A necessarily short post.
There will doubtless be a great deal of coverage over the coming days of GCap’s new strategy, and the parts of it that concern GCap’s commitment to DAB Digital Radio.
Here are some facts, most of which are drawn from GCap’s statement:
- GCap is refocusing on what makes money right now, which is FM and Broadband. GCap is disposing of two DAB Digital services, three regional FM services, and eventually an entire network of AM services, because they just don’t make money now. GCap’s investors have been calling for better financial performance since the merger of GWR and Capital in 2005, and the company is subject to a takeover bid from Global Radio.
- No DAB transmitters are being switched off, nobody will lose any coverage they have now. DigitalOne is still on-air, and wholly owned by Arqiva, who provide the transmission infrastructure. Local DAB licences continue to be advertised and won, and Channel 4 are still committed to launching a second national multiplex. GCap’s local radio services (under the “One Network” brand) continue to be simulcast on FM and DAB. GCap will be lobbying for AM radio to be turned off.
- GCap’s commitment to DAB infrastructure has exceeded that of the BBC’s, which is a bizarre situation when you consider the relative funding available to the two organisations. (The BBC’s funding for radio is £536m plus a share of £154m for on-line – GCap’s annual revenue is about £193m, which returns a profit of about £11m).
- The justification for pulling back on DAB is “we do not believe that – with its current cost structure and infrastructure – [it] is an economically viable platform.” (my emphasis). The issue with DAB in the UK is the cost of the unique way in which infrastructure has been built, licenced and funded (which I have commented on in the past), not the principle of the technology.
- GCap was the first commercial operator to invest in DAB infrastructure, between 1999 and 2002, on very long contracts. The cost of new DAB infrastructure has fallen by about 60% since then.
- GCap is one of six big radio operators in the UK. The BBC has a 55% share of the market, GCap 12.8%, Bauer (formerly EMAP) 10.4%, Global 4.9%, GMG Radio 4.7%, UTV Radio 3.1%. All these other broadcasters continue with their DAB Digital Radio services.
Flattering as it may be, it’s an unrealistic perception that a change in GCap’s strategy can , or indeed should, dictate the success or failure of DAB Digital Radio in the UK or anywhere else.