AM radio feels the pressure to tune into a new wavelength

Marc Bond is an engaging fellow who works extraordinarily hard running a radio station in Cheltenham with eight other staff. Until recently he was breakfast show presenter as well as managing director and sales director.

Cheltenham Radio is the only station in the town – its local rivals are based in Gloucester – and with plenty of emphasis on its locality it ought to be very successful.

But it has problems. Some boil down to a chequered history of early mismanagement and ill-advised format changes. But its 603 frequency betrays another, more fundamental, shortcoming: it’s on AM or medium wave.

AM’s disadvantages include lousy reception after dark and a reputation as a dying medium. Bond is engagingly candid about the difficulties his station faces.

AM radio, he told an audience at last week’s Radio Festival in Birmingham, “is destined to survive, not to flourish”. Running an AM station is a steep hill to climb: if you’re half way up already, it’s not worth turning back, but if you’re at the bottom, think again.

As the Radio Festival revealed, the possible demise of AM stations – along with the threats and opportunities of new technology – is a serious issue for commercial radio.

Atlantic 252, Radio 5 Live and the old ILR stations’ Gold services give the lie to the notion that AM is actually dead: Capital Gold reaches nearly 14 per cent of Londoners on AM, Downtown Radio in Northern Ireland more than 29 per cent. But newer stations like Virgin 1215, Talk Radio UK and local outfits like Bond’s 603 in Cheltenham are struggling.

The evidence from the US shows that AM stations aren’t necessarily bad investments. Robert Richer, a US radio consultant, told the Festival that the three highest billing stations in the US are all on AM: WGN, a talk and sport station in Chicago, turned over $37.1m (24.4m) last year, the other two (a sports station and a news station in New York) comfortably turned over $30m (20m).

In the US, talk is the key to AM success. The day will come, according to Richer, when most AM stations in Britain – if they are to survive – will evolve into local talk stations.

That may not be easy. For one thing Britain, unlike the US, has the BBC, which currently occupies the AM news/sport niche with Radio 5, and offers talk radio on its local stations.

In addition, changing formats is extremely difficult for UK commercial stations, which have “promises of performance” written into their licences that can be varied only slightly. Indeed, the chief executive of the Radio Authority, Tony Stoller, insisted unambiguously in a speech in Birmingham that failing stations won’t be allowed to ditch their format and try a new one, but will be expected to hand back their licence to be readvertised.

But the audiences for the existing AM Gold stations in Britain are on the wane, and commercial radio folk are casting about for ways to keep them alive without having to return their licences.

That helps to explain why Capital is one of the 25 bidders for the last London-wide FM licence, hoping to transfer Capital Gold to the more popular wavelength.

It’s also perhaps why Nigel Reeve, sales director of Classic FM, is suggesting creating an AM Gold brand across the country, sold nationally – an idea endorsed at the Radio Festival by three agency speakers, media independents John Ayling and Nick Lockett (of Booth Lockett Makin), and Rupert Howell of HHCL.

Ayling indeed sees “branded chains” not simply as a way of saving AM stations but as an idea applicable to FM as well. He suggested more franchising of London’s Kiss FM dance music or Melody easy listening formats, to capitalise on radio’s character as what the Australians call “the only mass medium that can micro-target”.

Radio is still a fragmented, confusing industry for advertisers with what Howell calls “too many me-too local stations”. Branding is sometimes poor – although one feels for stations trying to break into crowded markets like London. Heart, the most successful of the newer London stations, enjoys only 20 per cent awareness a year after going on air, despite spending the best part of 2m.

Fragmentation promises to get worse with the increase in the number of AM and FM commercial stations from 180 to 300 in a few years time. The arrival of digital radio (DAB) holds out the prospect of at least some additional services.

The advent of new technology poses a threat, partly because young people, the radio listeners of tomorrow, are most at home with it and expect it to be a growing part of their lives. According to research unveiled at Birmingham, a third of 15 to 24-year-olds are interested in using the Internet for radio listening – and a quarter of that age group expect to be listening to less radio in ten years’ time.

More national brands, marketed and sold nationally, may provide one solution. Though AM stations may be ailing, they haven’t run out of power just yet.