Radio in the Digital Economy Bill: the tail wagging the dog

The government’s forthcoming Digital Economy Bill will be the most significant legislation for the UK radio industry since the passage of the Communications Bill in 2002. Published at the end of November 2009, the Digital Economy Bill will propose ‘primary’ legislation that sets out a new regime for the licensing and regulation of commercial radio in all its forms – national analogue stations, local analogue stations and local DAB multiplexes.

The main thrust of the new legislation for commercial radio was contained in the Digital Britain final report published in June 2009. According to the Department of Culture Media & Sport, Lord Carter’s almost year-long consultation was intended to set out “the Government’s strategic vision for ensuring that the UK is at the leading edge of the global digital economy” and would introduce “policies to maximise the social and economic benefits from digital technologies”. Indeed, some of the changes proposed for the radio industry are forward-looking and designed to place the sector in a multimedia future in which it could survive and thrive.

However, some of the recommended changes to existing radio legislation are there only because parts of the commercial radio industry have lobbied for them to be there. At the time, these interested parties might have claimed that such changes would be beneficial to the commercial radio industry as a whole. Increasingly, other parts of that industry have realised that some Digital Britain proposals were lobbied for inclusion only because they suit the interests of a particular player, offering little or no benefit to the wider industry.

Worse, one proposal ties the future of the whole industry to a dangerous poker game with the government which commercial radio is unlikely to win. This is the Digital Britain proposal [page 102, paragraph 44] to automatically extend the existing licenses of the three national commercial radio stations for a further seven years. Why is this proposal there, and what does it have to do with the UK’s digital future? What price is the commercial radio industry being forced to pay for its inclusion?

During the Digital Britain consultation period, Global Radio had lobbied intensively to have the licence of its national analogue station, Classic FM, automatically renewed beyond its 2011 expiry date. In January 2009, I had written:

Classic FM’s licence expires on 30 September 2011 and it cannot be automatically renewed. This is a big problem. Whereas local commercial radio licences are still awarded (and re-awarded) by Ofcom under a ‘beauty contest’ system, national commercial radio licences are not. The system for national commercial radio licences is simple. Sealed bids are placed in envelopes. Ofcom opens the envelopes. The bidder willing to pay the highest price wins the licence. That’s it. This system is enshrined in legislation. Even if Ofcom wants a different system, it cannot change it without legislation.

As Classic FM’s new owner, Global Radio definitely wants a different system that will enable it to hang on to this most valuable asset. Global has been busy bending the ears of anybody and everybody who it might be able to persuade to interpret the broadcasting rules in a way that lets it keep Classic FM after 2011. Even Ofcom has had its lawyers busy examining the legislation to see what flexibility it has to interpret the rules in a way that might maintain the status quo.

Unfortunately, the legislation in the Broadcasting Act 1990 is quite specific:
“[Ofcom] shall, after considering all the cash bids submitted by the applicants for a national licence, award the licence to the applicant who submitted the highest bid.”

The solution for Global Radio was to lobby, lobby and lobby some more for the current legislation detailing the licensing system for national commercial radio to be revoked, changed, amended – whatever needed to be done to ensure that Global could hang on to its valuable Classic FM licence. When Digital Britain was published, it was evident that the phone calls and meetings had paid off handsomely. Lord Carter had listened and offered a solution – a significant change to primary legislation that would allow Global Radio to retain its Classic FM licence for a further seven years, replacing the existing legal requirement that it be re-awarded by Ofcom to the highest bidder in an auction in 2010.

Why exactly is Global Radio so desperate to hang on to Classic FM?

Firstly, Classic FM is a ‘cash cow’ and has always been the most successful of the UK’s three national commercial radio stations launched in the early 1990s. It attracts 40m hours listening per week which, at current sector yields, would earn it around £50m per annum revenues. However, its earning power is further enhanced by the affluence of its audience. Of its hours listened, 66% derive from ABC1 adults, 85% from ‘housewives’, and 68% from adults aged 55+, a target age group that very little commercial radio reaches. As a result, Classic FM is likely to be attracting more than 10% of total UK commercial radio revenues, significant for a single player out of 300 commercial stations. [RAJAR, Q3 2009]

Global Radio overpaid to acquire GCap Media for £375m in 2008. The challenge for Global is that the radio business is dominated by fixed costs. In other words, however many listeners an individual station has within its service area, that station’s costs are relatively static. Many of the stations in Global’s portfolio are medium-sized local operations, whereas Classic FM is a ‘giant’ with national coverage. Its profit margin probably far outstrips every other commercial station in the UK. Classic FM alone probably generates more operating profit than all Global’s other radio stations added together.

