Startup is a podcast that tells the warts-and-all story of Alex Blumberg’s effort to start a podcast company. You get to listen in as he stutters and stumbles through his first pitch to investors, stresses over what to call it and agonises over how much equity to give to his co-founder.

It’s good listening — but it’s not radio. The story picks up just after Blumberg has quit his job with National Public Radio in the US. His idea is that podcasts, not radio, are the future of his industry. So he sets out to try his luck. 

Startup came out in 2014. A little over a year ago I felt a surge of pride when I heard Blumberg had sold his little podcast company to Spotify for a cool $230 million. Soon after, Spotify bought another podcast company called Anchor for $110 million, then Joe Rogan’s hit podcast for $100 million, then a podcast company called Megaphone for $235 million, then one called The Ringer for $200 million. And it’s not just Spotify doing the running here. At the end of last year, Amazon bought a podcast company called Wondery for $300 million. That’s $1.075 billion worth of podcasts in just the last eighteen months. 

Podcasting, Spotify, Youtube, and phones in general are stealing people’s attention from radio. At the US, European, UK and Irish national level, there’s a clear trend of declining radio listenership. It’s a decline that’s most acute among the young. 

This is what’s coming down the tracks for Communicorp, the Denis O’Brien-owned radio company that owns Newstalk, Today FM, 98FM and SpinFM. The company has had a tough few years. In 2016, it went through a big restructuring which saw it lose a large number of its staff. Then came Covid, which has played havoc with the advertising market. 

As newspapers and record labels will tell you, navigating a shrinking media industry is not easy. Can Communicorp, which has a lot on its plate, maintain its important position in Ireland’s media landscape?

The three acts

Communicorp’s story, like that of other Denis O’Brien-owned businesses Digicel and Actavo, is one of empire building, over-expansion and retrenchment.

It was an international business almost from the start. Founded in 1989 by O’Brien, in 1992 it launched in Czechoslovakia. Over the following two decades plus it gradually added, and sold, stations all over Europe. By 2016 it had added and divested its Czech, Hungarian, Estonian, Finnish and UK stations, leaving it with ones in Bulgaria. Of €83 million in revenue that year, €82.3 million went on direct operational expenses — ie the basic costs involved in getting programmes on the air, and not including things like interest or depreciation. That year the company lost €4.2 million. 

To balance the books, Denis O’Brien wrote the company a cheque for €7.9 million, as he had done the previous year and for many years before. O’Brien, who is the 99.99 per cent owner of the business, had at that point loaned the company €93 million. Including loans to O’Brien, Communicorp had €29 million more liabilities than it had assets. Clearly something needed to be done.

Over the following two years Communicorp underwent a fairly radical restructuring. It sold off the Bulgarian business, which had generated 48 per cent of its 2016 revenue. This move reduced overall headcount from 540 in 2016 to 226 in 2018. 

Selling off the Bulgarian stations didn’t turn things around straight away. Revenue was cut in half, and Communicorp’s cost of sales stayed high. This resulted in a small operating loss in 2017 and 2018, and a net loss of €5.1 million in 2017 and €5.5 million in 2018. 

In 2019, the most recent accounts we have available, Communicorp looked to have turned the corner. It had cut its cost of sales, and slightly grown revenue, such that it was able to post its first operating profit in years, of €3.7 million. That fed through to a net profit of €1.5 million — again, the first in years.

The same trend is visible on the cash flow statement. After a few bad years, the company started to generate cash in 2019. 

In its 2019 accounts it had €39.7 million more liabilities than assets. But as we’ve seen, it’s in the unusual situation of owing lots of money to its (99 per cent) owner. So in a sense, it owes the money to itself. And a note in the accounts makes clear that O’Brien doesn’t intend to call in his debts any time soon or charge interest on them. In 2019 the company owed O’Brien €104.5 million.

Stripping out the loan to O’Brien, Communicorp had €64.8 million in net equity in 2019. Clearly that’s healthier, but the company still has a fair amount of external debt. In 2019 its net debt to Ebitda ratio was a chunky 11.8. Another way of showing the company’s debt is the coverage ratio – which focuses on how sustainable interest payments are, as opposed to the overall size of the debt. The coverage ratio shows how many times Ebit, a measure of earnings, can cover interest payments. A large number means Ebit can easily cover interest payments, a small one means it’s struggling to cover them. Though it depends on the relevant industry, for most companies a coverage ratio below 3.0 would be considered too low. Communicorp’s coverage ratio is currently at 1.7 — so its Ebit wouldn’t cover two of its annual interest payments. That’s high, though at least it’s going in the right direction.

