How Do You Solve A Problem Like Consolidation?

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Image: Nick Jeffery

So, a few issues for Global Radio as the Competition Competition decide the group need to dispose of a number radio stations:

East Midlands: Smooth OR Capital
Cardiff and South Wales: Real OR Capital
North Wales: Real OR Heart
Greater Manchester and the North-West: Capital OR Real XS with either Real or Smooth
North-East: Real OR Smooth OR Capital
South and West Yorkshire: Real OR Capital
Central Scotland: Real OR Capital

I have some sympathy for Global as I’ve been in a similar, albeit smaller, position when I worked at GWR and we had acquired two Vibe FM radio stations into a new joint-venture with SRH. We, too, had to go through lots of regulatory hoops, and we also lost. Having to sell on the stations.

Strategically, the worst thing about these deals is the sheer amount of time they take up. It’s incredibly distracting and you end up taking your eye off the ball of loads of day to day business issues.

With a deal the size of the GMG acquisition, I imagine one of the issues was there were so many potential scenarios about what the CC may say. This means that you have to have a number of plans – again something that takes up a lot of time.

Now they’ve got the decision, there’s also lots of choices to make.

Are they after the most audience, the most revenue or true national coverage for their brands? For example, it’s probably a sensible guess that they would like a near-as-possible s national station in Heart and then a what-they-can-manage network with Capital. So, probably Smooth will take the brunt of disposals. But then there’s something like Smooth North West which rates really well. It’s not an easy pick.

The other thing to think about, is not to assume that they merely want to own the most stations. The point of having decent national networks is that Global become the defacto dominator in national sales. And to do that, you don’t necessarily need to own all the stations. You just need the national sales contracts.

I would have thought Global’s strategy would be to keep the stations where they have the biggest opportunity of upside – stations that have strong local and national revenue potential and those that occupy a broad format. Therefore, I would have thought the main aim was to retain Heart as the primary network.

Which would suggest the following green ones are keeps…

East Midlands: Smooth OR Capital
Cardiff and South Wales: Real OR Capital
North Wales: Real OR Heart
Greater Manchester and the North-West: Capital OR Real XS with either Real or Smooth
North-East: Real OR Smooth OR Capital
South and West Yorkshire: Real OR Capital
Central Scotland: Real OR Capital

But then, I even look at that list, and think “would you let Capital Yorks go”?

None of this is easy.

Then you think about who’s around to acquire the stations that you dispose of? And at what price? It’s a fire sale. Bauer can’t really buy much (not that they would want to sell to them). The other radio groups left in the UK haven’t really got deep pockets.

The last thing you would want to do is crack open your national networks, sell them for little money AND not necessarily be able to keep your national sales operation. Whilst you may want to ‘licence’ the brand out, the other UK operators might not want to play ball AND they know that you’ve got only 12 weeks to do the deal.

The deal you want is for a White Knight to come along. You want someone who will buy all of those stations, get a brand licence off you, and keep your national sales contract. Maybe, perhaps,  someone from a different country? Indeed, the selling price – what £20-30m max – isn’t actually that much in the grand scheme of things. Perhaps a new buyer wouldn’t even have to pay cash?

That way, it doesn’t matter, really, what you sell, as you still achieve your main aims – being the number one sales point – and earning as much from the stations you own as possible.

Warehousing

Some consider this sort of thing to be a warehousing deal. ie you’re getting round the rules, whilst someone ‘looks after’  them for you whilst you wait for the rules to change.

In reality, these are actually very difficult to accomplish. The problem is you don’t know how long it will take to change the rules, it could be a long time. If that’s the case the acquirer really needs to be building the business – whatever that is.

I was involved a bit when UBC bought a load of Classic Gold’s off of GWR, though GWR still had a stake in the new acquisition vehicle – CGDL. Whilst some people regard this as a warehousing job, in reality, views diverged quite regularly. The UBC-end would very much do what they wanted to grow the business for their shareholders. And as a quoted company – that’s clearly their prerogative.

What’s happened with Orion is another interesting example. They brought all the stations that Global had put up for sale, keeping Global’s national sales operation and (for a while) keeping the Heart brand too. The market shifted quite suddenly in the Midlands (Capital rebrands etc) and Orion clearly had a rethink about what would serve them well – swapping Heart for Gem. I also suppose it must have been a little confusing for regional advertisers to argue against Heart in the West Midlands, but be enthusiastic for it in the East Midlands! But they’ve still kept their national airtime contract with the big G, so it must be doing well for them. Again – once you’ve sold the stations it’s very difficult to keep any influence.