Classic FM occupies a unique position in the radio market (the only competitor in the classical music format is BBC Radio Three) and its market power has proven relatively stable over time, with a current listening share of 3.7%, only slightly down from 4.1% a decade ago. By comparison, GCap Media’s prime local radio assets also acquired by Global Radio have lost immense market power over the same period – the market share of London’s Capital FM down from 13.0% to 6.2%, and Birmingham’s BRMB down from 17.1% to 4.8%, for example. Thus, Classic FM is very much a ‘rock’ at a time many local commercial stations occupy a ‘hard place’. [RAJAR, Q3 2009 & Q3 1999]

Global Radio desperately does not want to partake in an auction for the Classic FM licence. It might under-bid and lose. It might over-bid and win. Either outcome would be a disaster, the former losing it the ‘crown jewels’, the latter allowing it to keep the licence but at a price that could lose the station its ‘cash cow’ status. Because there has been no auction of a national commercial radio licence auction since the early 1990s, nobody knows what the winning bid price might be. Worse, in the 1990s, the field had been open only to European Union companies. Legislation since then has opened up the bidding to the global market. Thus, a licence auction would be an extremely dangerous game for Global to play and, if it lost, would force it to write off its entire Classic FM balance sheet valuation only two years after it acquired the station.

Global Radio has a bargain on its hands in the current Classic FM licence. Not only does this one radio station attract more than a tenth of all commercial radio revenues, but its Ofcom-issued broadcast licence costs very little by market standards. The present cost is fixed at £50,000 per annum + 6% of revenues, probably amounting to around £3m per annum, not a huge expense for a station that generates around £50m. Why is the licence fee so little?

It is the regulator (initially the Radio Authority, now Ofcom) that sets the price of the licence, in the first instance according to the amount that the applicant has bid in its licence application to win the right to broadcast. The price of the licence is collected by the regulator but remitted directly to the Treasury in payment for the scarce FM radio spectrum used by the station.

In 1991, when it won the licence at auction, Classic FM had bid £670,000 per annum plus 14% of its revenues. In 1999, the Radio Authority increased this to £1m per annum plus 14% of revenues. However, in 2006, Ofcom reviewed the Classic FM licence payment and slashed it to £50,000 per annum plus only 6% of revenues. As the table below shows (using estimated amounts because the advertising revenues generated by Classic FM are not published), Global Radio purchased Classic FM just at the time when its licence started to cost significantly less than in previous years.

Why did Ofcom decide to reduce the cost of Classic FM’s licence so substantially? Because Ofcom believed that the analogue FM spectrum used by Classic FM would become less and less important with time, as listening via digital platforms, mostly DAB, rapidly replaced FM listening. Ofcom’s own forecast, made in November 2006, anticipated that digital platforms would account for 60% of all radio listening by 2011, the date when Classic FM’s licence expires. Quite how this justified a 95% cut in the licence fee, alongside a 57% cut in the revenue charge, was not explained by Ofcom. Essentially, Ofcom offered Classic FM’s owner the bargain analogue radio licence deal of a lifetime.

Ofcom’s forecast of digital radio listening turned out to be wildly over-optimistic, appearing to be based more on wishful thinking than on available evidence. Whilst Ofcom had forecast that digital platforms would account for 42% of radio listening by year-end 2009, industry data show the present outcome to be 21% for all radio and 20% for commercial radio. [RAJAR Q3 2009]

The inaccurate Ofcom forecast for consumer uptake of digital radio (never subsequently updated publicly) merely confirmed the belief within a large part of the radio industry that digital radio was about to exhibit exponential growth. This Ofcom forecast, accompanied by supporting comments from the regulator (for example, six months later, Ofcom director of radio Peter Davies said: “we are potentially at a Freeview moment with digital radio”), proved significant in misleading stakeholders into believing that the death of analogue radio was just around the corner. The regulator could not have got it more wrong.

