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Commercial Radio - Market ReportProduct Type: Market Research ReportPublished by: Key Note Publications Ltd Published: May 2004 Product Code: R310-1219 Description This report examines the UK market for commercial radio, which is defined as any free-to-home radio service, broadcast terrestrially or non-terrestrially, that derives all or most of its revenue from the sale of advertising airtime.
In 2003, UK revenues from commercial radio advertising, sponsorship and promotion reached £601m, which represents an increase of 6.8% on 2002 and 17.8% since 1999. In terms of revenue, the commercial radio market is segmented into three sectors: advertising on national radio stations, advertising on local radio stations, and sponsorship and promotion on both national and local stations. National radio stations account for the largest share of total revenues but, since 2000, local radio has taken share from national stations. Sponsorship and promotion have also shown strong growth. Highly targeted audiences and strong brand-building capabilities have made the radio highly attractive to commercial organisations. In 2003, radio accounted for 6.8% of UK display advertising, compared with 5.5% in 1999. As the number of stations increases, each offering its own advertising and sponsorship opportunities, radio is proving to be a flexible medium for marketing investment. Digital technology, in the shape of digital audio broadcasting (DAB), the Internet, and cable and satellite TV, is playing an increasing role in the market and has paved the way for new broadcast channels, fresh listening experiences and even additional revenue streams. While radio is essentially a very fragmented medium, it is becoming increasingly dominated by large groups such as GWR Group PLC, Capital Radio PLC, EMAP PLC and Chrysalis Group PLC. These are the only broadcasting groups commanding more than 10% of commercial radio listening hours. GWR Group is the clear market leader, being the largest national commercial radio broadcaster in terms of its share of listening. Capital Radio is the second-largest group and is the largest local radio broadcaster. In terms of advertising revenue, GWR Group and Capital Radio are the largest players in the market and are of broadly equal size. Only one other company, Chrysalis Group, holds more than 10% of the market. Consolidation has allowed the industry to build strong brands and raise programming quality. This has improved radio as an advertising medium, as numerous individual local stations have been replaced by national, regional or pan-local networks of stations, making it easier for advertisers to build campaigns that stretch across several local franchise areas. Key Note forecasts strong growth in revenue from radio advertising between 2004 and 2008. The commercial radio market will increasingly be shaped by the growth of new digital means of listening, including DAB, the Internet and digital TV. Moreover, there will be growing competition in the market as the number of new services continues to grow and licence trading comes into force. As competition increases, the market will become steadily more fragmented, with the largest operators taking a growing share of revenues. Key Note Market Reports
Table of Contents 1. Market Definition REPORT COVERAGE MARKET SECTORS MARKET TRENDS Digital Audio Broadcasting New Media Concentration of Ownership ECONOMIC TRENDS Population Table 1: UK Resident Population Estimates by Sex (000), Mid-Years 1999-2003 Gross Domestic Product Table 2: UK Gross Domestic Product at Current and Annual Prices (£m), 1999-2003 Inflation Table 3: UK Rate of Inflation (%), 1999-2003 Unemployment Table 4: Actual Number of Unemployed Persons in the UK (million), 1999-2003 Household Disposable Income Table 5: Average Annual UK Household Disposable Income (£), 1998-2002 MARKET POSITION The UK Table 6: Commercial Radio's Share of UK Display Advertising (%), 1999-2003 Table 7: Commercial Radio's Share of UK Listening (%), Fourth Quarter 1999-2003 2. Market Size THE TOTAL MARKET Revenue Table 8: Total UK Commercial Radio Revenues from Advertising, Sponsorship and Promotion (£m), 1999-2003 Listening Table 9: Commercial Radio Listening Trends Among UK Adults (million and %), Fourth Quarter 1999-2003 Market Shares Table 10: Market Shares of Commercial Radio Listening by Company (hours and %), Fourth Quarter 2003 Table 11: Estimated Market Shares of Commercial Radio Advertising by Company by Value (%), 2003 BY MARKET SECTOR National Radio Advertising Revenue Table 12: Advertising Revenue Generated by National Commercial Radio Stations (£m and %), 1999-2003 Listening Table 13: National Commercial