Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of
experience in the broadcasting industry, having held senior management and consultancy
roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at
http://www.grantgoddard.co.uk