GCap decline deepens

listeners.

In London, Capital Radio experienced a 15% year-on-year drop in weekly
reach to 1.6m listeners, while Chrysalis-owned rival Heart saw a 0.1%
climb to 1.6m listeners.

This, combined with that fact that Heart attracts 2.5m more listening
hours a week than Capital, suggests it will be a long way back for the
station that, traditionally, has held the number one spot in London.

MindShare head of radio Howard Bareham says: 'Capital has tried to win
listeners by cutting the number of ads it airs in breaks. But it hasn't
got the programme proposition right. Until it does, there is no point in
marketing the brand, so it could be a while before it turns this
situation around.'

Capital has managed to hold off Heart during the lucrative
breakfast-time slot. But this is of little comfort when one considers
that this quarter's figure is Capital's lowest ever. This time last
year, its weekly breakfast reach was 357,000 listeners ahead of Heart.
Now the gap is just 32,000, making a reversal next quarter highly
unlikely. Capital is also struggling to retain daytime listeners.

GCap's position in London looks even worse once the dismal showing for
its older-format station, Capital Gold, is factored in; its reach
plunged 24% year on year to 590,000. Emap stations, meanwhile, returned
a stellar performance.

'Magic has consolidated its position as London's number-one station by
recording its highest reach,' says Bareham. 'Kiss, too, has put in a
great performance - up 7% year on year to 1.5m listeners. Kiss is not
seen as mainstream, but it is now just 100,000 behind Capital.'

The problems for GCap extend to its national network Classic FM, which
has posted a 7.6% drop in reach year on year to 5.8m listeners.

In response, the company has tried to shift attention away from the
problems at its big brands by highlighting its progress in digital.
GCap's strategy is 'to stem the audience decline at our core heritage
stations, while increasing digital listening and strengthening our
national brands,' says its media operations director, Steve Orchard.
'Listening to our digital-only stations has increased by 17% to 4.4m
hours.'

While the growth of digital is key to GCap's prospects, its entire
digital business still brings in only 40% of the listening hours
generated by Capital Radio.

This leaves the importance of fixing Capital's problems in no doubt,
according to ZenithOptimedia radio manager Steve Coteman. 'Most agencies
and media owners would agree that a weak Capital Radio is bad for the
radio sector as a whole. My concern is that it could take two years for
the brand to recover - if it ever does,' he says.

GCap may find solace in the fact that none of the UK's big three
national commercial stations did well in the second quarter. Virgin
Radio's audiences declined nationally, in London and during the
breakfast daypart, despite handing its national breakfast show to Xfm's
2005 Sony Award-winning DJ Christian O' Connell at the start of
2006.

'It always takes time for changes to bed in,' says Paul Jackson, Virgin
Radio's programme director. 'I wouldn't expect listener perceptions
about Virgin to change markedly for another couple of Rajars. At that
point, we'll market Christian's show more heavily.'

He adds that the World Cup was partly to blame for the dip in audience.
'With Virgin's key demographic being 25- to 44-year-old males, we knew
this would have an adverse effect on our figures.'

GCap's suffering has been to Emap's benefit; it now claims to be
London's biggest commercial radio group following strong performances by
both Magic and Kiss. 'Magic has promoted its star DJ, Neil Fox, well and
stayed true to its more-music, less-talk policy,' says PHD head of radio
Cathy Lowe. 'If it maintains its consistency, I can see it pulling
further away from its main rivals.'

Across the UK, 4.8m people tuned in to Emap's Big City network of
heritage local radio stations every week. Though some stations recorded
increases in reach, including Forth One, Hallam FM and Tfm, both overall
hours and reach were down year on year.

There was better news for Emap in digital, where it owns five of the 10
most-popular national stations. Among these is The Hits, which at 1.1m
listeners is the first digital network to have broken the 1m mark.

There are 3.2m DAB radio sets in the UK - a penetration level of 15.3%.
Rajar found that the number of adults who own a DAB set, or have
listened to the radio via digital TV or the internet, increased from
25.5m in the first quarter of this year to 27.1m in the second.
Digital's share of hours of radio listening, meanwhile, is now 13.6%, up
from 6.5% in the same period in 2005.

This is good news for the commercial sector, says ZenithOptimedia's
Coteman. 'The BBC takes 55% share of analogue listening, but commercial
radio takes 66% of digital because it has a more diverse and interesting
array of brands.'

In terms of other trends, Lowe says speech radio had a poor quarter.
'This is a bit surprising given the World Cup was on,' she says. 'Speech
is an area where commercial radio has room to grow as it seeks to
diversify its offering.'

DATA FILE - RAJAR LISTENING FIGURES, APRIL-JUNE 2006

- Chrysalis Radio attracted 6m listeners a week. Aside from good figures
for Heart, there was a strong showing for the Galaxy network, which has
2.5m listeners a week.

- GCap's Xfm boosted its London hours by 32%; its weekly national reach
increased to 1.1m listeners.

- London stations LBC 97.3 and LBC News 1152 saw their weekly listener
reach slump by 32% and 43% year on year respectively.

- Mojo Radio's weekly reach leapt 72% year on year, albeit from a low
base, to 202,000 listeners.

- Magic now attracts 3.1m listeners a week across the UK via a network
of analogue, DAB, satellite, cable, online and Freeview.

- GMG's Real Scotland's weekly reach rose 4.3% year on year to 723,000
listeners, while Smooth Northwest hit 670,000. The brands' total
national audience was 2.8m.