Have podcasts killed the radio star?

The brain drain from Communicorp isn’t helping. Two of Ireland’s top 20 podcasts – by economist David McWilliams and broadcaster Eamon Dunphy – are both made by former Communicorp employees. The breakout podcast of the year (‘Where is George Gibney?’), which has been listened to by over one million people, was made by Mark Horgan who formerly worked with Newstalk. Along with Eoin McDevitt, Ken Early, Simon Hick and Ciarán Murphy he left Newstalk in 2013 to start the popular Second Captains podcast. 

This is before we get to the talent lured from Communicorp to RTE, such as Claire Byrne, Sarah McInerney and Niamh Lyons. Or those who once worked with the O’Brien group but are now in communications like Chris Donoghue, Paraic Gallagher and Conor Brophy. Internationally Christo Grozev -– lead Russia investigator with Bellingcat and one of the best journalists in Europe – is another former employee, who had been in charge of Communicorp’s expansion into Ukraine and Latvia (markets from which the Irish media group later retreated). 

And then of course there is Ivan Yates and George Hook, who have both left the station in recent years after long periods as bedrocks of its broadcasting schedule.

Communicorp has shown an ability to uncover new talents and it still retains many old ones. Earlier this month it rehired John Keogh, a respected journalist, as its group director of news. 

But it is hard not to feel Communcorp has lost more talent than it has gained.

In 2018, Independent News and Media (INM) looked to buy Newstalk from Communicorp. O’Brien was then the largest shareholder in INM. The deal fell apart over Newtalk’s valuation, with Communicorp reportedly seeking €35 million for the station. How Communicorp justified that price tag for what was then a component station within a loss-making radio company and is now a narrowly profitable company, is hard to say.

So Communicorp has had to work hard to get itself in a solid financial position. In 2017 it had to chop the business in half, losing the Bulgarian stations. In 2018 it had to find cost savings in Ireland. And in 2019 it had to grow revenue. Having achieved all that it seemed to have turned the corner in 2019, generating a small profit and positive cash flow. Then came 2020.


Covid-19 has scrambled the radio business. It has attracted listeners while simultaneously repelling advertisers. 

Locked up at home, people have turned the radio on for company. The most recent figures show Communicorp’s listenership has held fairly steady in the year to September 2020. Talk shows in particular have done well – Newstalk’s Pat Kenny show hit an an all-time high of 155,000 listeners. 

But with 70 per cent of Communicorp’s revenue derived from ads, listenership is only important to Communicorp’s bottom line to the extent that it drives ad revenue. And ad revenue is down across the industry this year. In the second and third quarters of the year, companies hoarded cash the way consumers were hoarding toilet paper. Non-essential spending, on things like ads, was first to go. 

The drop in ad spending wasn’t distributed evenly. Radio ads are a mixture of ads for big national brands, which are handled via ad agencies, and smaller local advertisers who approach the stations directly. In the pandemic the former held up reasonably well, but the latter dropped sharply. 

The Irish radio ad market was down 7 per cent this year to around €100 million, says Eddie O’Mahony, Chief Investment Officer at Core Media. But most of that drop has been concentrated in local radio. Ads on local radio fell between 25 and 30 per cent.

Ads by the government helped the national networks a lot this year. The department of the Taoiseach and the Department of Health made radio advertising their key medium for Covid-19 health messages. Between them they spent millions. But government spending didn’t trickle down to local radio.

Communicorp didn’t avail of the temporary wage subsidy scheme. But its Finance Director Joe Dempsey said that in the second quarter, “Government support was essential for us as a business with significant debt.”

From Communicorp’s perspective, more concerning than the Covid-related 7 per cent industry drop in ad revenue this year is the 11 per cent drop in ad revenues nationally over the previous three years. That trend is independent of Covid.

Ads follow attention

Mary Meeker is an analyst who’s famous for her annual Trends in Technology presentation. Once a year, she puts together a long presentation covering all the most important goings-on in the technology industry. 

