Media Forum: Will radio be affected by blip?(opinions on Capital Radio PLC's merger with GWR Group PLC)(Panel Discussion)

Is the recent revenue dip worrying for the future of radio, Alasdair Reid asks.

This is a milestone year for commercial radio, not least because it is about to enter a long-awaited consolidation phase. The Capital Radio merger with GWR is first up and, with others in the pipeline, the industry's corporate organogram will look considerably tidier by the end of 2005.

Meanwhile, it will be a year in which we will start to get a real understanding of the impact that digital will have. On the one hand, it could lead to a damaging fragmentation of audiences. On the other, it could help increase the sector's share of dial space (and, therefore, audience) in its perennial battle with the BBC. There is a real land grab opportunity here - and let's not forget that commercial radio's fortunes took a great leap forward the last time its frontiers were extended, with the award of national licences more than a decade ago.

So, exciting times. Strange, then, that the medium's fortunes seem to be at such a low ebb, especially given the fact that other media, especially TV, are experiencing such an upswing. Last week, Chrysalis reported a 3 per cent year-on- year decline in revenues for the period from the beginning of September 2004 to the end of January 2005 and then compounded the gloom with a poor showing in the Rajar results - also released last week.

Emap, it has to be said, continues to be upbeat; but Capital also revealed last week that its revenues for the fourth quarter had declined year on year by 4 per cent. GWR was also downbeat, stating that January revenues would be down 4 per cent on 2004.

What's going on? Phil Riley, the chief executive of Chysalis Radio, argues that commercial radio is merely experiencing a shortlived blip in its upward growth curve. He states: 'An upward trend is never completely smooth.

The industry as a whole was up 7 per cent for the first nine months of 2004 - it's just the last quarter (that didn't deliver). In fact, for many companies it was just one weak month. For us it was December but I know that for others it was November. The general feeling is that the first quarter of 2005 is more positive.'