KN64012

KEY NOTE COMMERCIAL RADIO : June 2003

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This report covers: audio entry systems, video entry systems, keypad systems, card systems, proximity access control, long range access control, hands-free access control, biometric systems, barium ferrite, wiegand cards, magnetic stripe, barcode cards, smart cards, dual function cards, infra-red cards,

Companies covered include: Abloy Security, Assa, Bell Group, Bewator Group, Cardkey European Holdings, Group 4 Technology, Kaba (UK), Newmark Technology Group, PAC International, Paxton Access, Sensoprmatic Electronics Cororation, TDSi Group, MR Access, HID Corporation Inc, Recognition Systems Inc, Honeywell Westinghouse Security Electronics, Honeywell WSE, Guardall, Codelocks

EXECUTIVE SUMMARY

Executive Summary The success of national commercial radio stations has produced a sustained long-term growth in advertising revenues to the commercial radio market, and strong growth occurred between 1997 and 2000. During 2001, however, advertising expenditure in all media - including commercial radio - declined. Key Note estimates that, in 2002, the value of the commercial radio sector will remain static at 2001's figure. Key Note anticipates that growth in revenues will resume in 2003, at around 5 percent per annum, to give a market value of £666m in 2006 at constant 2002 prices.

Commercial radio's audience has not grown as fast as the number of stations, but revenue from advertising and other sources has soared. In part, this is because many of the new stations cater for specialist tastes; for example, XFM, one of London's newer stations, plays `alternative rock'. This has drawn in new advertisers keen to reach small but dedicated audiences. In spite of the segmentation of the audience, however, most of the new advertising revenue has come from mass-market brands, such as Coca-Cola and McDonald's.

The Radio Authority (RA) continues to issue licences for new commercial radio services. It is not clear whether or not there is enough advertising revenue to pay for more commercial stations; the other difficulty may be a lack of space on the airwaves. However, digital audio broadcasting (DAB) would go some way to solving this problem. The future of digital radio is still uncertain, but commercial radio operators are deeply involved in the process of jockeying with each other for commercial advantage in developing and launching new digital services. The Government is expected to force companies to back it by switching off analogue frequencies. Analogue radio could look increasingly old-fashioned with the television industry's switch to digital. Nevertheless, there are serious problems yet to be overcome.

The trend toward consolidation in the commercial radio industry began in the early 1990s. However, the development of DAB is providing a new commercial impetus. All the major radio groups are vying with each other, both for new licences and for growth by acquisition. Ultimately, the future of digital radio in the UK may depend on the willingness of the regulatory bodies to permit further concentration of ownership.

With the whole broadcasting industry in a state of flux, it is impossible to be certain of the final outcome of current trends. However, Key Note anticipates that, by the year 2006, commercial digital services will have established themselves in the commercial radio market. The only real question is whether they will establish themselves as the mainstream commercial radio format or whether they will still be a niche market, rather like pay-television in the early 1990s.

TABLE OF CONTENTS

Text © 2004 Key Note

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Last updated by Amanda Porteous February 2004