Ofcom’s inability to forecast the radio market it regulated has resulted in a loss of millions of pounds of potential commercial radio licence fees for the Treasury, not only from Classic FM, but from the other two national commercial stations whose licence fees were also reduced. By Ofcom’s own estimate, under the previous formula the three stations combined had paid £7m per annum, but were now being charged less than £1.5m per annum. Over the four-year period until the three stations’ licences expire in 2011/2, the total revenue foregone to the Treasury will be around £22m. The Digital Britain proposal to extend these national radio licences for a further seven years, if the present licensing payment scheme is continued, would increase the total potential revenue lost to the Treasury to more than £50m.

Neither RAJAR nor Classic FM release data publicly showing the proportion of the station’s listening derived from digital platforms, but it presently seems unlikely that the station would voluntarily give up using FM for broadcasts after 2011 (when the present licence expires), and probably not even after 2018 (the revised expiry date if Digital Britain’s proposed seven-year licence extension were legislated). Effectively, the Digital Economy Bill would merely enable the largest player in the commercial radio sector not only to hang on to its ‘cash cow’, but to continue paying its present low licence payments to the Treasury for the FM radio spectrum it uses.

The losers from this arrangement are:
• taxpayers who, thanks to Ofcom’s poor forecasting, are now effectively subsidising the FM spectrum used by the commercial radio sector’s single most profitable asset
• the rest of the commercial radio sector who will never be able to match Classic FM’s operating margin because their own costs and revenues are considerably more constrained
• new entrants to the radio sector who wish to bid for the Classic FM licence when it expires in 2011 and are willing to pay a realistic, market price for the licence, but will be denied the opportunity by the government’s offer of an automatic licence renewal.

Politically, the proposals in the Digital Britain final report could not have isolated Classic FM as the sole commercial radio station to have its licence automatically renewed through new legislation. So the renewal proposal was extended not only to all three national commercial stations, but also to all local analogue stations that are broadcasting on the DAB platform. In July 2009, I suggested that this Digital Britain proposal was still iniquitous to the remaining local commercial stations that cannot or will not broadcast on DAB. It appears now that the Digital Economy Bill is likely to extend the proposed licence extension to all analogue commercial radio stations (whether or not they simulcast on DAB).

So every analogue commercial radio station will now be offered an automatic licence extension! Is that not a universal ‘good thing’? Well, no, because there is rarely a ‘free lunch’. Lord Carter was determined to extract a price from the entire commercial radio sector for bowing to persistent demands from Global Radio for new legislation to renew its Classic FM licence. The strings he attached are related to the government’s insistence that the whole radio industry use DAB as its main broadcast platform. This is why two entirely unrelated issues – Classic FM’s licence and DAB consumer uptake – have now become so intertwined in the proposed legislation.

In the seven-year renewal offered to every commercial radio licence, the government proposes to insert a clause that will allow it (via Ofcom) to terminate that licence extension with two years’ notice if the radio industry as a whole (commercial radio and the BBC) does not achieve these goals:
• 50% of radio listening to be via digital platforms by 2013
• DAB transmission infrastructure to be upgraded significantly.

It is a ‘carrot and stick’ approach: ‘We the government will give you all a free licence extension if you collectively promise to make DAB work. But, if we find you do not succeed in making DAB work, we will take your licences (and hence your businesses) away altogether’. The problem here is that the buck has been passed on to a wide and varied constituency of 300 commercial radio stations, many of whom have very little or no control over whether DAB can be turned into a successful delivery platform.

It is the entire commercial radio industry that will be expected to potentially pay the price with its own lives in exchange for changes to primary legislation that allow Global Radio to hang on to its ‘cash cow’ Classic FM licence. What seems even more unfair is that the entire DAB platform is owned and controlled by a mere handful of the largest UK commercial radio companies who, between them (and the BBC and transmission company Arqiva), wield the power to make DAB a success or failure.

If the largest commercial radio owner, Global Radio, had demonstrated incredible confidence in the DAB platform, maybe it might instil confidence in the rest of the radio sector that DAB could be made a consumer success by 2013. However, although Global Radio has regularly talked the DAB talk, it has hardly walked the DAB walk. Global had been the largest owner of commercial DAB infrastructure until, in April 2009, it sold its 63% stake in the national DAB multiplex and its wholly owned group of local DAB multiplexes. At the same time, it has sold or closed all but two of its digital-only radio stations, which exist now only as music jukeboxes.

