Radio Ad Revenues Dive at UK's Merged GCap

10 May 2005

Not the news most happy couples hope to hear as they celebrate their nuptials - the dowry has been slashed!

Shed a tear for hunky groom GRW Group and blushing bride Capital Radio - until their wedding earlier this year respectively the UK's largest and second largest commercial radio groups.

Just as both were adjusting to the rigours of the honeymoon, the bad news. Advertising revenues for April and May are way below expectations heralding, many in the radio industry fear, lean times ahead.

According to GCap Media ceo David Mansfield, combined ad revenues for April were down year-on-year by 17% (diving 21% at Capital and 15% at GWR). He expects a similarly chill climate for May.

Even though the adverse impact of an early Easter in March and this month's general election (in the run-up to which the government is prohibited from advertising) had been anticipated, the extent of the downturn suggests slowing consumer confidence.

Concedes Mansfield: "Every media owner that relies on national advertising is going through a difficult period." But analyst Paul Bates at Charles Stanley declared himself "shocked at the extent of the fall."

GCap executive chairman Ralph Bernard was in breast-beating mode: "The senior level [of GCap management] has had its eye off the ball because we've been putting two businesses together and dealing with competition issues. It is immensely distracting while in the meantime the chill winds have been blowing at our ankles."

The main advertising shortfalls were in the retail sector (down 9%), food companies (minus 31%), household supplies (18%) and electronics (54%).

Data sourced from Financial Times Online; additional content by WARC staff