Forced by spiralling digital radio costs, GCap’s plan to sell its DAB multiplex stake, offload theJazz and Planet Rock digital stations and shutter three Xfm regions (see this morning’s post) is a slimlining strategy that puts broadband and ye olde FM at the fore.
Part of the package as GCap eyes £8.8 million annual savings – more mobile efforts through iPod and Nokia (NYSE: NOK), transferring some defunct music radio genres online and community sites. Yet there’s no new cash for online. Interactive director and former Yahoo (NSDQ: YHOO) exec Robin Pembrooke, speaking ahead of a session to brief analysts, told me: “It’s the reinforcement of the interactive investment that was set off by the company in February last year.”
- DAB challenges: Despite impressive sales for DAB radio sets: “The existing cost structures around DAB don’t make it economical to us to maintain those brands.” GCap is losing £5.5 million annually through the collapse of BT (NYSE: BT) Movio and Oneword services that used its network, which is costly to maintain alongside the analogue transmitters. “(theJazz and Planet Rock) were very successful brands, from audience levels, both on-air and online. The issue, though, is that the current contracts and financial mechanics that sit around broadcasting over DAB just did not make them profitable, even with the rapid growth that we’re seeing in audience.”
- Migration: “What we’ll be looking to do with theJazz is to make sure that we’re not losing… If we sell the station, clearly the online presence will go with the brand. But what we’ll be looking to do if we don’t sell that station is roll a lot of the content from theJazz in to a redesigned version of the ClassicFM website, covering classical music and jazz. Now that we’ve launched the iClassicFM player, what we’ll be doing is having a dedicated stream or streams on there that focus just on jazz music.”
- Strategy: “The strategy is around two things. One is just producing fantastic listening experiences across multiple platforms and the other is developing and driving online communities of interest, either around music genres like classical or new music, or around places, be that London with Capital Radio or smaller local stations.”
- Revenue so far: “We’ve been seeing audiences and revenues grow faster than planned and we’re going to be breaking even on the online quicker than we’d originally forecast, at the end of this financial year. What that allows us to do is accelerate the roll-out of some of the new solutions and products that we’re going to be going to market with.”
- Investment: But there will be no new funds to achieve any of this, “In the revised plan that’s been put out to the City, we’re assuming increased levels of growth in online revenues from the existing, approved investment.” No new investment “on top of any that’s we announced to the City last February.” It suggests today’s announcement is more about saving on DAB costs and pressing ahead with existing online plans than anything significantly new.
- Xfm: GCap will axe the Scotland, Manchester and south Wales versions of the alternative station that was once confined to London – all of which cropped up as part of a regionalisation strategy in the last couple of years and the latter of which has only been live for three months. Buyers are being sought for the analogue licences.
Pembrooke: “We believe Xfm is a fantastic brand that we really want to develop a community around new and live music with. We think the most effective way to be able to do that is to do a combination of the London FM station and a national broadband offering, so what you’ll see in the next two to three months are significant investment in to the website.” The Xfm site will see a “revised rollout” by end of February and more community features in April.
- New products/mobile: Sites for One Network stations (Capital and her satellites) recently got a new lick of paint, but anything fancier? “What you’re going to see every month now going forward is we’re launching some really quite radically different customer experiences online.” Next week will see a new traffic info and webcam service for Capital.
- Mobile: First up is musicradio.com, which streams live stations to iPod touch from today’s launch and includes revenue-making iTunes Store links. “The younger generation are spending more time listening to music on mobile phones and mp3 players so that’s why we’ve targeted the biggest mp3 player in the market to launch our first application.” GCap will also work with Nokia on an upgrade to Visual Radio. Pembrooke conceded the mobile radio add-on, that broadcasts added pictures and data to handsets, has had “relatively limited take-up” but work will take place on the user interface. The mobile emphasis may happen sooner than you think – following our call, Pembrooke was to join us at the deals marketplace that is Barcelona’s Mobile World Congress.