Bauer have got their cheque book out again, but this time they have abandoned our fine shores to bunk up with the Irish. They’ve acquired Communicorp Media, the owner of the two national commercial stations Today FM and Newstalk, Dublin’s 98FM, the two Spins and some digital assets too, all for a purported €100m (about £85m). Communicorp’s UK operation (FM stations that, in the main, licence Global’s brands) remains unaffected.
Ireland is an interesting market. Radio’s popular with consumers there, and the fact RTE has advertising too, means pretty much the whole population can be reached through radio - which makes a difference to its share of the country’s advertising Euros.
It’s also heavily regulated, with a limited number of FM radio stations and no real DAB roll-out. If you walk into a station there’s often 30 or 40 people there, with a strong news team and little networking or automation. RTE have national stations, but don’t provide the local competition that say, the BBC does in the UK.
The benefits of being a relatively closed-shop has meant the sector has been somewhat preserved in aspic. Keeping out new competitors, stopping any DAB development and no broad availability of radio on digital television has meant there has been little growth for the sector.
My view is that by not providing any real digital products of scale, safely cocooned in their FM world, they have left the innovation in audio to non-radio businesses. Irish radio output doesn’t seem to trouble the podcast charts and additional streams that stations provide, as they lack scale, have little investment in content.
This is a particular shame as consumers have huge affection for their radio stations, love speech more than other markets and the stations are resourced in a way that they have the staff to do interesting things digitally.
This is the dichotomy that many incumbent businesses face. The current business seems pretty good - why change it? And then it’s too late.
Last month’s JLNR’s Radio in a Digital World report shows that only 8% of the population listen to radio ‘digitally’, that number in the UK is 67%. When you look at time spent listening, in Ireland digital listening accounts for just 5.9%, in the UK that figure’s ten times that - 59%.
With Bauer’s acquisition, there’s been much talk about whether they’ll roll out the UK local brand strategy of Hits and Greatest Hits or import national stations like Kiss and Absolute Radio. I doubt there’s much chance of that in the short term.
What may well be different is Bauer’s digital-focus. They are a strong proponent of DAB and DAB+. When becoming a main operator in Sweden, they definitely helped pushed that market, a previous digital radio refusenik, into adopting the platform.
In many markets they’ve been growing podcast content and also in Denmark, Sweden and Finland, developing their RadioPlay aggregator. Last week it announced that their tech is powering Antenna Group’s online activities in Greece, Cyprus, Romania and Moldova.
The other player with more of a digital focus is the Wireless Group, who also own a decent number of local Irish licences. In the UK they’re the people behind talkRADIO and Virgin Radio, and who sold their UK FM stations (to Bauer) at the beginning of 2019.
Indeed, with Bauer they operate Octave, a joint venture that sells ads in streaming and podcasts. So there’s definitely already some digital alignment.
The support of Bauer, Wireless and RTE on DAB would certainly galvanise the regulator (BAI) into kicking off a DAB licensing programme. The BAI and RTE (ongoing financial troubles aside) would be positive about a digital radio roll-out if some commercial big boys jumped on board. Growing out and promoting digital services, for both Bauer and Wireless, would also help build inventory for their IP operations and maybe provide a way to bring some of the UK national digital brands to the market.
The main digital asset Bauer have now acquired is Audio XI, which was designed as a carbon copy of Global’s DAX - repping their own audio, third party radio stations and international podcast providers.
If I was Bauer, acquiring a strong FM business makes sense. It’s something they understand and they can probably add value to sales and programming. It’s also likely that there will be some relaxation of the over-restrictive radio regulation in the coming years that will allow them to reduce costs. It’s also already profitable, well at least pre-pandemic, so earnings additive to the Bauer business.
But, I think all of that is chicken feed when thinking about what the digital opportunity is. Irish radio has under-exploited digital audio - both IP and broadcast - and there’s the potential for strong growth if it’s attacked with zeal. Let’s see if they’re the ones to do it.
Update: Of course, you send something out and immediately there’s some news! RTE have just announced that they’re stopping their DAB broadcasts. I guess ongoing operations are hard to justify when they’re the only broadcaster involved. Maybe time has run out for Bauer to do much? Or maybe it leaves the whole market open for them?
Previously a launch issue for DAB was lack of receivers in a market. But nowadays as EU rules require all radios to be DAB-enabled, and the vast majority of cars being shipped to Ireland are compatible, switching on DAB services would actually find a pre-installed audience (if marketed properly!). Another one to watch.
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