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Digital Radio in the UK: “Not Economically Viable”?

The UK’s largest commercial radio company is pulling out of digital in favor of broadband and FM, calling digital “not economically viable”:

GCap Media chief executive Fru Hazlitt said the “new GCap” would be built on winning brands, winning content, and “a focus on platforms that consumers want”. Despite a 10% share of all radio listening in the latest Rajar figures, Hazlitt said these platforms would not include DAB radio. “DAB with its current cost structure and slow consumer response is not an economically viable platform for the group,” Hazlitt said this morning, unveiling a £9m package of cost-cutting measures. “In the short term, without massive investment and improbable changes in government policy, it is not a platform in which we can grow.”

And this:

…although DAB radio accounts for nearly 10% of all listening, Hazlitt pointed out that only 4% of total listening was to digital-only stations not already available on analogue. She said the greatest growth opportunities for the company’s radio stations were on FM and broadband. She also announced a new tie-up with Apple enabling people to listen to digital radio on their iPhone.

Now this is part of a larger belt-tightening strategy, and some analysts evidently view this as strictly that. Further, there is a broader context, as GCap is trying to fight off a takeover bid from a competing broadcaster. I’m not up to speed on all the details so you should take the above statements with a grain of salt. They may be “under duress.”

Still, the symbolism here may send a chill through digital radio in the UK, and quite probably across the pond in the US, too.

And it’s interesting that this is precisely what I’ve been arguing for the past three to four years.

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