It took Ralph Bernard, the 54-year-old head of Britain’s biggest commercial
radio group, 5½ hours to complete the London Marathon, but even that
probably was easier than running GCap Media, the home to Capital 95.8 and
Classic FM. On its first day, in May 2005, there was a profit warning, and
the ensuing advertising recession cost the company a fifth of its then
£250million a year in revenues. Capital 95.8 lost its way, slipping to third
in London. David Mansfield, Mr Bernard’s former merger partner, was forced
out.
Like the 26-mile run, Mr Bernard has not been enjoying himself as chief
executive. “It makes you want to get a cat to kick,” he says. GCap has
underperformed the FTSE 250 by miles: £1 in GCap invested on day one would
be worth 70p now, versus £1.85 for the bench-mark index. Show him the chart,
though, and it triggers an emotional response. “What does that tell you?
We’ve lost the equivalent of £45 million of profits on a business that used
to make £37 million; so this year we should lose £8 million, but the
consensus is that we will earn £13.5 million. What do people think I’ve been
doing these last two years? Baking cakes?”
The original radio entrepreneur, Mr Bernard says that he has “been used to
success”, completing his first merger in 1985, when his Wiltshire Radio
bought Radio West. He set up Classic FM without City backing and “did the
deal the City wanted” by merging GWR with Capital. It is hard to think of
any other British media executive who has been at the top so long.
Curmudgeonly and visionary in equal measure, he has been a chairman or chief
executive continuously since 1984.
And now Ralph Bernard wants to talk. The company releases annual results in
five weeks and, having already disclosed that ad revenues were actually up,
albeit by 1 per cent at the start of 2007, it is clear what the message is.
Expect a relaunch in May.
Crisis-hit Capital is key to the turnaround — Classic FM, by contrast, holds
roughly steady, with about six million listeners. Mr Bernard accused Capital
95.8 of “playing bubblegum pop” when he took over as chief executive from Mr
Mansfield in September 2005, stepping down from being executive chairman. In
the past six weeks its music policy has changed to focus on contemporary
British acts. Such as? “The Kaiser Chiefs, or Paolo Nutini.” Other acts —
The Kooks, The Killers — feature in an advertising campaign, and Mr Bernard
promises to invest more in promotion in “this year, and in 2008 and 2009”
because, finally, he has a product good enough to promote.
Today Capital 95.8 lags Chrysalis’s Heart 106.2 and Emap’s Magic 105.4 in
London’s commercial sector. A year ago, the situation was so serious that Mr
Bernard had to reduce the amount of advertising that Capital carried simply
to preserve the price premium that it had charged historically, introducing
a “no more than two ads in a row policy”. Listening, though, has not
recovered — “We never did it to increase listeners,” he says. “We did it
just to preserve our premium, because once you’ve lost it, it will never
come back.” And there are no plans to introduce the ad-light policy at
Classic FM or elsewhere. “We couldn’t afford to.”
So what about Johnny Vaughan, then? The breakfast presenter has struggled to
replicate the popularity of Chris Tarrant. “He has come in for an enormous
amount of criticism; it’s an impossible task taking over from a guy who had
been here for 17 years.” Some say that Vaughan is too blokey, lacking a
strong female co-host, and, therefore, does not appeal to the 25-to
34-year-old women who are now Capital’s target audience. “That’s so
old-fashioned a view,” Mr Bernard argues. “He talks about things that are
meaningful to a woman with kids.”
Mr Bernard reckons that the impact of the changes will be felt soon. “We won’t
see it in the next Rajars [the audience measurement survey], because it only
started in March, but we’re already seeing improvements in our internal
tracking, although you won’t see that until the Rajars come out in August.”
He is confident that Capital can regain its top slot, but there is no
timeframe for that.
Elsewhere, Mr Bernard concedes, there will have to be rationalisation. A refit
of the Leicester Square offices has themed rooms for the key stations:
Capital; Classic; the indie station Xfm; Choice, for black music; and Planet
Rock.
Choice’s room has a nice line in members-only bling, with white leather
padding on the walls, but there is no sign of Core, once intended as a
challenger to Radio 1. There will be the odd new station, too, such as the
recently formed theJazz, a niche product that is, at least, pleasing jazz
fans.
In such an environment, the prospect of mergers is remote. Mr Bernard says it
is unlikely that he will bid for Chrysalis’s up-for-grabs radio properties,
citing concern with an overlap in the Midlands. “We have quite enough on our
plate at the moment,” he says, but can’t help pointing out that “you expect
further consolidation” after an Ofcom analysis showed that it would be
possible to bring together GCap and Emap’s Kiss and Magic radio business. As
for private equity interest, “there have been no telephone calls”. That is
hardly surprising for a stock rated at over 50 times earnings. The market is
pricing in a recovery and Mr Bernard doesn’t sound willing. “I’d see a
private equity bid as a failure to the shareholders who have stuck by me.”
