Has Mirror group gone radio gaga?

Kelvin MacKenzie is leaving the Mirror Group, where he is deputy chief executive, for a “one-in-a-lifetime opportunity” to lead a bid to buy Talk Radio. But if MacKenzie’s interest was merely pursuing a career in radio, he could have stayed at the Mirror. Last week, the group’s Scottish tabloid, the Daily Record, announced it is part of a consortium bidding for the new central Scotland radio licence, as first revealed in Marketing Week (MW May 28).

This attempted move into radio is part of what Mirror Group calls its strategy of “expanding its business base”. But the bid raises the question of whether Scotland may be a test-bed for the group’s ambitions to enter the radio arena in other parts of the UK. Other newspaper owners have radio interests and the Daily Record will be bidding against the Scottish News consortium, which includes the Daily Mail & General Trust’s DMG Radio, which owns or controls 65 stations around the world. The Mirror Group claims this is its first foray into radio.

Mirror Group head of communications Nick Fullagar says the company is “not about to rush around buying up local radio licences”, but that the Scottish move “fits in with other areas of the business like Live TV and Midland Independent Newspapers”.

The Daily Record will join forces with Chrysalis Radio and celebrity Billy Connolly, who will pay 1m each for a 40 per cent stake in a consortium called “The Edge”, which will set up a radio station by the same name if the bid is successful. Cross media ownership rules limit the Daily Record to a 20 per cent stake.

It will make an initial investment of 500,000. Given that it may be three years before it moves into profit, this is a hefty investment for the Daily Record, but one that holds the allure of cross-promotional opportunities.

Steve McLaughlin, circulation and marketing manager at the Daily Record, who was formerly promotions director for Scottish Radio Holdings, says: “We see it as a marketing partner for us in our recognised area – the central belt of Scotland. There will be cross-promotional opportunities where we can drive people towards them and them to us.”

Cross-promotion may take the form of joint events and competitions, where a question is posed in the newspaper to be followed up by a second on the radio. McLaughlin admits there are also opportunities for editorial cross-fertilisation, which could go as far as a music page called The Edge in the newspaper. However, the Daily Record with its minority stake in the consortium, will not be in a position to dictate the radio station’s content.

The Daily Record was not short of suitors for the bid. At least four other consortia approached the paper, according to McLaughlin. With an average net circulation for the period November 1997 to April 1998 of 674,753, according to figures from the Audit Bureau of Circulations, the Daily Record outsells The Sun and The Mirror, The Express and The Daily Mail combined in Scotland.

But tabloids are losing young readers who prefer magazines and television for their news and entertainment. At present the Daily Record claims that 44 per cent of all 15- to 30-year-olds in Scotland read the newspaper and it is anxious to hold onto this market. A radio station could offer a mechanism for the Daily Record to attract new young readers, who will hopefully form an allegiance and stay for life.

“Every national newspaper in the UK is looking to expand its 15- to 30-year-old readership, and this is a good way in for us,” says McLaughlin. “We are the establishment if you like and this will be a very much younger feel.”

But the first task for the consortium is to conquer fierce competition from as many as 30 other bidders for the licence.

Bids, accompanied with a 5,900 non-refundable application fee, must be handed in to the Radio Authority by July 28 1998. The licence covers the main population areas of central Scotland, including Glasgow and Edinburgh, with a receiving adult population of 2.3 million.

New licences for commercial stations are few and far between, hence the level of interest in this bid. Chrysalis Radio chief executive Richard Huntingford says: “The licence for central Scotland and the licence for the North-east of England are the last big analogue licences for a few years. This will be the last opportunity for existing and new players to get a commercial licence for a good while.”

A consultant working on The Edge’s deal claims it will compete for Radio 1’s audience in Scotland and will not cannibalise existing commercial stations. It will aim to reflect the values and lifestyle of young Scots under 30, with indie rock and dance hits, plus tracks from new Scottish bands. Chrysalis’ Huntingford says The Edge will appeal to advertisers looking to promote youth brands.

Billy Connolly brings both financial backing and star appeal to the consortium. The comedian, who has a long history of involvement with Chrysalis, (which has sold videos of his live performances for 20 years,) has bought a house in Aberdeenshire and plans to spend more time in his homeland. Connolly is keen to develop his own programme ideas and promote young Scottish bands.

Chrysalis is an old hand in the radio sector, with successful stations such as Galaxy and Heart, although this will be the first time it has ventured north of the border. The bid gives Connolly the chance to re-establish his credentials in his native country. For the Daily Record it offers all the advantages of cross-media ownership.

For Mirror Group it is a gamble. Ironically, the chance of winning one of the few remaining analogue radio licences could make the group look even more attractive to German predator Axel Springer.

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