Radio giant axes two digital stationsGCap Media labels digital costs 'unviable'
11 February 2008
The UK's largest commercial radio broadcaster, GCap Media, axed two of its stations today after labelling digital radio 'economically unviable'.
The Classic FM owner said The Jazz and Planet Rock will go as it looks to concentrate on its core FM stations in a bid to revive the business.
The company - currently fighting takeover interest - also plans to boost advertising at its flagship Capital 95.8 station - reversing its previous policy of broadcasting no more than two adverts in a row.
Chief Executive Fru Hazlitt unveiled the review weeks after the group rejected a £313 million takeover approach from Global Radio.
She said digital 'was not an economically viable growth platform for GCap Media'.
The former Virgin Radio boss added: 'We are structuring the business around the revenue streams that can deliver us the most profit going forward. Planet Rock and The Jazz are brands that we do not believe can win for us.'
Ms Hazlitt hopes to deliver cost savings of £8.8 million a year through disposals and restructuring, as well as achieving profit margins of up to 19% by March 2010 under the 'radical but realistic' plans.
GCap has also agreed to sell its stake in Digital One, the national broadcasting platform for digital stations, to communications infrastructure firm Arqiva.
Share of radio audience that listens to digital
The company - which has around 15 million FM listeners - said that, in the year to March 2007, it spent £8 million on digital radio despite the medium accounting for just 9% of all radio listening.
Ms Hazlitt said: 'FM is the backbone of the radio industry and we believe it compares favourably to any of the digital platforms currently available to the consumer in terms of quality. It is also the source of the majority of our revenue...If digital is going to be viable on a local and regional level, it will have to be on a much lower cost platform.'
Which? digital technology expert Lizzy Payne said:'DAB offers consumers lots of features that are not available on FM, such as the ability to pause and rewind live radio, as well as additional station choices such as Five Live Sports Extra.
'DAB radio is still in its early stages and there will always be a settling-in period in which radio stations come and go.'