Media: Snap, crackle, pop go the ratings

Time was when all Chris Evans had to do to attract listeners was turn up. But is he now losing his appeal?

The "Ginger effect" at Virgin Radio may have peaked. Newspapers are already forecasting that ratings for Chris Evans's station will slip for the second successive quarter when the audience research for October, November and December is published on 4 February.

So what is happening at Virgin Radio and what will it mean for the career of Britain's most hyped broadcaster? Since Evans joined in autumn 1997, (and bought it two months later), the station's audience jumped up and has since fallen slowly back down. In three-month increments, the station's audience went from 3.2m, then to 3.9m, and to 4.2m. By June last year it had peaked at 4,244,000, then in October slipped to 3.91 - the figure that prompted the headlines.

Next month, it seems, the station will record another drop. Private tracking by rival stations indicates that the station should see a small increase in London but may lose another 150,000 listeners in total across the country. Evans's breakfast show itself lost 336,000 listeners in the autumn, and unofficial research suggests the fall is set to continue, if at a slower pace.

Adding to the suspicion that all is not well with Virgin's ratings is the appearance of Evans on a Virgin sports round-up show on Saturday afternoons. The man who left the BBC because he was too tired to do Radio 1's Breakfast Show five days a week and TFI Friday on Channel 4 every Friday, is now working even harder at his own station.

"The station is very much Evans driven," says Cathy Lowe, head of radio at the media-buying agency New PHD. "There is not a lot of audience outside of the breakfast show, which should be a concern to them. Capital may need Chris Tarrant, but they do have some other winners like Dr Fox and Steve Penk."

Evans brought in Ray Cokes from cable channel MTV to do an early evening slot, but Virgin admits the programme didn't work and he left the station.

Jonathan Ross has done well out of Evans's tenure. He started off covering the breakfast show while Evans was on holiday in the summer and was then given his own Sunday show. Now he has a permanent contract to cover for Evans.

John Pearson, the managing director of Virgin, has a different outlook on the figures: "After the initial Chris factor, we are now trading as any other radio station would - where every listener is hard fought for. Over a three-year business plan, you expect some quarters to be better than others. Remember, Chris is still 40 per cent up year on year."

The ratings fall should not be a surprise. Evans was always portrayed as the saviour of Radio 1, but in fact before he left his breakfast show had already peaked. When Evans took over the show on Radio 1, he took an audience of 6.1m and turned it into 7.36m in a year, unarguably a startling success. But just before he left, his ratings had fallen back again to 6.9m - a fact that was missed when everyone was concentrating on the ratings haemorrhage of his breakfast show replacements Mark (Radcliffe) and Lard (Mark Riley).

But the real importance of ratings now is not on Evans's ego, but on advertising revenue. And here the "Ginger effect" is yet to slip. In the 12 months to October, the first full year of Evans's time there, Virgin Radio took pounds 27,836,000 in advertising, an increase of pounds 6.8m or 33 per cent on the previous year. Given that the amount of money going into commercial radio over the same period increased by 18 per cent, it means Virgin's income is increasing almost twice as fast as the market.

Because Virgin's increase in advertising revenue has increased faster then the increase in listeners, advertising agencies must be paying a premium for the station - that is the Ginger effect. Because of the publicity Evans generates and the perception that his fans avidly listen to the station, and therefore its adverts, its well-run sales team has been able to get good prices from agencies. Although revenue figures are not yet available from when the station's ratings started to fall, media buyers haven't yet softened the price of Virgin airtime. They are waiting to see if new audience figures show the trend continuing.

A climate of slipping ratings shows just how big a gamble Chris Evans was taking when he decided to put together a bid for Virgin.

Evans and the Ginger management own 60 per cent of the company. But in a complicated deal, what was bought in December 1997 was actually a new creation called Ginger Media Group. Richard Branson, who was planning to sell his station to Capital, swapped Virgin for 20 per cent of this new company and around pounds 16m. The money came from venture capital company Apax Partners, which owns 20 per cent of the company. More money was borrowed from the French bank Paribas. To raise the money for Branson, Evans effectively mortgaged his rights to TFI Friday and much of his future.

Apax was set up to bring American-style venture capital to the UK. Its style is to take risks that UK venture capital firms won't take, and it has been involved with Virgin since Branson launched it. But in return for taking bigger risks, Apax plays a very tough game. In the past, even very outwardly successful companies, such as the Covent Garden Soup Company, which have not fulfilled the Apax business plan, have been taken over. Apax will have no hesitation in taking over control of Ginger to get its value back.

Indeed some observers believe that Ginger moved from its original offices and crammed everyone into Virgin Radio in Soho after six months because of an order from the Apax boss, Alan Patricoff, to cut costs. Yet Ginger announced profits at Virgin of pounds 10.5m in October, which seemed an amazing turnaround for a station which is believed to have cost Richard Branson over pounds 10m since he started it.

The profits come from the "Gingered" advertising revenue and a pounds 3m deal with BSkyB for the satellite broadcaster to sponsor the breakfast show and for Ginger Television to come up with programme ideas for Sky One.

That Sky deal included simulcasting the Evans breakfast show on Sky each morning. That show has not been a success. Sky's ratings for the show are so low as to be unmeasurable, and on air Evans himself can be heard disparaging the small number of viewers.

Other Ginger Television ventures have only been slightly more successful. The two showings of TFI Friday get 2.8m viewers together in slots that Channel 4 should expect to get nearer 5m. TFI has the advantage of keeping Evans and Ginger's talents at Channel 4 - but a university pub-quiz show for BBC 2 starring Ginger producer Will MacDonald has yet to be recommissioned as a series, and the golfing show for Channel 4 hosted by Evans managed less than spectacular ratings.

Ginger Television lost its chief executive, Michael Foster, in an acrimonious fall-out last autumn, and last week announced that Eileen Gallagher, the former managing director of London Weekend Television, would be taking over the television division.

If Virgin's ratings continue to fall - and impact on advertising revenue - then the other parts of Ginger have to do better at making programmes which sell.

It will not be make or break for Chris Evans's future as a media tycoon, but 4 February will provide another sign that a whole business cannot be based on one man's broadcasting talents.

"There is not a crisis at Ginger," says one radio industry financier. "But the size of the gamble seems to have gotten bigger. Chris Evans will either make pounds 100m from all this or he will go bust."