Commercial radio rode high on the back of positive economic conditions in the first quarter of the year. But by May that mood had soured when the Federal Government announced the deadline for metropolitan broadcasters to launch digital radio had been pushed back from January 1, 2009 to May 2009. Since then the medium has been mired in talk surrounding delays, caused by concerns ranging from cost to signal strength.
To make the situation worse, concerns about the technology echoed around the world – most worryingly in markets where the technology is not new. Britain’s largest radio group, GCap, decided to ditch two of its leading digital stations, The Jazz and Planet Rock, earlier this year, citing high costs. Other well-established stations have also closed, dogged by low listener numbers.
In Australia, the major commercial radio players – ARN, Austereo, DMG, Fairfax and Macquarie Radio – were tight-lipped about their plans to market digital radio to consumers and advertisers, fuelling fears that the lack of digital penetration could continue for some time. But by mid-year, Commercial Radio Australia (CRA) together with the networks, hired creative agency Smart to develop a multi-million dollar ad campaign to promote the digital launch. The networks then made important appointments to facilitate the switch-on and a new group, the Digital Advertising Advisory Group, was formed and began tackling the challenges of the launch.
Joan Warner, chief executive of CRA says the digital setbacks meant 2008 was “an incredibly challenging year for commercial radio”.
“We not only had a competitive market, but we had political challenges as well as tough economic times,” she adds.
The challenges didn’t end there for digital radio and in September, DAB+ radio suppliers revealed another blow – that the delay in the launch of digital radio would cost them tens of thousands of dollars in lost revenue. Geared to bring products to market in November in time for a January 1 switch-on, suppliers would now miss out on the lucrative Christmas period.
A further blow was dealt in October from the plunging Australian dollar, which hit local DAB+ radio manufacturers. The 30% devaluation of the Australian dollar meant the cost of purchasing a digital radio here would almost double.
Suppliers described the situation as a “tragic coincidence” and “bad news for the digital switch-on” as some of the cheapest radios (previously valued at $139) spiked by $100. At the time Warner described the revelation as: “Unwarranted negativity too far out”, and another distraction for CRA. “It was irritating. This is an enhancement to our technology and it gets very tiring when people say this isn’t going to work,” she now says.
Amid concerns for digital radio, CRA laid the foundations for a number of major industry advances, including an overhaul of radio ratings collection methods. “From a ratings perspective we’re getting all the fundamentals right to launch the enhanced system in 2009,” Warner says.
A review of the radio codes of practice has also been an important item on the CRA’s 2008 agenda, according to Warner. “It’s a long and involved exercise to look at the seven codes. We will put forward appropriate revisions to the codes and make that available for public consultation at the end of the this year,” she says.
“And of course we have all the local content issues looming around which we have been lobbying the Government on in terms of onerous compliance burdens,” she adds.
And while a bear market unfolded in 2008, radio revenue continued to increase – PricewaterhouseCooper’s Radio Revenue Performance figures for the financial year 2007-8 showed an industry increase of 5.76%
Looking ahead, Warner says: “It will be a tough year with the economic situation, particularly in Sydney, but we think radio will come out of all this still looking as a good and profitable industry”.
