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Monday, 10th December

'Prospects for European Radio to 2006' report published

Oliver & Ohlbaum, a strategy consultancy in the media sector, have today published their review of the European radio sector. It is understood to be the first overview of its kind.

Within the report, it is suggested that the "European commercial radio sector is still extremely underdeveloped with 5,100 stations sharing just 4 billion in advertising and sponsorship revenue - about 0.8 million per station. This compares with a USA commercial radio sector worth 17 billion in 2000."

O and O logo                         "Europe's 400 public service radio stations in contrast still enjoy many of the best analogue frequencies, substantial licence fee funding - topped up in some cases by additional advertising revenue - and an average of 13 million revenue per service."

"Over the next five years changes to ownership rules and regulations are likely to have a greater impact on the sector than the development of digital transmission. The switch to digital in turn is unlikely to be dominated by any one distribution platform, with terrestrial DAB, satellite, cable, internet and mobile devices all being used to receive digital radio services."

"With industry annual average revenue growth slowing to about 4 per cent a year from 8 per cent due to the more depressed European economy and the limited availability of new analogue frequencies, the best growth opportunities over the next 5 years are likely to be in programme syndication and affiliate network expansion."

The report goes on to make more specific findings. These findings include:

"Europe's 9.8 billion radio broadcasting sector is still dominated by its 400 public service stations which account for over 50 per cent of revenue, many of the best frequencies and 38 per cent of listening."

"Europe's 5,100 commercial radio stations share just 4 billion in total revenue of about 0.8 million per station - 4,500 of them are part of affiliate networks - with the remainder often being part of multi-station owning groups."

"Commercial station advertising yields per thousand listening hours in Europe are between 15 and 30, compared with almost 50 in the USA. This is in part due to the lack of reach and proper demographic segmentation within much of European commercial radio."

"Radio station choice in major European cities is generally just three-fifths the USA level."

"Sector annual growth is likely to fall from 8 per cent to 4 per cent over the next five years - commercial sector growth falling from 10 per cent to 6 per cent."

"The move to digital broadcasting will see radio move from a single distribution system to a multi-system medium utilising terrestrial, satellite, cable, internet and even mobile and wireless LAN distribution. Terrestrially delivered DAB is only likely to reach 10 per cent of European households and account for 6 per cent of total listening by 2006."

"The long term prospects for radio in Europe are generally positive - radio listening is still increasing; radio advertising is still comparatively cheap; ownership regulation changes are likely to reduce fixed costs and increase programme investment and reach; digital distribution will eventually bring the segmentation and choice needed to expand the market; and, internet based advertisement slot trading and copy delivery should reduce historically high transaction costs."

Oliver & Ohlbaum Associates is a strategy adviser at board level to the media, sports, entertainment and e-commerce sectors. O&O have advised on many of the major developments in the European television, radio, publishing, on-line and sports markets over the last 6 years.

Related links:
Oliver & Ohlbaum Associates website

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