GCap to charge listeners as radio revenues tumble

Owner of beleaguered Capital Radio plans commercial-free versions of stations such as Classic FM
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GCap Media, the owner of Capital Radio, is planning to charge listeners to tune into some of its stations. Chief executive Ralph Bernard said the group was also looking to form partnerships with other media companies such as ITV to launch new interactive services.

Mr Bernard told The Independent on Sunday that GCap, whose profits have plummeted on weak advertising, could launch a commercial-free version of its Classic FM station on a digital frequency, charging listeners a subscription of several pounds a month.

Mobile phone or online radio listeners would also be able to download or "podcast" premium content from other stations for a fee, he added.

GCap has already struck a deal with the BBC that allows the corporation to broadcast the Captain Kremen radio comedy shows of the late DJ Kenny Everett. Mr Bernard said other money-making opportunities could include GCap charging for podcasts of the show, or for specialist content such as fishing programmes, which he dubbed "rod casts".

GCap would become the first mass-market UK radio group to offer "pay radio". Unlike in TV, where broadcasters such as BSkyB already charge a subscription, mainstream UK radio has always been free to air. Mr Bernard denied the move to charge for podcasts and pre- mium content was driven by falling ad revenues,.

"[The] advertising market is clearly soft at the moment. But this is not an alternative to existing free-to-air services," he said.

This week, the group will announce the appointment of a new group strategy director, Will Harding, to focus on boosting new media and non-traditional revenues.

Mr Bernard declined to say how a deal with ITV might work. However, he added: "I would not rule out a relationship with ITV, Clearly this is something which works in a multimedia world. If there is an interesting proposal, we do not have to remain sole operators."

But analysts have urged Mr Bernard, who is a fierce advocate of digital radio even though the medium has so far failed to return a profit, to concentrate instead on arresting the decline in the group's advertising and listening figures, particularly at Capital Radio.

Last year, the group's flagship was knocked off the top spot as most popular commercial station in London for the first time in its 32-year history by Chrysalis's Heart FM.

Johnny Vaughan, who pre- sents Capital's breakfast programme, has also been criticised for his "laddish" style. In the third quarter last year, the audience for his breakfast show fell 17 per cent.

Mr Bernard responded in January by almost halving the number of adverts broadcast by the London station, in order to attract more listeners and maintain the rates charged for ads. But when the group reported results in May, it admitted that Capital Radio's revenues were forecast to be down by more than a quarter in April and May.

Analysts have criticised the group for not marketing Capital, which is trying to appeal to an older, more sophisticated audience. Mr Bernard said changes were still being made to the format, and that once a new programme director had joined the group, a marketing blitz would be launched.

But he denied rumours that Mr Vaughan, who took over from Chris Tarrant in 2004, would be replaced as part of the changes.

"We do not junk a winning formula," he said. "He has a contract to stay with us. You should never say never - that would be stupid. But there is no reason to believe he will not be with us to see out his contract and beyond when we renew it."

He added that Mr Vaughan had become more "female friendly" in his presenting style. He did not know when his contract was up for renewal.

But one analyst said: "The company won't say what's wrong with Capital Radio. It's very hard to get a consistent message from them. How long does it take to get Capital Radio in order?"

He added that while rival companies like Emap have been developing strong brands, "no one has heard of some of GCap's digital stations".

Later this summer, BT will launch its Movio service in partnership with GCap. This will allow users to listen to digital radio on a mobile phone for the first time.

Digital radio is growing in popularity. It now accounts for around 10 per cent of total commercial listening.