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					STEN case study – UKRD – 1004

To continue its growth, UKRD‟s stable of radio stations need to appear local, but act national. Philip Smith reports. UKRD’s challenges  Increasing share of local ad spend  Dealing with the expansion of digital radio  Finding and nurturing talented staff Driving down the M5, William Rodgers likes to station-hop on his car radio. He‟s not just searching for good music. He also wants to hear the links, jingles and presenter babble that are the cornerstone of local radio. But his favourites are the ads. It might be Star 107.5, broadcasting to Cheltenham, or Star 107.2 in the Bristol area. But what he really likes is Star 107.7 in the north Somerset area. “That‟s our star Star station,” said the 44 yearold head of UKRD, a group of 10 local radio stations, half of which are branded „Star‟. The idea to brand so many stations with the same name is calculated. But you‟d expect that from a man who made his money through insurance and his name in local politics. “When it comes to pitching to a national agency you are more likely to be successful if you say you cover the whole of the West Country rather than just one town,” he said. That‟s important to UKRD. Commercial radio stations across the UK rely on advertising revenues to succeed. “The smaller the station, the less likely you are to survive,” he said. “So we decided to have a single identifiable brand.” To advertisers, Star radio - collectively - means a bulk audience. But to the listeners it is still their own local radio station. The ethos is that if a radio station becomes part of the community, listeners will tune in. “Star in north Somerset has the sixth highest average listening hours of any commercial radio station in the UK,” he said. It‟s all part of a plan to keep UKRD experiencing the kind of growth most in the radio world only dream of. Each station appears highly localised, with news, sports, weather and references to people and places. “We obsessively talk local on air,” said Rodgers. But it is with the sales power of a larger group that UKRD plans to match the big boys when it comes to pitching for a slice of the major national and regional advertising budgets. “Some 70% of UKRD‟s revenues are from local advertisers. Our challenge is to maximise our share of national and regional ad spending. We are not yet picking up our fair share,” said Rodgers. He is also competing against newspapers, billboards and a host of other media for a slice of the corporate ad spending. In an industry that is witnessing great mergers between the likes of GWR and Capital, Rodgers has to find a niche to ensure his small group is not squeezed off the airwaves. And with the big spenders concentrating on the major national or regional radio groups, UKRD has to play by the same rules or be left to pick up the scraps. It‟s a strategy that is starting to work. Three years ago, on a total revenue base on £6.8m, UKRD was making a £2.5m loss. Today, helped by its 10% a year growth, it makes a modest pre-tax profit on an income of £9m. “Not all the stations are currently in profit, but they will be,” said Rodgers. “We are not interested in running loss-making stations.” The challenge for UKRD now is to maintain that growth. It was with the Cornish Pirate FM that Rodgers first tuned into the local radio business. As a businessman - he ran his own insurance company - and was well-known as the leader of Penwith

District Council, he was asked to join a consortium to bid for the vacant commercial radio slot to broadcast in Cornwall. The consortium was led by James St Aubyn, chairman of UK Radio Developments & Infinity Group, an investment company that made its money out of bidding for such licences. They won and four years later, in 1994, the holdings company and Pirate FM merged to form UKRD. Rodgers took on an executive role, becoming group managing director in 2001. St Aubyn remains chairman. As well as the Star stations and Pirate, the company today also operates Eagle and County Sound from, Surrey, KLFM in north Norfolk and Fen Radio in Cambridgeshire. Audiences range from 100,000 to 600,000. It is the bigger stations, those away from the M5 hub, that have retained their own identity. The stations broadcast around the clock, automated during the night. The group is run as a collection of small, virtually autonomous companies. Each station has its own budget and each station manger – Rodgers is acting station manager at Star 107.2 in Bristol – can spend it how he or she sees fit in order to deliver a local radio service. “The best way to get results is to have someone who talks, walks, eats, drinks and sleeps the business. That‟s how you keep it local,” he said. It means the financing is decentralised. “It‟s important that our sales, finance and credit control is at the heart of each business community,” he said. Debtor days, he added, are among the best in the business, at less than 30 for some stations. Stations that over achieve are given 20% of the excess back as shares for the staff. While 35% of UKRD‟s shares are owned by St Aubyn and vice chairman John Hepburn, the remainder is split between some 300 owners, including many of the 200 or so staff. That forms part of a culture of ownership and autonomy that UKRD hopes will help attract the next generation of top presenters, technicians and sales teams away from the big names such as BBC or GWR. “Working in local radio is not just about money, it‟s about culture and creativity,” said Rodgers. Competition is also fierce in the fight for audience share. In Bristol and Bath, for example, Star will be head to head with the likes of the BBC, GWR, Scottish Radio Holidngs‟ Vibe FM and independents such as Bath FM and BCR for the limited pool of listeners. “We had to decide on the style and target audience,” said Rodgers. For UKRD it is the 24 to 45 age group. “But we need to drive those audiences harder and higher,” he said. “That means raising the profile of the stations on the street.” As well as promotions and the usual array of publicity stunts, Star staff use a „star bugs‟, VW Beetles emblazoned with the Star logo and frequency. In addition to growing the revenue for each station, Rodgers also wants to grow the number of stations within the UKRD group. “We are bidding for other FM licences,” he said. But with only limited capacity – all such stations have to broadcast between 87.6FM and 107.9FM – many broadcasters are now looking to move into digital, or DAB, transmission. He reckons the digital radio revolution will take off within three to eight years and that, for small players such as UKRD, it will involve a major investment. “It‟s because the existing frequency range is near to capacity that broadcasters are moving into digital. That poses a challenge for us. We need to judge when the time is right for us to make the move.” In the meantime UKRD has to decide how to increase its portfolio of stations in the short term. One way, said Rodgers, is to take over smaller stations. But another option is to create a co-operative of medium-sized groups where each station can keep its autonomy but collectively they can bat with the big boys. For Rodgers, that‟s the star option.

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