The FT’s Ben Fenton has a depressive take on the prospects for commercial radio.
The BBC is “crippling” the commercial sector, writes Fenton. Meanwhile, growth in digital audiences — the object of much investment — is slow. (85% of homes possess digital TV; only 22% possess a DAB radio.)
The remedy? There are two schools of thought.
The first is represented by Grant Goddard of Enders Analysis, who reckons that commercial radio needs “a forward-looking strategy”.
This would involve more competition and plenty of investment in content. Of course, the assumption here is that radio has a future as a growth medium.
The second — much more conservative — approach is being championed by the private equity investors who are bidding for EMAP’s radio business.
In Fenton’s words, this camp would like to see “two, or at most three, big private players sitting around a table and sharing out stations like a fixed game of poker”. The carve-up would reduce competitive pressure. Cost cutting would do the rest.
If you take the view that commercial radio is mature, or declining, the poker game approach makes some sense. The market share configuration of commercial radio looks oddly like that of a growth industry:
GCap — 29%
EMAP — 23%
Chrysalis — 11%
Guardian Media Group — 11%
Meanwhile, three out of four of the leading players are already privately-held, or soon will be.
As Phil Riley, the former Chrysalis Radio chief executive who is running a private equity bid for EMAP Radio, puts it:
“The decisions that need to be taken to make this industry. . . would be taken so much better by companies that were not thinking about what effect such-and-such a move would have on investors and the share price”.
Of course, Ofcom would need to be squared before the game could commence. But the process of softening up the regulator has already started.
According to some, last week’s retirement of Ralph Bernard, the veteran chief executive of GCap, brings the industry a bit closer to Game On.
So who will take the reins at GCap after Bernard’s retirement?
If GCap London’s managing director Fru Hazlitt gets the job, it’ll answer a question I’ve been asking since 2005, when this feisty former sales executive quit her job as managing director of Yahoo Europe to become. . . chief executive of Virgin Radio.
In doing so, Hazlitt became that rare thing — a media executive whose career path led from Web 2.0 back to Big Media. Usually, the traffic in talent goes in the opposite direction.
Getting the top job would also explain why Hazlitt accepted GCap’s offer of a seat on the board when she left Virgin Radio in January of this year.
Hazlitt is known for her amusing turn of phrase. At a recent industry conference, she was asked to comment on a Welsh newspaper story criticizing the London 2012 Olympics.
She commented: “Who cares what the f***ing Welsh think?”
There are some who suggest that Hazlitt left Yahoo — with its famously US-centric management style — after saying the same thing once too often about her American overlords.
At Numis Securities, Paul Richards seems perturbed by Hazlitt’s candour. Her chances of getting the top job won’t have been helped by those comments, he suggests.
Has Richards ever heard the language round a high-stakes poker table? Presumably not. . .
PS: Nice to see Ralph Bernard rolling back 40 years of progress toward gender equality in his final conference call with the media.
“Thank you gentlemen, it’s been a pleasure,” he said at the end.
Then, after a pause: “And ladies, sorry . . .”