Summary

Well, it’s all a bit of a mess. Particularly for the staff at stations where there’s some question marks. But, if they can find one, I think we’ll see a single buyer (existing or more likely a new entrant)  who’ll keep the stations part of the Global-led brands with Global selling the national airtime. This should cement Global’s national brand proposition – even if they don’t own the stations.

I would also expect something in the deal that aligns the objectives of the two long-term. You can’t, truly, roll out a national brand if your partners decide against it later…

Whilst some will say “they had that already by selling GMG” – they didn’t really. Converting Real to Heart is a big win for the national plan and revenue growth. A Global-led Smooth network also has a good chance of building on GMG’s groundwork in relation to audience – again providing more national ad opportunities for Global Sales.

In addition, Global get nice new Smooth stations in London and the West Midlands that they’ll be in a great position to grow local revenue from. Plus, in London, I imagine Smooth is going to be re-positioned to give Magic a bit of a kick in! Remember – a declining Magic means Capital or Heart is far more likely to go number one!

I think this year is going to be a busy one for stations changing hands – this is, sadly for the people involved, just the beginning.

I Love Pop

I’m a big pop fan. I love entertainment. I love spectacle. I love fun.

I love that a good pop execution is MORE than just the music. I love that it works hard to DELIVER.

Music on is own is absolutely fine. But I need something else. Deep down an act with a better haircut is just a better act. A well choreographed dance routine takes something from good to excellent. A cheeky wink says we thought about this. We made this for you. And not just to make ourselves feel better.

Pop. Works. Harder.

If there’s anything that describes this, it’s Taylor Swift at the Billboard Awards. She may well be an unhinged popbot, but she does not get phased by a four minute one-take explosion. Taylor we salute you.

http://www.youtube.com/watch?feature=player_embedded&v=qqu53SUyQMo

 

Audience Availability

How do we get more listening hours? Well, you have to fish where the fishes are. An option is to target the audience who listen to the most radio, in the place they listen to the most radio. So, here’s a Top 18 – hours (millions) consumed by different demos in different places.

1 Adults 65+ At Home                                  229,082
2 Adults 55-64 At Home                                  123,982
3 Adults 45-54 At Home                                  111,127
4 Adults 35-44 At Home                                    80,857
5 Adults 25-34 At Home                                    61,193
6 Adults 15-24 At Home                                    60,029
7 Adults 45-54 In A Car/Van/Lorry                                    51,453
8 Adults 35-44 In A Car/Van/Lorry                                    42,777
9 Adults 25-34 In A Car/Van/Lorry                                    40,143
10 Adults 25-34 At Work                                    37,874
11 Adults 35-44 At Work                                    35,937
12 Adults 45-54 At Work                                    35,123
13 Adults 55-64 In A Car/Van/Lorry                                    30,448
14 Adults 15-24 At Work                                    26,816
15 Adults 15-24 In A Car/Van/Lorry                                    22,534
16 Adults 65+ In A Car/Van/Lorry                                    20,327
17 Adults 55-64 At Work/Elsewhere                                    17,014
18 Adults 65+ At Work/Elsewhere                                      4,913

Those top 3, 45 and over, at home, are responsible for nearly half of all radio listening.

Nevermind “at work listening”, your positioner should be “at home, dear”.

 

RAJAR Facts – Q1/2013

People seemed to like the RAJAR facts last quarter – so here’s some more. Be sure to add your own in the comments!

