Conor Dignam on Broadcasting

Ahem, any chance of a commercial broadcaster in the house ... please?

For the last few years there's been a touch of embarrassment within the BBC about quite how big its lead over commercial radio has become. Every quarter, as the latest Rajar radio listening figures are released, BBC executives have found themselves in the odd position of hoping commercial radio might pull its socks up just a little, so the BBC didn't look quite so big and dominant in the battle for audiences.

Top management at the Beeb has even discussed whether the lead was becoming damaging to the BBC and what might be done to help their commercial counterparts although there is little evidence that this has led to the BBC's reducing either its investment in radio or its significant marketing budgets.

Sadly, for embarrassed BBC executives and embittered commercial radio ones, there is little sign of this trend changing any time soon. The most recent set of Rajars at the beginning of this month saw the BBC achieve its biggest lead ever over commercial radio. Overall, the BBC had a share of 56.8 per cent in the first three months of this year with commercial radio's share falling to 41.1 per cent from 42.4 per cent in the previous quarter.

The figures have become a quarterly whipping for the commercial radio sector, which way back in 1994 in a brief purple patch, overtook the BBC's total share of listening. For a couple of years it seemed as if commercial radio might be about to establish its position ahead of the BBC, but it wasn't to happen.

Instead, while commercial radio players focussed on a wave of consolidation, deal-making and cost-cutting, the BBC got on with renewing its stations, clearing out the "Smashy and Nicey" generation of presenters, and winning over a new generation of listeners. The result was summed up recently at the Sony Radio Awards, where the BBC wiped the floor with the commercial competition. The BBC took Sonys for best breakfast show (Chris Moyles), best music programme (Dermot O'Leary for Radio 2), best news and current affairs (Newshour, BBC World Service), best music personality (Jonathan Ross), and Radio 4 was named station of the year. It really was an embarrassment of riches for the BBC and a stark reminder of the gap that now exists between the commercial sector and the BBC.

So where does all that leave commercial radio?

For too many years the commercial radio sector spent most of its time complaining about the BBC's output and impact but more recently it seems to have realised that some of its problems were of its own making.

The solution to commercial radio's woes lies within. And while there is clearly a long way to go there may be reasons to believe commercial radio is shaping up for a fight back.

For a start the second wave of consolidation in the industry is now underway. The three major forces in commercial radio have all gone from being listed businesses to privately owned companies within the last year. Chrysalis, GCap have been bought by Global Media and Emap sold to German publishing company Bauer. These deals allow the landscape of commercial radio to be transformed in a relatively short time with more cohesion between the brands involved. They also give the radio businesses an opportunity for investment, rather than being squeezed by the City to deliver the numbers, at any cost.

Charles Allen, who chairs Global Media, came in for plenty of stick in his running of ITV but we shouldn't forget that he was a sharp strategist when it came to consolidating the business and getting greater coherence from the ITV network. A similar exercise now needs to take place in radio and that won't all be about cost-cutting. The new owners of commercial radio in the UK need to get round a table and redraft the map for how commercial radio should look and operate and there are signs that this may happen.

The commercial sector also needs to stick with its digital strategy. Fru Hazlitt, the departing chief executive of GCap had planned to axe its digital stations as part of a cost-cutting plan that was always designed as a defensive move. It was a decision based on GCap escaping from Global Media's clutches but it was not the right move for the long-term good of the business. Of course, digital investment costs need to be reviewed, but DAB remains the commercial sector's best bet of eventually recovering ground on the BBC. The majority of DAB listeners are going to commercial stations and this presents a massive opportunity that the commercial sector must seize.

The BBC, of course, might help, if it took the advice of GCap's outgoing chairman, Richard Eyre, who said last week that both Radio 1 and Radio 2 should be sold off and the money re-invested in online services for young people. A similar idea has been floated before but it's unlikely to attract much support from government or regulator who have had the chance to look at major changes to the set up of the BBC, and tended to reject them. It also begs the question whether the release of Radio 1 and Radio 2 would really generate that much more revenue for commercial radio, or simply slice the radio pie a little thinner.

But another reason for modest cheer for commercial radio is the imminent departure from the BBC's top radio job by Jenny Abramsky, who has been a major force in the BBC's dominance of the airways. The BBC could, of course, do commercial radio a big favour and get in someone completely useless to replace the formidable Abramsky. But the corporation's worry about commercial radio's underperformance probably doesn't extend quite that far.

Channel 4's venture into radio is exciting, but is it good business?

Bob Shennan, the former controller of Five Live, was at Broadcast magazine's Radio 3.0 event last week, making his first outing as Channel 4's new head of radio. Shennan, right, told the audience that C4's digital radio stations would go ahead as planned and be good news for both commercial radio and the independent production sector, which would make many of the programmes. He said C4 would bring the same model of looking to indies for its radio content as it has to television, boosting radio indie production.

All exciting stuff, but the nagging doubts about the wisdom of C4's venture into radio continue to hang over the project. With C4 very loudly banging the drum for more public money to keep public service programmes on air, is this really the wisest way to be spending its money? An E4 radio service will launch first later this year. Then in 2009 will come a speech radio service, which the industry knows is notoriously difficult to make money from. C4 will be asking for funds for its TV services while piling millions (and it will have to be millions) into new, unproven, radio ventures.

As a listener, the idea of C4 speech radio bringing competition to Radio 4 is both exciting and welcome. But radio isn't part of C4's public purpose or remit. C4 radio must be about profit and loss before content and purpose. If it doesn't make a profit, C4 shouldn't be doing it. That's why, for all Shennan's passion, C4's speech radio plans could still be silenced before they open their mouth.

Conor Dignam is digital content director for Emap Inform