How Can Radio Stations Double In Number While Radio Revenues Wane?

So Virgin Radio is back again -- or at least it will be next spring, it has been announced today. In the second wave of Digital Audio Broadcast licences, fourteen new stations are being announced today by Ofcom, nearly doubling the today's total.

It sounds great, and will be very useful on those long journeys up and down motorways where the national list on a DAB radio screen saves drivers from having to scroll around local station lists as they move from one area to the next. 

I hate to be the fly in the ointment, but I think it's worth asking where the advertisers support for a near doubling of national, digital stations will come from? Radio has been just about holding its own over the past decade, with each year showing either a tiny contraction or growth in ad revenues -- which for 2014, are estimated to have been around GBP373m, down from just over GBP400m in 2004. That makes it consistently about a tenth of the size of television advertising over the past decade.

Just to add another awkward point, although digital has overtaken analogue radio in the home, it's still only just over a third of overall radio listening in the UK. 

To be fair, radio is in better shape than local newspapers -- the channel that has been absolutely cut to the bone over the past decade, even more comparatively than its faltering national, print stablemates.  However, you can't say it's showing signs of growth, and the more players there are, the smaller the slice of pie for everyone. Whenever I've chatted to radio execs off the record, they have been pretty upfront about the challenges. Revenue is low, stations are growing in number, their biggest rivals are state-funded and advertising, on the whole, is local or regional with only a little national interest thrown in to the pot.

These fourteen new stations, then, are unsurprisingly coming from existing broadcasters -- Virgin aside, of course, which will be making a return. There are three 'Talk' branded stations and Kiss's 'old school' Kisstory is in the mix, as is Jazz FM and another station from Magic. It would be hard to imagine a debutant broadcaster seeing the new licence as an opportunity to cash in on a new lucrative market opening up. 

I just can't help think the new licences are all about existing broadcasters saving themselves from rivals. If they didn't take up a new licence, then someone else would -- a little like a national airline taking over new landing slots at their hub airport to keep rivals out. 

So we have pretty much the same broadcasters with pretty similar radio stations launching on a new wave of channels that are being launched because they're available, rather than because there is any consumer or advertiser appetite for new stations. 

The pot won't get bigger -- it will just be split more thinly between existing broadcasters. Consumer choice won't be improved greatly, there will just be a rebranding of existing stations.

So, excuse if I don't get too excited for now but I will reiterate the question. Advertising revenue is not growing, so who's going to support the near doubling in national, digital radio stations?

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