  • 47.2m people listen to the radio each week – that’s 90.3% of the UK!
  • Each week 54.9% of radio listeners listen to some form of digital radio.
  • The vast majority of it is DAB Digital Radio – 232m hours – that’s more than Radio 2 and Five Live’s total hours combined.
  • And Radio 2’s big! It continues its desire to have everyone tuning in – it has record reach and hours. Again. 15.2m reach and 183m hours
  • Radio 2’s hours are more than those of all of Global’s radio stations put together.
  • Speaking of which, this quarter Global Radio have their lowest ever hours since acquiring GCap – 161,148.
  • Absolute though, are celebrating their highest ever hours across their network – 25.7m.
  • They’ve got record reach and hours for Absolute 80s – 984k/5.9m – making it the biggest commercial digital radio station.
  • However, Capital has a million listeners outside of its analogue areas – making perhaps it the biggest ‘digital’ station.
  • But in London, it’s Capital’s lowest ever total hours.
  • Jazz FM‘s celebrating it’s best ever hours – 3.2m
  • and XFM’s got its best hours since Q1/08 – 5.2m
  • There’s really three XFM’s now:
    • London – 573k/2.8m
    • Manchester – 206k/1.0m
    • Rest of the UK – 250k/1.5m
  • The commercial radio station with the biggest share in London is Magic with 5.6%, the BBCs? Radio 4 with over three times that – a whopping 17.6%.
  • Also over three times the size? Radio 2’s hours are 3 times as big as Heart.
  • The top local London stations for share are Magic (5.6%), LBC (4.6%), Capital (4.2%), Heart (4.2%), Kiss (3.9%), Absolute (2.6%), Gold (1.7%), XFM (1.3%), BBC London (1.3%), Smooth (1.1%), Choice (1.1%)
  • The top national stations in London, by share, Radio 4 (17.2%), Radio 2 (12.6%), Radio 1 (4.5%), Five Live (4%), Classic FM (3.9%), talkSPORT (2.6%), Radio 3 (2%), 6 Music (1.4%), 4 Extra (0.9%), Absolute 80s (0.7%).
  • 8.3% of listening in car is now ‘digital’. 35% of all new cars have DAB as standard.
  • The amount of listening on DTV and the Internet is the same – about 5% each of all listening
  • Mark Forrest’s new programme has 1.60m listeners – across the network the highest reach and share in a year. If you sneakily look at the unbalanced quarterly figures, it’s doing even better – boding well for next quarter.
  • AM/FM listening is at its lowest point ever – it’s share of listening is now only 60%.
  • In London, it’s even smaller. AM/FM has just a 54% share.
  • Five Live has its best reach in a year – even beating its Olympic quarter.
  • Doing some maths, I believe that (excluding longwave/BBC Local AM simulcasts) AM, as a platform, now has a reach of 24.4% and a share of just 10.7%
  • DAB has a reach of 32% and a share of 22.5%.
  • Year-on-year Nick Grimshaw‘s R1 Breakfast show has lost 1.3m listeners and quarter-on-quarter it’s dropped 907k.
  • For 15-24s, year-on-year he’s lost 274k of them and quarter-on-quarter’s 198k have disappeared.
  • It’s not all bad, honest. Looking at 15+, the average age of the show is at a two and a half year low of 33. When you look at 10+ it’s 31.8.
  • UKRD/TLRC’s combined UK market share is 0.7% and has, in total, less listeners than Absolute 80s.

If you enjoy reading these, hit Like below, and then more people get to see it!

And now over to Adam Bowie for the analysis or my other post for more on Nick Grimshaw.

Plus! on RAJAR Extra! A lovely infographic from RAJAR themselves!

Nick Grimshaw’s Q1/2013 RAJAR Performance

I feel bad writing this one. It’s fundamentally unfair to judge a brand new breakfast show, especially one that followed a renowned programme, after just two quarters on the air. That won’t, of course, stop the papers who no doubt will be saying there’s a ‘crisis’ at Radio 1.

There won’t be of course. You don’t re-position a network without some collateral damage. So, what’s happening?

Top line is this:

Q1 2012 Q4 2012 Q1 2013
Adults 15+ Reach (000’s)            7,103            6,691            5,784
Hours (000’s)          25,071          19,573          16,916
Market Share %              10.1                 8.2                 7.1

That’s a year-on-year decline of 1.3m listeners (18.6%) and a quarter-on-quarter drop of 907k (13.6%).

Year-on-years hours have faired worse – down 32.5%. This isn’t really a surprise though. Moyles listeners were older and more passionate – he was the longest serving Radio 1 breakfast presenter after all – that means they’re going to listen longer. You churn them out and it’ll have this sort of effect.

So, who’s gone?

Well, the biggest chunks are the olds! Year-on-year 767k of 35 pluses have disappeared. This is particularly concentrated with the 35s to 55s – this is the group that have loads of commercial and BBC choice. 55 pluses are only down a little. This is one of the problems that Radio 1 faces – these lot are really not going anywhere – these are the ones that keep dragging Radio 1’s average age older.

Of more interest are the 15 to 34s.

