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QUALIPORT
By
Carburton Street, London -- Determining a company's competitive advantage is all-important when investing for the long-term. But for the ordinary private investor, it can be difficult judging how effective a company's products or services are. More often than not, reliance is placed upon anecdotal evidence, management comments and the company's track record. However, there are some businesses whose competitive position requires less investigation than most. For instance, it won't take you too long to discover that the London Stock Exchange (LSE: LSE) has a robust competitive advantage simply because it has no domestic rivals. Then there's the UK tobacco market. If you read the annual reports of Imperial Tobacco (LSE: IMT) and Gallaher (LSE: GLH), you'll quickly find each has a 40% market share. With domestic rivals few and far between, the relative industry standings of these two businesses are pretty clear-cut. The media industry is another sector blessed with several "business franchises". Those companies involved in television, radio and newspapers are also all highly visible to the ordinary investor. Furthermore, information is readily available on every broadcaster and publisher's market share. Television The Broadcasters Audience Research Board (BARB) is the primary source of television audience data for channels received in the UK. For those investors owning shares in ITV (via Granada (LSE: GAA), Carlton Communications (LSE: CCM), SMG (LSE: SMG) and Ulster Television (LSE: UTV)), British Sky Broadcasting (LSE: BSY) or Channel 5 (via United Business Media (LSE: UBM)), data provided by BARB can highlight general trends in viewing figures. Average Weekly Viewing Time (hrs:mins)
Dec 98 Dec 99 Dec 00 Dec 01
BBC1 8:50 8:53 7:48 7:33
BBC2 3:00 3:01 3:02 3:08
ITV 8:48 8:39 8:10 6:44
Channel 4/S4C 2:47 2:53 2:52 2:31
Channel 5 1:17 1:28 1:26 1:27
Sky/Other 3:37 4:08 5:03 5:27
Total 28:19 29:02 28:21 26:50
Over the past two years, both BBC1 and ITV have lost market share to Sky. ITV's viewing figures have been especially disappointing:
Average Weekly Market Share (%)
Dec 00 Apr 01 Aug 01 Dec 01
All BBC 38.2 37.2 37.5 39.8
ITV 28.8 28.0 24.7 25.1
Channel 4/S4C 10.1 10.1 9.9 9.4
Channel 5 5.1 5.5 6.1 5.4
Sky/Other 17.8 19.2 21.9 20.3
Radio
Radio Joint Audience Research (RAJAR) operates the audience measurement system for the radio industry. Using RAJAR data, investors in the likes of Capital Radio (LSE: CAP), Chrysalis (LSE: CHS), Emap (LSE: EMA), Scottish Radio (LSE: SRH) and GWR (LSE: GWG) can quickly get a hold on how their particular radio stations are performing. For instance, here's a roundup of how some London-based broadcasters fared last year:
Station 3 months to Dec 2000 3 months to Dec 2001
Listeners Total Hours Listeners Total Hours
(000s) (000s)
BBC London 94.9 299 1,471 322 1,694
Virgin London (AM/FM) 1,340 9,981 1,319 8,829
95.8 Capital FM 2,852 26,741 2,951 25,501
Capital Gold London 1,272 7,104 1,203 7,195
104.9 XFM London 423 3,116 450 2,939
Kiss 100 FM 1,457 9,133 1,636 9,874
Magic 105.4 1,224 10,537 1,364 11,286
Heart 106.2 FM 1,329 10,115 1,708 14,462
Jazz FM 102.2 637 3,652 568 2,186
Alongside the revamped BBC service, the capital's radio winners last year included Emap's Kiss and Magic stations, and the Heart station owned by Chrysalis. Both broadcasters continue to chip away at Capital Radio's dominance, with SMG's Virgin station and Jazz FM (LSE: JFM) falling back.
Newspapers
The Audit Bureau of Circulations (ABC) provides circulation numbers for all major newspapers. Shareholders of Trinity Mirror (LSE: TNI), Pearson (LSE: PSON), Daily Mail & General Trust (LSE: DMGT) and Johnston Press (LSE: JPR) can use ABC data to discover whether readers are switching to rival titles. Here's how the country's national newspapers have performed recently:
Newspaper Average Circulation Average Circulation
Aug 02 - Jan 02 Jan 02
The Mirror 2,179,236 2,164,576
Daily Record 595,699 584,290
Daily Star 617,316 605,249
The Sun 3,469,196 3,502,923
Daily Express 961,754 991,560
The Daily Mail 2,480,374 2,489,264
The Daily Telegraph 1,021,851 1,013,653
Financial Times 480,904 475,475
The Guardian 416,066 411,386
The Independent 231,083 224,655
The Scotsman 81,501 79,931
The Times 721,838 711,295
ABC also provides circulation information on a local level. For instance, shareholders of Johnston Press will discover the group's newspapers in Fife have just two other publishing rivals:
Newspaper Circulation Fife & Kinross Extra (Dunfermline Press)* 57,106 Herald & Post, Fife (Scotsman Communications)* 48,740 The Fife Leader -- North (Johnston Press)* 26,367 The Fife Leader -- South (Johnston Press)* 52,828 Central Fife Times (Dunfermline Press) 6,849 West Of Fife Times (Dunfermline Press) 21,464 East Fife Mail (Johnston Press) 11,735 Fife Free Press (Johnston Press) 20,641 Fife Herald News (Johnston Press) 13,545 (* free newspaper)
Summary
The information supplied by BARB, RAJAR and ABC can certainly highlight where mainstream media firms stand in their respective industries. The data can also put into context vague management comments about changes in their company's viewers, listeners or readers.
However, the information supplied free of charge on the respective websites is typically restricted to recent survey results. Indeed, to gauge longer-term trends, hefty subscription fees are required. But for private investors owning media shares, keeping a regular eye on these sites should help ensure any untoward decline in trading does not go unnoticed.
More: BARB website | RAJAR website | ABC website
The author owns shares in Johnston Press