Radio Listening Trends Among UK Adults (million and %), Fourth Quarter 1999-2003 Market Shares Table 14: Market Shares of National Commercial Radio Listening by Company and Station (hours and %), Fourth Quarter 2003 Local Radio Advertising Revenue Table 15: Advertising Revenue Generated by Local Commercial Radio Stations (£m and %), 1999-2003 Listening Table 16: Local Commercial Radio Listening Trends Among UK Adults (million and %), Fourth Quarter 1999-2003 Market Shares Table 17: Market Shares of Local Commercial Radio Listening (hours and %), Fourth Quarter 2003 Sponsorship and Promotion Revenue Table 18: Sponsorship and Promotion Revenue Generated by National and Local Radio (£m and %), 1999-2003 3. Industry Background RECENT HISTORY INDUSTRY SYNOPSIS Table 19: Average Financial Performance of Radio Companies (£000, % and £), 2002/2003 NUMBER OF COMPANIES Table 20: Number of Commercial Radio Licences in the UK by Type, End of February 2004 REGIONAL VARIATIONS IN THE MARKET HOW ROBUST IS THE MARKET? LEGISLATION Communications Act 2003 Ofcom Types of Independent Radio Licence — Broadcasting Acts 1990 and 1996 National Licences Local Licences Cable and Satellite Licences Digital Radio Licences Ofcom Radio Advertising and Sponsorship Code KEY TRADE ASSOCIATIONS Advertising Association Advertising Standards Authority Commercial Radio Companies Association Digital Radio Development Bureau The RAB The Radio Advertising Clearance Centre Radio Joint Audience Research Ltd 4. Competitor Analysis THE MARKETPLACE Table 21: The Ownership Structure of Major UK Commercial Radio Stations by Company (number of stations), February 2004 MARKET LEADERS Capital Radio PLC Company Structure Current and Future Developments Financial Results Chrysalis Group PLC Company Structure Current and Future Developments Financial Results EMAP PLC Company Structure Current and Future Developments Financial Results Guardian Media Group PLC Company Structure Current and Future Developments Financial Results GWR Group PLC Company Structure Current and Future Developments Financial Results Scottish Radio Holdings PLC Company Structure Current and Future Developments Financial Results SMG PLC Company Structure Current and Future Developments Financial Results The Wireless Group PLC Company Structure Current and Future Developments Financial Results Other Companies CN Group Ltd Forever Broadcasting PLC KM Radio Ltd Lincs FM PLC Milestone Group PLC Radio Investments Ltd Sunrise Radio Ltd Tindle Radio Ltd UBC Media Group PLC UKRD Group Ltd OUTSIDE SUPPLIERS Content Providers/Rights Owners Software Applications/Developers Hardware Operational and Production Services Radio Content Independent Production Companies News Sources Satellite Media Services Syndicators MARKETING ACTIVITY Table 22: Main Media Advertising Expenditure by Commercial Radio Companies (£000), Year To December 2003 5. Strengths, Weaknesses, Opportunities and Threats STRENGTHS WEAKNESSES OPPORTUNITIES THREATS 6. Buying Behaviour RADIO'S POPULARITY AS A LEISURE ACTIVITY Table 23: The Most Popular Evening Leisure Activities (% of adults), 2003 THE RADIO LISTENER Table 24: Amount of Time Per Week Spent Listening to Radio (% of adults), 2003 By Demographic Subgroup Table 25: Amount of Time Per Week Spent Listening to Radio by Sex, Age, Social Grade, Region and Household Income (% of adults), 2003 Intensity of Listening Heavy Listeners Medium Listeners Light Listeners 7. Current Issues JOINT CONSULTATION ON SPECTRUM TRADING Ofcom's Case Commercial Radio Companies Association's Case A NEW RADIO ADVERTISING REGULATOR? RADIO MERGERS COMMUNITY RADIO 8. The Global Market IS THERE A GLOBAL MARKET? GLOBAL RADIO ADVERTISING REVENUE 9. Forecasts INTRODUCTION Forecast Economic Trends Population Table 26: Forecast UK Resident Population by Sex (000), 2004-2008 Gross Domestic Product Table 27: Forecast UK Gross Domestic Product in Real Terms (%), 2004-2008 Inflation Table 28: Forecast UK Rate of Inflation (%), 2004-2008 Unemployment Table 29: Forecast Actual Number of Unemployed Persons in the UK (million), 2004-2008 FORECASTS 2004 TO 2008 Table 30: Forecast UK Commercial Radio Revenues from Advertising Sponsorship and Promotion (£m), 2004-2008 Table 31: Forecast UK Commercial Radio Revenues from Advertising, Sponsorship and Promotion by Type (£m and %), 2004-2008 FUTURE TRENDS Digital Listening Consolidation and Competition 10. Company Profiles Capital Radio Plc Chrysalis Group Plc Emap Plc Guardian Media Group Plc Gwr Group Plc Scottish Radio Holdings Plc SMG PLC THE WIRELESS GROUP PLC 11. Further Sources Associations General Sources Government Sources Other Sources Bonnier Information Sources |
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