GCap abandons regional Xfm and digital-only brands

by Daniel Farey-Jones, Brand Republic 11-Feb-08, 09:00

LONDON - GCap Media chief executive Fru Hazlitt has unveiled plans to dispose of the three non-London Xfm stations, close digital-only stations TheJazz and Planet Rock, and sell GCap's shareholding in the Digital One DAB multiplex.

Together with the ditching of the "no more than two ads in a row" policy on Capital, GCap claims the measures will increase 2008/2009 profits by £10.3m and reduce revenues by £13.2m.

The biggest surprise in Hazlitt's strategy presentation today was the culling of Xfm Manchester, launched two years ago, and Xfm Scotland and Xfm Wales, which only launched in November.

GCap is attempting to sell them, but if it fails it says it will simply hand back the FM licences to Ofcom on March 28.

It said Xfm London is very much a part of its new plan to build its future around key brands on the FM and broadband platforms -- Capital, Choice, Classic FM, Xfm and its regional station network The One Network.

The DAB and AM platforms will be abandoned as far as possible, with the exception of transmitting Classic FM on national DAB and of broadcasting existing FM stations on their equivalent regional DAB multiplexes in accordance with Ofcom rules.

GCap's pioneering investment in launching the first DAB multiplex, Digital One, will be unwound with the sale of its 63% stake to its partner Arqiva for a nominal sum. In mitigation, Arqiva has agreed in principle that GCap is allowed to terminate at no cost the transmission contracts for its Digital One stations except Classic FM.

GCap is to lobby "vociferously" for the switch-off of the AM platform, which carries its 25-station strong Gold classic hits network. Gold's AM transmission contracts run until between 2012 and 2016, depending on the individual licences.

Gold, which is also broadcast on DAB, digital TV and online, was not given key brand status, but described as "transitional". GCap said it would scale back investment in Gold.

Hazlitt said: "GCap Media will become a leaner and more dynamic company focused on maximising the revenue and profit potential of five key brands on FM and broadband, the platforms we believe consumers want and which offer the greatest growth opportunities."

The new "flexible" Capital inventory policy of nine minutes of ads per hour is predicted by GCap to add £2m in revenue in 2008/9. It claims the current policy cost it £5.8m in lost revenue in 2007/8 compared with 2006/7.

Comments

Mark Griffiths - 11/02/2008

Well, thanks for nothing, GCap! A brilliant business strategy that stuffs consumers once again. Yes, we really do want our music regularly interrupted by inane advertising. To hell with the regions, put London first. How original! Long live TheJazz - the best digital jazz programme. Hardly any advertising or news or vacuous DJ babble. Inevitable, I suppose. Such wonderful Monday morning news.

Darren Davidson - 11/02/2008

Very sad. TheJazz is a great listen. Axing the station seems like a retrograde step to me, when the brand could be leveraged to make money through events, CDs and other activities, if it's not making any money from ad revenue. It has a very loyal following.