Some draw the conclusion that, amid a glut of podcasting, advertising money
drifting to the internet and the ever-present BBC (Mr Bernard is never far
away from a rant about the corporation), commercial radio is doomed. The DAB
digital radio standard, which he promoted ardently, could amount to
something of a red herring, as transmission via the internet and wi-fi takes
off. Mr Bernard has long been associated with pushing DAB, but he knows that
his tone has to change. “It was the standard we had to live with —
not the one we were given. Other platforms will be just as successful.” Yet
so far internet success has been elusive: a music download service —
Hear it, Buy it, Burn it — never took off because “it was not promoted
enough”.
Has the company enough promotional clout to build a powerful online presence?
“The iPod is still an opportunity for us; before, people never listened to
radio on the Underground.”
Talk about the emergence of Last.fm and Mr Bernard is at first dismissive.
Last.fm is trying to build a subscription-based business formed around
creating “personal radio stations” using the music that individuals listen
to. Last.fm works well for listening while working at the computer. Mr
Bernard responds with questions: “What did you listen to before Last.fm when
you were working?” iTunes or the BBC online player. “And before that?”
Didn’t usually listen to radio. The case rests. Yet, he is copying, too. “We
are doing something similar with Mi-Xfm” — a special music player
in development that recommends music for listeners on the basis of what they
prefer. Expect to hear more about Mi-Xfm at May’s strategy presentation.
One wonders why it took so long. At one point, there is a sort of excuse: “It
was not until January 31, last year, that David Mansfield left the building;
it was a confusing time for staff while the former chief executive was
around.” That, though, was more than a year ago: only at this point is Mr
Bernard ready to demonstrate that GCap has to reinvest and evolve again.
Now, the London Marathon competitor needs to up the pace.
Curriculum vitae
Name Ralph Bernard
Born February 11, 1953, in London
Education Caterham School, Ilford. A “smattering of ordinary exam
passes”. No university, opting instead to try to become a journalist on
leaving school
Career 1970 Copy boy at a Fleet Street news agency;
1971 Reporter for several local and evening papers in London and
Cambridge;
1975 Radio journalist, Radio Hallam, Sheffield, becoming an
award-winning network documentaries producer;
1980 News editor and then programme controller at Hereward Radio,
Peterborough.
1982 Aged 29, stepped into the role of acting-managing director,
Wiltshire Radio, for three months after the sudden departure of the
station’s managing director with the intention of reverting to programme
controller. Instead, was asked to take on both roles;
1985 Became chief executive of GWR Group;
2001 Executive chairman of GWR;
May 2005 Became executive chairman of GCap Media plc (formed by the
merger of Capital and GWR), reverting to the role of chief executive after
the departure of the chief executive in January 2006.
2001 to present Chairman Digital Radio Development Bureau;
2002 Awarded CBE for services to broadcasting
Family Married to Lisa since 1977. Four daughters
Hobbies Football, cricket, collecting memorable newspaper headlines and
Wisden cricket almanacs
Lives Marlborough, Wiltshire
The bottom line
If you could change one thing in the financial and commercial environment,
what would it be?
I’d give BBC licence fee-payers the option to discount their licence costs for
the services they don’t use. [Impossible to police, so it’ll never happen;
nice idea, though]
Who is, or was, your mentor?
Eddie Blackwell, now nearly 80, who risked his career by leaving a safe Fleet
Street job to gamble on the success of pirate radio in the 1960s. It was,
and he remains a terrific enthusiast of jazz music and radio. Even today he
still runs the digital radio station Our Kind of Music and is very active
behind the scenes at theJazz, our latest national station. Eddie’s work
ethic and advice has helped to guide me for 25 years
Which is more important: what you know or who?
No doubt, it’s what you know
Does money motivate you?
Money is not a personal motivator. Money as a reward is simply recognition and
acknowledgement of effort. Responsibility motivates me. I don’t think I’ve
ever worked harder than over the past two years — I didn’t need money
to motivate me to do that. It’s my responsibility to get GCap performing
well
What was the most important event in your working life?
Getting Classic FM on air. In 1991 I’d been working on the idea for a national
classical music station, but we couldn’t afford the £6 million to launch the
station. We were given just six weeks to raise it before the offer of a
licence expired. I had trailed around the City for a month delivering
presentation after presentation — not a single institution would back
the idea. No one believed that it would be successful and it looked like we
were going fail. Eventually, with just a few hours to spare before the
deadline, we pulled it off with the help of DMGT, Sir Peter Michael and Time
Warner. Classic FM became hugely successful and changed the prospects for
commercial radio
What gadget/piece of technology can you not do without?
My mobile phone, definitely not a BlackBerry
How do you relax?
I’d like to be able to say that I’m one of these people who sips a quiet malt
whisky getting lost in Puccini. But I’m not. I play five-a-side football
(perhaps stupidly at my age) with a group of blokes who have absolutely no
link to my business life whatever
What does leadership mean to you?
Vision, passion, honesty. Having a clear sense of direction, with the skills
to create and motivate a team of people prepared to accept delegated
authority
Who do you most admire?
Not one but three, sorry. In the global sense, Nelson Mandela; in business,
Stuart Rose; but also my father, Reginald Bernard
