GCap expects fall in first half revenue

Listen to this article

00:00
00:00

GCap Media, the UK’s largest commercial radio group, on Thursday said it expected first half like-for-like revenue to fall by 4 per cent amid a weak advertising market.

Total group revenue is forecast to fall 9 per cent in the six months to September 30 compared with a year earlier, as the company struggles against tough sector-wide advertising conditions and tries to reverse a decline in the number of listeners.

Previous efforts to attract more listeners at Capital Radio, the group’s flagship station, by deciding not to have more than two advertisements in a row in a bid to play more music failed to reverse the decline. Capital Radio is still in third position in London behind Emap’s Magic 105.4 and Chrysalis Group’s Heart 106.2.

GCap’s long-term plan to reverse the audience loss at core stations will involve marketing Capital Radio for the first time since 2005. The group said it “expected a visible impact beginning in the New Year which will be increasingly evident in 2007 listener figures”.

The group said that July trading had proved particularly difficult, but recent months had seen an improvement in performance.

“Although the market remains weak and visibility poor, we currently expect GCap Media’s advertising revenue performance, excluding Capital Radio, to be in line with the radio sector as a whole,” it said.

In August, listener figures showed a 2 per cent increase across One Network stations such as BRMB, GWR FM and Trent FM.

GCap said that a deal to supply digital radio to a new BT mobile phone service launched earlier this week would help boost future profits.

“We anticipate that this will have a positive impact on the development of digital radio and will deliver significant profits to the group from its first full year of operation,” the company said.

Alex DeGroote, analyst at Panmure Gordon, said: “Radio sector sentiment is atrocious. The internet, BBC and a weak UK ad market have combined to erode revenue growth, and the operational gearing which originally interested investors.”

He added: “On valuation grounds, GCap continues to look very expensive. In our view, the dividend is also looking unsustainable. This would be a major prop on the share price at current levels.”

GCap will release its interim results on November 28. The shares were up 3.24 per cent at £1.99 by early afternoon.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.