GCap reaches for DAB off switch

GCap Media said it will axe the home of Planet Rock and theJazz because the Digital Audio Broadcasting (DAB) platform has not been a money spinner for the firm.

The UK's largest commercial radio broadcaster will close the doors on Digital One's remaining stations and sell its assets to its partner Arquiva, which will take GCap's 63 per cent stake for just £1, according to the Financial Times.

GCap, which is currently caught up in a hostile £313m takeover bid from Global Radio, is backing away from the digital platform as it attempts to cut costs by some £4.7m. Instead, it said it plans to concentrate on FM and broadband-based radio.

GCap's newly-appointed boss Fru Hazlitt said in a presentation (pdf) that listeners were not voting with their ears when it comes to the take-up of digital-only radio stations. She quoted industry number cruncher Rajar saying that DAB accounts for only nine per cent of radio listening, while digital-only stations reel in less than four per cent of UK radio fans.

She added that Planet Rock and theJazz had pulled in combined "net benefit" worth a measly £0.7m over the past year.

Hazlitt, who was previously managing director of Yahoo!'s UK and Ireland operations, perhaps unsurprisingly came out in favour of web-based radio as the format worthy of greater investment in the short-term.

GCap said it will put a further £0.8m capitial expenditure into the pot to work on various technologies, which includes the likes of its newly developed Apple iTouch streamed-radio application.

Underlining its retreat from DAB in favour of internet radio, GCap said that its biggest brand – London-based Capital 95.8 radio – had seen a 30 per cent increase in page impressions on its website over the past 12 months, it also claimed that unique users were up some 38 per cent.

Hazlitt is targeting an increase in operating profit margins from seven per cent to 12 to 14 per cent in the year to March 2009. She said in a statement: "Capital 95.8 will have a new flexible inventory policy with up to nine minutes of advertising per hour and we plan to dispose of our interest in Digital One, reflecting our view that DAB is not an economically viable platform for the company."

Just last month the independent commission in Germany, which was the first European country to experiment with digital radio, said it was canning the DAB format, admitting that the technology has never really caught on. ®