GCap Media, part owner of DAB network operator Digital One, announced its intention to significantly scale back its investments in digital radio in favor a new strategy that focuses on core FM analog properties.
In effecting this new strategy, outlined yesterday, 11 February, by GCap Chief Executive Fru Hazlitt, GCap is selling its interest in Digital One to its partner, transmission services provider Arqiva, as well as shutter two “non-core” DAB brands, theJazz and Planet Rock.
“Today we are announcing a radical but realistic set of measures with the aim of delivering significant improvements to profits and operating margins and positioning GCap Media for long term sustainable growth,” stated Hazlitt. “GCap Media will become a leaner and more dynamic company focused on maximizing the revenue and profit potential of five key brands on FM and broadband, the platforms that we believe consumers want and which offer the greatest growth opportunities.”
In addition to selling off its interest in Digital One, GCap is looking to dispose of its Xfm analog FM licenses in Scotland, South Wales and Manchester, England, to focus the Xfm brand on London and nationally via webcasting.
In deciding to move away from DAB, GCap cited the cost savings associated with divesting itself of Digital One, as well as slower than expected consumer uptake of the medium.
The latest RAJAR figures show that DAB listening remained stable in the fourth quarter of 2007 at just over 6 million listeners per week. In the same period some 22.3 percent of surveyed adults said their owned a DAB receiver, a 40 percent increase on the figure from the fourth quarter of 2006. According to the Digital Radio Development Bureau (DRDB), more than 550,000 DAB radios were sold in December 2007, up 22 percent from December 2006, putting the total DAB receiver base in the United Kingdom at 6.45 million as of year-end 2007. In 2008, the DRDB forecasts sales of 2.6 million bringing the cumulative total to 9.1 million sets and household penetration to 30%.
While some commentators have been quick to point to GCap’s move as a sign of no confidence in DAB, others have noted that GCap has been the target of a hostile takeover by Global Radio and the cost-savings associated with a divestiture from Digital One will help boost profits for GCap.