In this group the 25 to 35s have taken a significant hit. This was, of course still part of the plan – be younger by getting this lot to disappear too. Year-on-year, the market share in this group has dropped from 25.7% to 17.4%. 300k have disappeared.

There is a smaller decline with the core audience – 15 to 24s. 247k y-o-y (down 11.9%) and  198k q-on-q (9.7%). This is clearly a worry, as that’s the audience they would want the show to attract. But, to be honest, it’s part of the sort of decline you would expect with a new breakfast launch.

Programming-wise, I don’t think this quarter was particularly strong. Personally, I thought the music was all over the place – way to heavy – and the content didn’t really hit the mark.  I think the issue they face is that the stuff that sends away older audiences can also send away the younger ones too.

This quarter’s already much more focused and relevant. The Big Weekend lets them be more poppy and younger – you can hear that with the music and last week’s school tour. The return of Call or Delete allows there to be much more mainstream content in the 8 o’clock hour.

Fundamentally Nick Grimshaw is a good, funny presenter. He does a great job of being target.

However, I think structurally and team-wise they have a significant way to go. I know it sounds like a formatted commercial-radio observation, but whole teams need to be ‘cast’. They need jobs to do, they need to take on a position. How are Matt/Laura/Ian different? They definitely have the potential to be an integral part of the show, but great breakfast shows have well defined characters.

I’d also hope that they were really leaning on music research of 15 to 24s for song choices. I’m not expecting ‘pop’ or ‘hits’ but artist and song choice needs to resonate completely with that audience. With a team of late 20s/early 30s working on it – are they absolutely sure their free plays or records of the week work for the target? It still feels a little too indie when looking at the currents.

Overall though, and this will annoy the haters, the general show strategy has been the right one – they’ve skipped a generation with the host and done things to get rid of the olds. Re-focusing breakfast was essential to stop the whole station drifting older.

So, how has this affected the station as a whole. The chart below shows market share for each of the demos.

Q1 2012 Q4 2012 Q1 2013
Adults 15-24           21.5           20.4           20.2
Adults 25-34           19.4           18.4           15.7
Adults 35-44           10.8             9.7             7.9
Adults 45-54             5.1             4.1             4.3
Adults 55-64             1.3             1.8             1.6
Adults 65+             1.1             0.8             0.7

The 25 to 44s are definitely getting the message and moving away. The market share for these demos has seen rapid decline. Grimshaw at Breakfast and Scott’s move to a different daypart has unsettled many older listeners.

R1 still faces significant trouble with 55+ – they just don’t want to go.

This is where I feel for Ben Cooper and his directive from the Trust to ‘go younger’ – he is clearly doing the things to achieve this, but those 55+ wedded to Radio 1 cannot be shifted and their average hours are still good – keeping the station’s average age up.

15 to 24s have seen a little bit of share decline across the station as a whole. I don’t think this is particularly anything to worry about. But they clearly still need to keep focused on attracting this audience. The research I’d be looking at is whether these station-wide changes have been communicated to non-listeners.

Overall – R1 are carrying out a disruptive, risky strategy. But it’s the right one to achieve their aims. The challenge now is to quickly evolve the breakfast show to make sure it’s firing on all cylinders – and communicate that to the non-listeners.

Over here – some more RAJAR Q1/2013 facts.

Being Real

I’m a big fan of being real with the listeners. They’re a bright bunch, I think sometimes making sleek products, removing imperfections (be that from calls, links or whatever) moves us away from being real.

Here’s a YouTube promo for McDonalds in Canada. In it, the Marketing Director answers a consumer’s question – Why do the burgers look different in store, than in an advert? It’s a question that you kind of know the answer to – trickery! In the video they’re very honest, opening up the curtain a little to show people in.

I don’t often see much of this honesty from radio. It’s easier when stations start – Absolute, for instance, having an open blog – One Golden Square – when they launched. I can see some of the same thinking in TeamRock’s tweets. I liked that over the weekend they explained why they were having streaming trouble:

Now, if they only stopped telling me, over and over again, how to tune in, I’d be happy. I know how to tune in – I chose to follow you remember!

One of the issues stations face, it that as they mature, they often have much more to lose, and it makes it difficult to keep the honesty up.

Perhaps we should all have honesty officers – people who tell the truth to our listeners. It would make us seem more real, and perhaps listeners would feel closer to us – and listen more!