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Heart and Galaxy drive Chrysalis Group revenue growth

LONDON - Strong growth in revenues at its Heart and Galaxy radio stations has helped Chrysalis see its radio business deliver year-on-year revenue growth of 20.9%, but its outlook is cautious.

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Overall, Chrysalis posted turnover of £164.2m, up 3.2%, and earnings before tax and amortisation of £11m, up 128.6%. These figures exclude the contribution of Chrysalis Television, which was sold in August 2003.

Pre-tax profits dropped by 75% to £5.5m from £21.9m. The fall in profits related to the sale of its TV business, which helped inflate last year's pre-tax profit figure.

The company indicated in its trading outlook that it anticipated flat revenue growth for the first quarter of its 2005 financial year, on the back of weak performance in October.

In Chrysalis Group's preliminary results for the year ended August 31 2004, its radio division showed revenues of £67.7m and Ebita of £14m. The figures are significantly better than 2003 and are attributed to the advertising recovery and operating improvements in pricing and inventory management.

A spokesperson for Chrysalis said: "The significant share of commercial listening that our stations enjoy within all of our markets has stimulated this increased demand as we have been able to position ourselves increasingly as a core buy on many advertisers' schedules."

Listening share was flat across the company's portfolio of stations, which includes Heart FM and LBC in London, Heart FM in the West Midlands, and the Galaxy network of local radio stations.

Heart's audience declined 2% over the year, but is currently running a television and outdoor advertising campaign as it looks to fight rival Capital FM. Galaxy's audience also declined by 3%, but revenues grew by 14.6%.

Chris Wright, Chrysalis Group chairman, said: "The two major operating divisions, radio and music, have reached record levels of profitability with radio posting significant Ebita growth of 48.2% to £14m and music growing Ebita by 20% to £4.6m."

LBC increased its audience by 9% and grown revenue by 40%, but still made a loss of £4.7m. This was less than 2003's loss of £5m. Chrysalis said it is improving the demographics of LBC and that since the launch of the talk format on the FM frequency in January 2003, reach among the 35- to 54-year-old listener base has grown by 84%.

Investment in digital broadcasting increased over the period to £2.8m from £2.1m for the last period. Chrysalis expected digital investment to peak at £3m in the current financial year and remain at this level for the foreseeable future.

Digital radio has given the company an additional 689,000 listeners and an additional 3.8m listening hours, and it said it was currently working monetising the extra hours generated by this additional listening.

Chrysalis Mobile, launched in March 2004 to take advantage of the increasing demand for music content over mobile phones, posted an Ebita start-up loss of £0.3m for the financial year ended August 31 2004. This was in line with forecasts made at the time of the launch. Its music2mobile product was recently taken up by The Carphone Warehouse.

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