Who wants to lose their audience share? Capital's £1m question

Question: why has Capital Radio lost 14 per cent of its audience over the past year? Is the answer:

a) Listeners thought Chris Tarrant was leaving Capital's flagship London show and so lost interest?

b) Rivals such as the BBC, Heart and Kiss are gaining ground?

c) Capital's stations need a new format?

d) Capital hasn't put enough cash into programming and marketing?

"This is the £1m question," says a spokesman for the company. But the answer, as with the hardest questions in Mr Tarrant's TV show, is elusive.

The popular presenter is now signed up for another year at Capital, so if rumours of his departure did play a part in the fall, the London station's figures should soon rebound. But Capital's other stations in the South-east, the North and Scotland are also experiencing a slump in listeners.

On Thursday, when chief executive David Mansfield reports full-year results, he will attempt to explain how he is going to address the problem. As profits are expected to be down 34 per cent to £18.5m, according to investment bank Merrill Lynch, the company needs a convincing plan to boost investors' morale. Merrill analyst Steve Liechti says the recent audience figures were an "absolute disaster" for Capital. He was unsure, though, whether it was being "attacked from every direction" by its competitors, and so heading for further decline, or whether investors could be cheered by its strong presence in London, making it a tempting bid target.

In many ways, Capital is successful. Although it has been hit by the advertising slowdown, along with many companies in the media sector, it is well placed to take advantage of the bleak climate. It has little debt and can therefore ride out the storm if it gets any worse. This also means it has the ability to buy up other radio stations that are in a less secure state, and therefore cheap.

It can also benefit from proposed changes in the law governing regulation of the media sector. The Government is likely to allow non- European companies to buy into British broadcasting and also reduce the impact of the complicated "points system", which restricts the amount of radio stations that one company can own. The Communications Bill, which will be included in the Queen's Speech on Wednesday, will make its way through Parliament this year. Therefore, it won't be long before changes take place.

In the merger and acquisition frenzy that has been predicted, Capital is seen as the jewel in the British radio crown, the company most attractive to predatory American groups, and the most attractive partner for its competitors.

Numerous rumours have circulated as to who will be the winner. A tie-up with GWR has been mooted, while Capital was said to be thinking about buying Virgin from rival SMG. Emap's radio assets were also thought to be in Capital's sights.

But a spokesman says that although management talks to other companies all the time, there is nothing on the cards.

A merger could bring financial growth, and could also bring benefits to the programming and audience figures. But in the meantime, Capital needs to show it can grow its existing businesses.

"It's important that it can grow organically and not just exploit a mon- opoly," says Anthony de Larrinaga, media analyst at SG Securities.

The company will also have to get a better return from its investments so far. Mr de Larrinaga complains that although Capital has spent £160m on its newer radio stations, such as Century, Beat and Xfm, it is only expected to get £18m in revenues from them this year.

That the whole group has room for improvement suggests it was not just the incorrect rumours about Mr Tarrant's departure that turned listeners off. Either the company will have to lure them back, or it could be swallowed by a larger and beefier rival.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Media

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Junior Business Systems Analyst - High Wycombe - £30,000

£25000 - £30000 per annum: Ashdown Group: Junior Business Systems Analyst role...

Guru Careers: Talent Manager

£30-35k (P/T - Pro Rata) + Benefits: Guru Careers: We are seeking an experienc...

Sauce Recruitment: New Media Marketing Manager - EMEA - Digital Distribution

£35000 - £45000 per annum + up to £45,000: Sauce Recruitment: The Internation...

Day In a Page

The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003