September, 2018

Chris Evans

Virgin Radio

At this point, everyone in the industry and beyond has written about the seismic UK radio events of yesterday, when Chris Evans, presenter of the biggest breakfast show in the country, on the biggest radio station in the country, decided to leave after 8 years on breakfast there. Instead, he will take up the mantle at Virgin Radio, a station so small that the smallest shows on the Radio 2 network outperform it.

I’d encourage you to go away and read Matt Deegan, Phil Riley and John Myers.

I’ll try not to duplicate what they’ve said here, although some of that will be unavoidable. 

Let’s take it in steps.

A Massive Gambit for News UK

This is unquestionably an enormous play from the UK’s (distant) 3rd biggest commercial radio group. News UK bought Wireless Group back in 2016. The group had just made bold expansion plans when it launched a number of services on the new second national digital multiplex earlier that year. They added TalkSport 2, TalkRadio and Virgin Radio.

[It bears repeating that although this whole story is being painted as a return to Virgin Radio, the Virgin Radio that launched in 2016 is a different beast to the one that I knew so well and launched in 1993. Virgin properties that aren’t wholly owned by Virgin Group (i.e. most of them) are really licencing deals. When new owners came in to buy what was then Virgin Radio in 2008, they decided not to continue the licencing arrangement and the station was renamed Absolute Radio. There are still members of staff in what is now Bauer’s London HQ that worked with Chris back in his previous Virgin Radio stint.]

Since those new stations launched, I think it’s fair to say that they’ve struggled to achieve a real impact. Launching speech stations isn’t easy or cheap – and you need listeners to complete the circle.  The new Virgin Radio struggled to cut through, given that it didn’t have the coverage or the marketing budgets of competitor stations. The growth of digital services has meant more competition in every market segment. Furthermore, these new services were exclusively digital, and a nice FM backbone to a station’s output is still very important if you want to achieve big numbers early on.

Virgin Radio did try to do a few things differently though. They put women in key timeslots which somehow still isn’t as common as it should be. And they hired some interesting and otherwise overlooked presenters, often dovetailing their output with stints on TalkRadio.

Plus News UK’s ownership allowed for promotional crossover. Virgin Radio and TalkSport were regularly advertised and promoted in papers like The Times and The Sun. That said, I’ve said before, I found the creative tired and repetitive, so I’m not sure it has worked as well as the media value might indicate.

The question then is whether that 2016 investment in new services was paying off. So, from press reports, this seems to be Rebekah Brooks’ big play. The News UK exec is definitely swinging big here.

Phil Riley has run the numbers and reckons that Evans may be being paid as much as £3m a year (he was on around £1.6m at the BBC). But you have to add to that other programming costs, and importantly, a significant marketing campaign. Plus you’re going to need other big talent to back Evans up.

The commercial part of this is actually the trickiest bit. Between them, Global and Bauer dominate UK radio. And that means that they manage to take more than their “fair share” of commercial revenues. Wireless Group has its own commercial team, and they can obviously play to their speech radio strengths, but they are at a natural disadvantage. (Smaller commercial groups are at an even worse disadvantage, which is partly why it made sense for Bauer to buy the independently owned Jazz FM recently.)

Now it’s fair to say that prior to being bought by Bauer, Virgin and then Absolute Radio both had the same issue. And when Chris Evans was on breakfast on Virgin, the station was absolutely able to charge, and achieve, a premium. Brands flocked to be part of his show, and breakfast promotions were incredibly expensive and therefore profitable with an audience across the station of around 3m.

But since then, there has been more consolidation in the industry, and getting from 400,000 to 3m seems a colossal ask.

Make no doubt, this is a major play. It’s going to be really interesting to see what happens.

Chris Evans

A big question is why is Evans making this move. It’s undoubtedly bold. He is currently enormously comfortable with the biggest show on UK radio. But perhaps he’s too comfortable?

The whole Top Gear presenting thing didn’t work out, and with the publication of BBC pay levels getting enormous scrutiny, perhaps he just didn’t want the hassle. (It’s perfectly arguable that Eddie Mair made the same decision when he recently decided to leave Radio 4 for LBC.) What you can be certain of is that it’s unimaginable that Terry Wogan would have done such a thing.

But a result of this is that Evans gets a massive pay bump, and less public scrutiny. He will certainly be the best paid person in UK radio.

And never underestimate his need for a challenge. I suspect that his time at Radio 2, at least after the initial period, has been like water off a duck’s back for him. However, this is going to be harder and there’s going to be pressure on him to bring results. But Evans has made a career of doing big and bold things.

He shook up Radio 1, then left when the BBC wouldn’t give him Friday’s off for his Channel 4 show TFI Friday.

When he moved to Virgin Radio, he put together a bid to buy the station, grabbing it from under the noses of another bid from Capital. Then, having sold his equity in it for a massive profit, he was fired from Virgin and lost a massive court case (and a significant amount more money).

While this is not as wild and reckless as some of those other moves, it remains a big move.

Radio 2

How will all of this affect Radio 2? In some respects, nothing will happen. Radio 2 will get a new breakfast presenter and they’ll probably continue to do well. That’s kind of how Radio 2 works.

Who exactly that will be remains to be seen, but Sara Cox is clearly the safest bet, and is the bookies’ favourite. Another option might be to bring forward to breakfast the new Simon Mayo and Jo Wiley show, but I can’t see the field being any wider than that.

Whatever the result, this is a rare opportunity for the station to put more women into daytime – something it has been rightly criticised for lacking.

Digital

One thing that makes this move seem especially interesting is the fact that Virgin Radio is digital only.  The single biggest digital-only radio station is 6 Music with 2.4m listeners, and that’s still a growing station, having taken years to reach that level.

Even with a big name joining them, I think that’s a tall ask, and the growth of the station might take longer than News UK might hope. 

One of the biggest challenges with breakfast is listening during the commute. DAB’s biggest weakness remains the in-car market. While new cars tend to come with DAB, older ones mostly don’t have it, and so in the car your choice tends to be more limited. Listening to Evans isn’t always going to be easy.

The D2 multiplex which Virgin Radio sits on also has less coverage nationally that the first multiplex, and less too than the BBC. Arqiva recently announced that they were extending it, but Radio 2 is much easier to hear digitally in more remote locations than Virgin Radio is.

Ofcom recently closed a consultation about Localness on local radio. That has some really interesting potential ramifications. It could lead to stations like Capital and Heart being able to network most of their output nationally, including their breakfast shows. Currently, there are much tighter rules that limit the number of hours that can be networked and when those hours can be.

Would Wireless Group rebrand its local FM stations as “Virgin Radio” and put Evans across them? Even if they didn’t rebrand every service, they could still run a networked Chris Evans Breakfast Show across those services. That would give the show an FM presence and a bigger breakfast show to sell to advertisers. It’s a thought.

Conclusion

This is by no means a slam dunk from News UK’s perspective. They’re giving their whole radio business a massive shot in the arm. I suspect that being a distant third in the radio market is not somewhere that Rupert Murdoch likes to be. But while the station will achieve significant growth off the back of this, whether the numbers will work in the medium or long term remains very much to be seen.

Note: I’ve been spending a few days away this week with some friends. The place we’re in has a pool and so we were hunting around for inflatables. Wouldn’t you know that one of my friends has been hanging onto Virgin Radio branded beach balls for more than ten years!