Magazine article Marketing

Raymond Snoddy on Media: Radio Flux Belies Good Times Ahead

Magazine article Marketing

Raymond Snoddy on Media: Radio Flux Belies Good Times Ahead

Article excerpt

It would be easy to get very pessimistic about commercial radio at the moment; listening figures may be fine, but ad revenues were down by 5% last year. More to the point, it is far from clear how committed a number of the big radio groups actually are to the future of the business.

Whether they admit it formally or not, a number of 'for sale' signs are popping up. Can anyone be confident about predicting the future of SMG's Virgin Radio or the radio interests of either Emap or Chrysalis?

The only stable points are GCap, which, although struggling compared with the original vision of the Capital-GWR merger, is at least committed to the future of radio, and Guardian Media Group (GMG). In the wake of GMG's purchase of Saga Radio, the timing does not seem great for either it or GCap to embark on grand acquisitions.

It now seems inevitable that SMG and Virgin Radio will fall into the lap of UTV, a company that is serious about expanding in radio. The longer the deal takes, the bigger the share of the action that the tenacious Belfast-based group is likely to take.

With tribes of management consultants crawling over the deal, it is impossible to predict the outcome. These characters tend to like action and are almost required to come up with radical proposals to justify their hefty fees. So don't rule out a break-up of Emap - all in the interests of maximising shareholder value, of course.

As for Chrysalis, it should be very wary about considering selling off its prize asset at a low point in investor confidence in the traditional media. Unfortunately, its chairman, Chris Wright, has previous form here. He was reluctantly persuaded to sell his TV interests for pounds 45m. Last year an expanded All3Media was sold to Permira for pounds 320m. It would be unfortunate if Chrysalis, which always claimed it wanted to be a consolidator in radio, were to repeat its mistake and end up as a modest music publisher.

Confront Andrew Harrison, chief executive of commercial radio trade body the RadioCentre, about the medium's future, and his answer is interesting. A lifelong marketer at senior perches which have included Procter & Gamble, Coca-Cola and Nestle Rowntree, Harrison acknowledges the current instability in the industry and, naturally, hopes it will work its way through as soon as possible. But he is still irredeemably optimistic about the medium, which is probably a good thing, given his assignment. …

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