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
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
Have you tried new the Independent Digital Edition apps?
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Media

Ashdown Group: Database Executive - Leading Events Marketing Company - London

£23000 - £25000 per annum + 25 days holidays & pension: Ashdown Group: Databas...

Recruitment Genius: Publishing Assistant

£14000 per annum: Recruitment Genius: A fantastic opportunity has arisen for a...

Guru Careers: Graduate Account Executive / Digital Account Executive

£20k + Benefits: Guru Careers: We are seeking a Graduate Digital Account Exec ...

Guru Careers: Print Project Manager

Competitive (DOE): Guru Careers: A Print Project Manager is needed to join one...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk