Why Global Radio Needs to Sell Capital 95.8

More Capital Radio news today as they confirm that the lovely Denise Van Outen is to leave the Breakfast show after just six months on the show. I think if there’s one station that’s plagued with bad news, it’s got to be Capital 95.8.

As the UK’s first heritage ‘popular music’ station, in the most competitive market in the country, it has become the poster-boy for commercial radio’s ratings decline. If you look at the ratings for each of the One Network or Big City Network stations they all follow a similar pattern, though many of them have been insulated, so far anyway, by a lack of much competition in their TSAs.

Sorry anoraks, but all the investment in the world isn’t going to be able to reverse this decline. The ‘mainstream pop’ position is one that’s under attack not only from the well-funded Radio 1 and Radio 2 but also a selection of broad niches like rock and dance as well as music-as-mood stations like Magic and Smooth.

For operators of these stations the problem is that they still make significant amounts of money. If you’re in TSA of over 500,000 you’re probably going to be making over £750k profit per site. Indeed, as the ratings have declined more effort is put into cost control and driving profitability to 40%+. At the same time these stations need more management focus and effort to ensure that the audiences (and group profits) don’t fall off any cliffs. However, there is a law of diminishing returns and at some point the audience and sales effort will not be able to support these margins and their profits will naturally drop.

Capital shares this same problem, but if also faces the 200watt glare of the industry, press and the advertising agencies. Every problem or small ratings drop is reported as another ‘Capital Disaster’ alongside a picture of Chris Tarrant grinning from the 80s. In fact Capital’s hours have been roughly the same for the last three years, Magic’s total hours haven’t really changed from what they were doing in 1999 and Heart looks like it’s peaked and has had four quarters of decline. These are all mature stations now.

The up and down nature of share is the result of more new entrants coming in and grabbing hours here and there and the ascent of Radio’s 1 and 2 more than any particular programming failures at the big three.

In the face of the market’s changes and the licences they own, Global Radio’s move to a purely brand-driven strategy is an understandable one. Concentrating on Galaxy (and probably widening its reach to the XFM Scotland licence, the Power FM station and a London licence), Heart (and the Heartification of Network 1 in the One Network) as well as the healthy hours of Classic FM makes sense. And whilst I think it’s going to be RAJAR-suicide to change the stations’ names to Heart and that local sales will suffer faster because there’s less local programming to sell, I can see what they are trying to do.

The other networks – XFM, Choice, Gold and their digital remnants, whilst if pushed could make a difference, at the moment don’t and will probably be ignored or sold/swapped for something more interesting.

This leaves Red Dragon, BRMB, Trent, Leicester, Ram and of course Capital 95.8 – all profitable, but hard to maintain and very distracting to a business if you want to concentrate on growth.

Surely for Global the best way to discard the baggage of the past, cast away the worry of declining pop audiences and concentrate on a brand-based multi-platform future is to start by disposing of Capital 95.8?

3 thoughts on “Why Global Radio Needs to Sell Capital 95.8”

  1. Its a bit harsh, just because things get tougher, sell it. Also how much do you think Global would get for Capital, its not at its peak and I think in this market it wouldnt be enough.

    They tried to relaunch it 18 months ago but it hardly changed. With new management, im guessing radical changes and with Denise leaving, it could be a blessing in disguise for a big shake up and actually get more youth involved and really take on radio1…

  2. I think it’s high time Capital’s management stuck with something that they’ve been doing. Sure, the audiences are plummeting, but if you react to every drop with one radical(-ish) change after another, then you’ll never sustain.

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