The Communications Market 2008

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The Communications Market 2008 The Communications Market 2008 4 4 Radio 233 Contents 4.1 Key market developments in radio 235 4.1.1 UK radio industry key metrics 235 4.1.2 Introduction 235 4.1.3 Commercial radio revenue grows despite audience decline… 235 4.1.4 …although listening to national commercial stations rises 3.2% 236 4.1.5 Younger listeners lead a fall in listening hours 236 4.1.6 The Hits becomes the first digital station to enter the top ten by reach... 237 4.1.7 …helped by a rise in digital listening to 18% of the total 238 4.1.8 Digital Radio Working Group publishes interim report on digital plan 241 4.1.9 RAJAR to review listening survey methodology 242 4.2 The radio industry 243 4.2.1 Radio licences 243 4.2.2 Industry revenues and expenditure 248 4.2.3 Commercial groups’ performance 251 4.2.4 Overview of the major radio operators in 2008 254 4.2.5 DAB availability and station choice 270 4.2.6 Restricted service licences 274 4.3 The radio listener 277 4.3.1 Radio reach 277 4.3.2 Listening hours 278 4.3.3 Radio ownership and listening trends 282 4.3.4 Digital listening 285 4.3.5 Listening patterns and satisfaction with radio 288 234 4.1 Key market developments in radio 4.1.1 UK radio industry key metrics UK radio industry 2002 2003 2004 2005 2006 2007 Weekly reach of radio (% of population) 90.5% 90.5% 90.3% 90.0% 89.8% 89.8% Average weekly hours per head 21.8 22.1 21.9 21.6 21.2 20.6 BBC share of listening 52.6% 52.8% 55.5% 54.5% 54.7% 55.0% Total industry revenue (£m) 1,083 1,128 1,158 1,156 1,149 1,179 Commercial revenue (£m) 509 543 551 530 512 522 BBC expenditure (£m) 574 585 607 626 637 657 Radio share of advertising spend 3.4% 3.6% 3.5% 3.3% 3.0% 2.9% Number of stations (analogue and DAB) 345 357 364 372 389 397 DAB digital radio take-up (households) 1% 2% 5% 10% 16% 22% Source: Ofcom, RAJAR (all individuals age 15+), BBC, WARC, radio operators 2007 4.1.2 Introduction Radio has maintained its audience reach in 2007 but average hours of listening have fallen. Despite this, commercial revenues and BBC expenditure are up since last year, while levels of digital listening have also continued to increase. The following section provides an overview of the performance of the radio sector in 2007. This includes analysis of the separate radio sectors, including the growth in digital listening, and a review of some of the key events of the year. 4.1.3 Commercial radio revenue grows despite audience decline… The BBC’s share of total radio listening rose by 0.3 percentage points to an average of 55.0% in 2007. Over the same period, total commercial radio share fell to 42.8%, down by 0.3 percentage points on the year, and down by 2.6 percentage points on five years ago. By Q1 2008, BBC share had increased further to 56.8%, with commercial radio down to 41.1%. Despite this fall, commercial radio revenues have grew by around £10m (2.0%) in 2007 to £522. This suggests that the radio industry has been successful in attracting advertisers despite a more uncertain marketplace over the last 12 months. Commercial radio accounted for a 44.3% share of total radio funding in 2007, down slightly (by 0.3 percentage points) on 2006. Meanwhile, the BBC’s radio expenditure rose by an estimated £20m in 2007 (up 3.2%) to around £657m for the year. The BBC’s share of industry funding, at 55.8%, almost matches its audience share of 55.0%. 235 Figure 4.1 BBC and commercial radio share of listening and funding Share of listening hours / share of radio funding 70% BBC radio share of funding 60% 55.8% 53.0% 52.8% 53.5% 54.5% 55.4% BBC radio 50% 52.6% 51.9% 52.4% 54.2% 54.7% 55.0% share of hours 47.0% 48.1% 47.6% Commercial radio 40% 45.8% 44.6% 44.3% 45.2% share of funding 45.5% 44.6% 43.5% 43.1% 42.8% 30% Commercial radio share of hours 20% 10% 0% 2002 2003 2004 2005 2006 2007 Source: Listening data based on RAJAR (Adults 15+). Funding share data based on commercial radio revenues and estimated BBC expenditure on radio for 2007. Note: Remaining percentage for listening data is for ‘other’ listening, including independent stations, local community and RSL services. 