Business case for digital radio is no longer sound

THERE are two stories unfolding in the world of British digital radio. One, as told by the commercial radio industry trade group, RadioCentre, and the peak radio-audience research body, paints a picture of reasonable health.

THERE are two stories unfolding in the world of British digital radio. One, as told by the commercial radio industry trade group, RadioCentre, and the peak radio-audience research body, paints a picture of reasonable health.

According to Radio Joint Audience Research, Britons consumed more than 16% of their radio last quarter via the three digital platforms – purpose-built DAB (digital audio broadcasting) radios, the internet and digital television. The number of digital listening hours, a measure of aggregate consumption, jumped 10% on the previous quarter to nudge 170m per week.

Ownership of DAB radios, which account for about two-thirds of digital consumption, is also climbing. Sales jumped 16% in the quarter for a 40% year-on-year increase. There are now 6.5m DAB radios across the country.

The other story, stripping out the painfully selective media releases and shallow public relations puff, is vastly different. GCap Media, the biggest player in digital radio, announced earlier this week it was all but withdrawing from the industry, selling its majority stake in Digital One, the national multiplex – or platform of channels – for a token £1 ($1.95, e1.34) to broadcast infrastructure group Arqiva. That comes after an estimated investment by GCap of more than £80m in digital radio.

Put plainly, the benefit companies have received from investing in digital radio since its commercial launch in 1999 has fallen far short of justifying the vast sums poured in. It took an outgoing executive, former GCap chief Ralph Bernard, to offer a bluntly honest assessment of the state of digital radio in Britain. Preparing to leave the company late last year, Bernard acknowledged the medium’s miserable growth was his biggest regret. He said digital radio “was probably three to four years behind where it should be and that has impacted very seriously on the financials of the radio business”.

The casualties are mounting. In the last two months, GCap has closed its music station, Core, and will close or sell other stations, Life, theJazz and Planet Rock. GCap, the £305m broadcaster being eyed for acquisition by Global Radio, has been hardest hit as the biggest investor. It is understood to have been spending some £16m annually from total broadcast costs of £25m.

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