The Henley Centre study was commissioned by the Radio Authority and the Association of Independent Radio Companies (AIRC). James Walker, who devised it, said: 'A commercial Radio 1 would undoubtedly boost the credibility of radio as an advertising medium in the UK, and lead to overnight growth of 20 per cent in national advertisers' spending on radio. However, the existing commercial radio services are currently trading at an aggregate loss, and even though we are forecasting very strong growth in radio advertising over the next five years, the industry could not withstand Radio 1 taking advertising in 1997.'
Virgin 1215, Atlantic 252 and the forthcoming speech- based INR3 would be hardest hit: national commercial radio stations would lose pounds 17m a year and local radio stations pounds 15m.
The report adds that one way round the problem - if the Government pushes ahead with privatisation - would be for five-year restrictions on the amount of advertising Radio 1 could sell - perhaps six minutes per hour, compared with nine minutes for other stations.
A commercial Radio 1 would add an estimated pounds 19m to national commercial advertising, but it would take more than pounds 53m in revenue, giving it a 26 per cent share of the pounds 204m total radio income and making it very profitable.Reuse content