4.1.4 …although listening to national commercial stations rises 3.2% The national commercial radio sector saw its listening hours rise by 3.2% in 2007, aided by the wider availability of national stations on digital formats, while BBC network (Radios 1-5 Live) listening was stable during the year. Listening to local stations was lower, both for BBC and commercial radio, down by 7.0% and 4.5% respectively. Figure 4.2 Change in listening hours 2006-2007, by sector Percentage change in listening hours BBC network radio BBC local / national National commercial Local commercial 10% 5% 3.2% 0.0% 0% -5% -4.5% -7.0% -10% Source: RAJAR, (all listeners aged 15+). Data based on calendar year 2006 -2007. 4.1.5 Younger listeners lead a fall in listening hours Over the year, the amount of time spent listening to radio has continued to fall across all age groups. According to RAJAR, average listening for all adults 15+ stood at 20.6 hours a week over 2007,.down 2.8% from 21.2 hours a year ago and down 5.5% from 21.8 hours five years ago. By comparison television viewing was up during 2007, with average viewing at 23.7 hours per week, up from 23.5 the previous year and from 23.4 hours five years ago. 236 Generally, the reduction in radio listening hours has been more pronounced among younger people, with the 15-24 age group listening 3.1% less in an average week than a year ago. When including children, the 4-24 age group is down 7.8% overall. However, 2007 also saw a fall in older age groups, with listening down 2.4% among 35-44s, and down 2.3% among the over-55 age group. Figure 4.3 Changes in listening hours, 2006-2007, by age group Percentage change in listening hours All adults 15+ 4-24 15-24 25-34 35-44 45-54 55+ 0% -0.6% -1.2% -2.0% -2.4% -2.3% -3.1% -5% -7.8% -10% Source: RAJAR, data based on calendar years 2006 – 2007. 4.1.6 The Hits becomes the first digital station to enter the top ten by reach... BBC Radio 2 remained the station with the highest weekly audience, with over 14 million listeners by Q1 2008. However, Radio 1 achieved the highest growth of the BBC stations, up 6.5% on last year with a weekly reach of over 13 million. Among the commercial radio stations, Classic FM had the highest reach, with 5.9 million weekly listeners, although this was down on a year ago when the audience reached 6.5 million. TalkSPORT was a large gainer in the year, up by 8.0% to a weekly audience of almost 2.7 million, while Virgin Radio was up by 2.0%, to 2.8 million weekly listeners. In London, Magic 105.4 saw its audience increase by 3.9% to over 2.2 million, boosted by the station’s availability on digital platforms in areas outside London. The Hits became the first digital-only station to break into the top ten, with a weekly audience of 2.3 million, up by 43.2% since last year. Figure 4.4 Most listened-to radio stations, Q1 2008 Weekly reach (thousands) % change year-on-year 15000 + 4.4% Radio group + 6.5% BBC 12000 -1.6% Gcap (now Global Radio) 9000 SMG (now TIML) + 2.4% 14,959 -8.6% UTV 6000 13,118 9,980 Bauer + 43.2% + 2.0% + 8.0% + 20.1% 3000 6,544 5,944 + 3.9% -1.9% -4.8% -6.0% 2,814 2,680 2,320 2,242 2,221 1,904 1,908 1,836 0 BBC BBC BBC BBC Classic Virgin talkSPORT The Hits Magic Heart BBC Kiss 100 95.8 Radio 2 Radio 1 Radio 4 Radio 5 FM Radio 105.4 106.2 Radio 3 Capital Live FM/AM Radio Source: RAJAR, Q1 2008 (all listeners 4+), figures are rounded. Note: New RAJAR specification introduced in Q2 2007, therefore in some cases data may not be comparable with previous years. 237 4.1.7 …helped by a rise in digital listening to 18% of the total Cumulative sales of DAB digital radio sets passed the 8 million mark during 2008, with RAJAR estimating that around 27% of adults had access to a DAB set at home by Q1 2008. Digital radio services are also available via digital television, for which take-up had reached 87% by the end of Q1 2008, and also via broadband, where residential penetration reached 57%. Listening share, across all digital radio platforms reached 18% by Q1 2008, of which DAB digital radio accounted for 11%, digital television 3%, online 2%, with 2% unspecified (Figure 4.4).
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