In 2015, one of her slides lit a fire under the digital advertising industry. The slide showed what proportion of time people were spending with different forms of media: newspapers, tv, radio, desktop, mobile. Alongside, it showed what proportion of advertising spending was flowing to each medium. Eyeballing the chart, you could see a huge mismatch between the amount of time people were spending on their mobile phones, and the amount of advertising money that was being allocated to mobile (ie, in 2015 there was too little advertising spend allocated to mobile, relative to the amount of attention phones were getting). She called the gap between users’ attention to mobile and advertising spend on mobile, “a €25 billion opportunity”. Someone took notice because, by the 2018 version of the presentation, the gap had disappeared. It’s estimated that last year Google and Facebook, with their mobile and desktop ads, collected 40 per cent of total advertising spend in Ireland.

Advertising spend has flowed into mobile and desktop ads at the expense of old media. Print has taken the biggest hit, but TV and radio have also been affected. In eight years, both “time spent listening to radio” and “advertising spend on radio” dropped by a quarter. 

The chart is derived from the US. But these are global trends. What’s happening is that, while older cohorts are sticking with radio, the young are leaving it at a rapid clip. Last year the European Broadcasting Union found radio listenership among the young fell 17 per cent in the previous five years. And research by Martin Block, a media lawyer, in 2017 showed that there were 40 per cent fewer under 19 year olds listening to radio in Ireland than previously. The JNLR figures don’t pick up the 15-19 group, through a clear decline is evident in the its 15-24 group:

Martin Block, who previously managed 4FM, says: “20 years ago, 87 per cent plus of the under 20 age group listened every day. There’s absolutely clear evidence that this has been dropping year on year on year, for 20 years. It was happening slowly up until the advent of streaming and podcasting, and smartphones. But it has accelerated in the last few years. When you’re using a smartphone, you’re not listening to the radio as often.”

Youth listenership matters because big brands focus their marketing efforts on the young. They’re looking to build a life-long affinity with their customers. So they go after them when they’re young and impressionable — and with many years of purchases ahead of them. This is perhaps why, at an industry level, advertising spending has been dropping faster than overall listenership. In the three years prior to Covid, overall listenership is down two per cent to 81 per cent, 15-24 listenership is down seven per sent to to 69 per cent, and advertising spending is down 11 per cent. At Communicorp’s youth-focused stations, SpinFm and 98FM, listenership among 15-24s has fallen from 41 and 9 per cent respectively to 33 and 5 per cent. Though Communicorp – which chose not to comment on this story – would no doubt point out that in recent years, its stations’ overall listenership has declined more slowly than its youth listenership.

Faced with a panoply of podcasts, streaming services, and social media, how can radio stay relevant to young listeners? Gabrielle Cummins is the chairperson of Choose Radio, an industry group and CEO of Beat 102. “We’ve adapted and we haven’t stayed stagnant,” she says. “And we have totally embraced social media. We’re active on TikTok, Instagram, Facebook — everywhere our listeners are.”

At a time of falling advertising revenue, Eddie O’Mahony of Core Media suggests increased promotions and sponsorship might be a solution. These made up 30 per cent of Communicorp’s revenue in 2019. They might include sponsorship of specific programmes or segments, or live events. 

Newstalk has leaned into sponsorships with its Off The Ball sports brand. Off The Ball started out as a sports show on midweek evening, but it’s now been spun off as a separate fully-fledged vehicle and online radio station. It’s found online, on video streams, on social media and in podcasts. The show itself is sponsored and its individual segments are sponsored. Eddie O’Mahony says “Off The Ball has opened up a whole new area for brands to get involved.” This model – of heavy sponsorship, promotion and live events – might be enough to counteract declining ad spending.

Martin Block is less optimistic about music radio. “This is happening. You can’t put your head in the sand. You’ve got to develop the sort of programmes that attract younger listeners that can’t be found anywhere else. I would have thought a lot more creativity in programming is needed — and not just playing a whole load of tunes, overlaid with some average banter, which is available anywhere.” 

For now the problem is serious, but it’s not yet acute. Radio companies can still make money. They still have time to reposition themselves. But as the newspapers learned in the 2010s, an industry goes broke slowly at first, then all at once. “Eventually what will happen is it will get to a level whereby it really does become a massive problem,” says Martin Block. “And at that stage, panic will set in.”

Having done the hard work to get itself profitable in 2019 – and with the help of its generous owner – Communicorp has time to figure out a sustainable model in the face of declining youth listenership, and ad spending. It has Newstalk, which skews older, and should be better protected from these trends. And it’s leveraging properties like Off The Ball to build new revenue streams that don’t rely on advertising. But the competitive landscape is opening up, beyond Ireland, to the Alex Blumbergs of the world. It’s going to be tough.