Australia / Analyst Insights
New digital platforms increase competition for radio broadcasters
by Rachel Brady
Jun 14 2016

The Australian radio broadcasting industry has experienced intense competition over the past five years, as music streaming services surged in popularity. This competition is expected to intensify over the next five years, as broadcasters compete for both listeners and revenue.

Music streaming services offer consumers instant access to listening content of their choice, with a variety of music genres, podcasts, talkback and news content. The availability of portable devices, combined with increasing internet accessibility, has enabled consumers to personalise their listening experience and listen to content whenever and wherever they want.

In an effort to reclaim listeners, major players Southern Cross Media Group Limited and APN News & Media Limited, which hold market shares of 24.7% and 11.2% in the radio broadcasting industry, respectively, have attempted to diversify. Both players have employed promotional strategies and narrowed their content to appeal to specific listeners. By targeting a defined demographic, radio stations place themselves in a better position to attract revenue from advertisers that wish to communicate with the same demographic.

Southern Cross Media Group Limited operates The Hit Network and Triple M LocalWorks. These two divisions target different consumer markets and have both engaged high-profile personalities to host radio segments in a bid to attract larger audience numbers. Both radio stations also offer online streaming and The Hit Network has made its content more accessible through mobile application platforms.

APN News & Media Limited has also employed high-profile personalities to draw listening audiences through its KIIS and Pure Gold divisions. However, the main factor contributing to the network’s success has been the expansion of its digital radio platform iHeartRadio, which broadcasts content internationally from the United States and New Zealand, as well as Australia. This expansion has attracted a growing audience and advertisers have followed, with the company’s industry-related revenue expected to grow to $182.0 million by December 2016.

While private broadcasters primarily rely on advertising revenue to fund their operations, the Australian Broadcasting Corporation (ABC) depends on government funding. The ABC currently holds the second-largest market share of the radio broadcasting industry at 19.9%, with its radio offerings comprising ABC Local Radio and ABC Radio National. However, since the 2014 announcement of a budget cut of $254.0 million to ABC operations, industry revenue is expected to fall by 1.2% over 2015-16, as the future of the entity’s radio operations is uncertain.

Over the five years through 2020-21, radio broadcasting revenue is expected to marginally fall. Despite an anticipated rise in demand from media buying agencies for advertising space, competitive pressures will increase as radio broadcasters compete to attract larger audience numbers and secure a greater share of revenue. The shift in consumer listening trends to online services will mean that radio broadcasters must consistently deliver strong ratings if they wish to remain competitive in the Australian radio broadcasting industry.

 

Relevant companies:

Southern Cross Media Group Limited

APN News & Media Limited

Australian Broadcasting Corporation