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Crunch time for faltering GCap

Posted in Media, Oliver Milman, Latest reporters' blogs August 17th, 2007 by Oliver Milman

Steve Orchard, the operations director at GCap Media, infamously said last year that 95.8 Capital Radio had “bottomed out.” Following the latest disastrous Rajar for the station, commercial rivals will take little satisfaction seeing Orchard eating his own words.

GCap itself, like Capital in the London market, is the big beast in the commercial radio industry. Although rivals will enjoy scoring cheap hits on this fallen giant, there is growing unease at how the supposed market leader is failing to take the fight to the ultimate enemy, the BBC.

It’s slightly surreal to see the commercial radio industry close the audience share gap on the BBC while GCap’s stations still contrive to leak listeners. It’s a sad indictment of the company’s parlous position that it cannot contribute any firepower to its smaller commercial counterparts’ battle with the corporation.

It is a situation that is ultimately untenable. Either GCap will recover and lead a resurgent commercial sector, or the business will be swallowed by frustrated rivals, such as Charles Allen, fresh from his consortium Global Radio’s takeover of Chrysalis Radio. Allen, the consensus goes, could surely do no worse a job than the botched merger that created GCap in 2005.

Currently, the latter scenario appears the more feasible. Despite Orchard’s repeated protestations that GCap is in recovery mode, it’s now unclear how the company will actually know when it has hit rock bottom following the latest awful Rajar report.

Listener figures for second quarter of 2007 will certainly make harrowing reading for those attached to GCap’s fate. Capital lost 100,000 readers in the past three months, seeing its London share dwindle to 4.1 per cent.

The station now languishes in fourth place when it used to lord it over the London market. Kiss, essentially a niche dance music station, is the latest to overtake it.

Classic FM, GCap’s other main brand, shed 300,000 listeners over the past quarter. The station is in ruder health than Capital, but the results will still rankle with GCap executives who were praying that the worst headlines were behind them.

Ralph Bernard, the GCap’s chief executive, will be glad that the company’s AGM has already passed. Already under pressure from shareholders over Capital’s costly policy of drastically cutting the number of ads it airs, Bernard will not relish the prospect of explaining how the station is sliding into becoming an irrelevant player in a market headed by Heart and Magic.

Radio buyers, and those within the industry, are beginning to openly wonder how long it will take for heads to roll at GCap over the company’s continued woes. Despite an expensive advertising campaign for Capital and a major re-jig of its presenters and music policy, the station appears to be going nowhere.

Much hope is placed upon appointment of Fru Hazlitt, the former Virgin Radio chief executive, who has been tasked with developing GCap’s digital output since her May arrival. This is widely seen as a sensible strategy in an age where Capital could never re-assert its previous dominance due to increased competition, especially among digital radio operators.

Whether GCap gets its act together or not, developments at the company will be closely monitored by commercial rivals pondering whether it needs to be supported or killed off.

Click here to download our PDF containing the top-line results as well as analysis of the implications for the UK’s key radio stations