South Africa’s radio industry is still attractive

South Africa’s radio broadcasting industry is expected to grow its revenue base by more than 50% over the next five years, according to the latest PwC research report that tracks media industry trends.

The PwC report titled South African Entertainment and Media Outlook: 2013-2017 says radio expected to see strong growth in advertising revenue streams, rising from R3.6 billion in 2012 to R5.5 billion in 2017.

This feeds into growth of the broader media and entertainment industry. PwC expects the broader industry to grow its revenue base from at a compound annual growth rate of 10.9% in the next five years to R175 billion. While this growth will be fuelled by increasing internet access but the country’s broadband penetration level is growing from a low base living space for further growth of the radio plarform.

“As a significant proportion of South Africans lack Internet access, the radio remains one of the few advertising platforms capable of reaching a large audience,” said PwC Entertainment & Media Industries Leader for Southern Africa Vicki Myburgh.

PwC’s call flies against observations that South Africa’s radio market is getting overcrowded and closer to maturity. This is after South Africa welcomes a significant number of new radio broadcasters in the post 1994 era. The latest round of new additions saw the entry of Power FM in the Gauteng market which is one of the country’s most lucrative markets.

The potential of South Africa’s radio market is reflected in the latest financial of JSE listed entity Kagiso Media, which is one of the largest radio players in the country. The company’s figures for the year ended June 2013 show 39% growth in revenue to R1.3bn which was partly attributed to the radio market.

In its financial commentary Kagiso Media said “The group’s radio assets delivered revenue of R669.9 million, up 14.2% on the prior year amount of R586.4 million, performing better than the industry average of 12%”.

Key factors supporting this double-digit growth was a high trade presence with stable audiences, said the company. agiso Media is invested in a large portfolio of media assets and largely commercial radio stations. These include East Coast Radio (100%), Jacaranda FM (80%), OFM (24.9%), Heart 104.9 (20%), Gagasi 99.5 (20%), Kaya FM (47.5%) and MediaMark (50.01%). The company also features Juta (100%), Knowledge Factory (70%), Kagiso Vantage (50%) and Kaufman Levin Associates (89.99%). There is also Gloo Digital Design (60%) and Kagiso.MSN (100%) and Urban Brew Studios (50.1%).

Seeing potential for further growth, Kagiso Media majority shareholder Kagiso Tiso Holdings has offered to buyout minorities in the media operation.

Most interest in the radio industry development is on the entry of new players like Power FM. Targeted to the black affluent market, Power FM like many other new players is hopping into the media transformation theme. While there have been introductions of several new radio licences in the past 10 years or so there remains concerns that the industry is underperforming key transformation indicators. Content remains largely uniform and diversity of ownership is still unsatisfactory.

South Africa’s print media giant Times Media Group (TMG) recently expressed what sounded like a firm intention to venture into the radio market. In its financials for the year ended June TMG said the South African media landscape is, and will for the foreseeable future be, dominated by television, print and radio mediums. “We hold an ambition to expand into radio broadcasting”.

TMG added that its strategy of entering the radio broadcast market in South Africa was taking shape via the launch of TimesLive Radio, an internet radio venture. “This small initiative is the start of a broader ambition to own radio assets in South Africa and across the African continent. The radio landscape, as with television, is undergoing significant change and offers fresh opportunities as platforms such as the internet emerge as credible alternatives to traditional broadcast. We would be interested in owning traditional radio assets in South Africa but are hamstrung by stringent cross-media ownership legislation”.

news@ujuh.co.za

 

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