When 95.8 Capital FM was knocked off its perch as London’s biggest commercial radio station for the first time in 32 years in the third-quarter Rajar figures, a dramatic recovery plan was needed. But few predicted Capital owner GCap Media, the company formed by the merger of GWR Group and Capital Radio Group in May, would use its half-year results to announce a purge on the London station’s advertising.
The inventory will be cut down to just two ads per break, pruned from 12 minutes per hour to six minutes at breakfast, and from ten minutes to five per hour during the day. A similar strategy introduced by rival radio operator Clear Channel earlier this year led to an increase in audiences. But no other UK commercial radio group has indicated that it is likely to follow suit.
GCap – which reported an 11 per cent decrease in revenue to &£111.6m to the end of September and a 27 per cent drop in profits to &£17.4m – claims the move will not lead to an increase in price. The company has pencilled in a &£7m hit to revenue next year and does not expect the strategy to pay off for three years.
From January, 95.8 Capital FM will become Capital Radio, complete with a new music policy and fresh branding. Every aspect of the station is under review, including presenters such as breakfast show host Johnny Vaughan.
GCap operations director Steve Orchard says that 95.8 has become too “cheesy”, has too much waffle, repeats the same songs and is top-heavy with ads. The latest Rajar results served as a wake-up call. Orchard says that the new GCap management has the benefit of an outside perspective, while the previous team was “overwhelmed” by the issues it faced. He adds that the station is now at the point where “we have to fix all the problems… urgently”.
Radio buyers have given the plans a cautious welcome. Zenith Optimedia head of radio Mike Buckley labels it a “revolutionary move”. But he adds: “Arguably, when you have had a year like Capital’s, you have nothing to lose.”
Other industry sources believe the question is whether cutting on-air clutter and improving the playlist will be enough to win back listeners. MindShare head of radio Howard Bareham points out: “People won’t tune in just because they are playing fewer ads. GCap wouldn’t even be considering this strategy if 95.8 was still riding high.” Another concern is that less spot advertising may mean a rise in the amount of non-traditional advertising – such as sponsorships, promotions and advertiser-funded shows – further cluttering the station’s sound.
Meanwhile, the wider strategy of selling nine local stations, merging and rebranding Life and Capital Gold, and increasing focus on key brands such as Xfm – with Glasgow station Beat 106 rebranded as X – has been welcomed as a sensible move. Plans are also afoot to sell off nine local analogue stations as the group concentrates its resources on eight geographical regions and key brands.
GCap hopes its affirmative action will silence critics who have spent months raking over the failings of the merger, and help it concentrate on the day-to-day business of running a radio company. But analysts have already wiped about &£250m off its value, and predators are circling.