Has Sustained Growth Returned to UK Commercial Radio Revenues?
Commercial radio advertising revenues in the United Kingdom increased for the second consecutive year in 2015 and for the fourth year out of the past five, suggesting that the sector may now be back on a sustainable, albeit modest, growth trajectory, as a result of the renewed popularity of the medium with advertisers and media buyers.
Such a revenue recovery would be most welcomed by the industry which has been engaged in considerable rationalisation and consolidation activity over the past decade, at least partially in response to volatile, but generally declining -4.6% per annum compound revenue growth between 2004 and 2009. With operating profits likely to benefit from reviving revenues, those commercial broadcasting groups who in recent years have been struggling with high levels of debt and low levels of interest cover should be particularly relieved.
Since 2009, industry revenues have increased by 17.2%, according to data reported by Radiocentre in the UK, representing respectable compound annual growth of 2.7%. However, last year’s total revenues of £592 million were still 7.6% below their peak level of £641 million which was recorded in 2004, at the end of a 12 year period of remarkable and almost unbroken growth of 13.7% per annum between 1992 and 2004.
National advertising, which accounted for 55% of total revenues last year, has been the most volatile revenue category over the past decade, while branded or sponsorship revenue, which accounted for 17% of all revenues in 2015, has been the most stable category.
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