Of course, for Global Radio, none of the DAB ‘strings’ really matter. It thinks it has got exactly what it wanted in the forthcoming Digital Economy Bill – to keep its valuable Classic FM licence. This is its significant short-term goal and may be the only thing that can keep the group afloat financially. Who knows? If the media ownership rules are relaxed, Global might be able to sell its entire radio business to Murdoch or RTL or MTG before the 2013 date of judgement on DAB is even reached.

For a while, many in the industry had seemingly been happy to line up behind Global Radio, uncertain of their own futures and relatively uninformed on these complex regulatory and legislative issues. But the truth is dawning on many – what is good for Global Radio is not necessarily good for the rest of the commercial radio industry. The future of commercial radio should remain in the collective hands of the industry itself, not be determined by one individual owner. And the issue of radio licence renewals should not have to be linked to the future performance of the DAB platform.

Digital Britain and the Digital Economy Bill offer a rare opportunity to update the regulatory regime for the entire commercial radio sector, rather than merely to offer one company a ‘phone a friend’ millionaire lifeline.

[For the purpose of transparency, I contributed sector analysis to two documents that were part of the Digital Britain process – a pre-consultation overview and the regulation of local radio.]

[Note to the table: the estimated costs of the Classic FM licence fee are simplified. Firstly, the cash amount paid increases annually from £1,000,000 in 1999 to £1,161,000 in 2006 and subsequently, in line with the Retail Price Index. The £50,000 cash payment will similarly be adjusted. Secondly, the revenue percentage paid is applied only to “advertising and sponsorship revenue attributable to national analogue listening hours”, but this data is not published, so 100% of estimated revenues have been assumed to derive from the FM platform.]

DAB radio: “let us get on this horse or get off it”

House of Commons Culture, Media & Sport Committee
“The future for local and regional media”
27 October 2009 in the Thatcher Room, Portcullis House

Andrew Harrison, chief executive, RadioCentre
Travis Baxter, managing director, Bauer Radio
Steve Fountain, head of radio, KM Group

[excerpts]

Mr Tom Watson: Can I ask you about Digital Britain and the Digital Britain Report? Do you think the report gave a good way forward for the commercial sector to journey out of its current troubles?

Mr Baxter: Perhaps I could ask Andrew to give an overview on that and then maybe we can give our respective views?

Mr Harrison: To give an overview, I think the short answer to that is “yes”. One of the fundamental issues the sector faces right now is the appalling cost of dual transmission. Ultimately, right now, this is a small sector and very many of our stations are simultaneously paying for the cost of analogue and digital transmission. That clearly does not make any financial sense. What we advocated for in Digital Britain was a pathway for all stations to end up with a very clear plan of what is the single transmission platform for them. That led, as I said in my opening remarks, to three very complementary tiers of the commercial radio offer. The first tier is a strong national offer on digital to compete with the BBC, and that is critical for the sector because the truth is that the FM spectrum is full. I am sure all of you will know from some of the other conversations we have had before that the BBC dominates the gift of analogue spectrum. It has four national FM stations; we only have one with Classic FM. For the sector to compete and capture its share of national advertising revenue, the ability to have a national digital platform I think is critical. As we then had the conversations with Digital Britain, I think it became very clear to all of us that you cannot just migrate national stations to digital and leave all of the large metropolitan local stations, like City in Liverpool for example or Metro in Newcastle, all the BBC’s local stations, as analogue only. The listeners to those stations will want the functionality, experience and benefits that come with digital. It is then very important that we have a second tier of the large local and regional stations which also migrate to digital. Critically, however, that nevertheless leaves an important third tier, which are the smaller or the rural stations for which either DAB coverage is currently not present – there is just not the transmitter build-out in some of the rural areas – or for which it is likely to be prohibitively expensive going forward. That sector equally needs clarity and that sector being able to stay on FM alongside community radio we feel gives a very balanced ecology where the sector has the most opportunity to compete and the lowest cost base because each station can ultimately choose whether it is on one transmission methodology, i.e. digital, or another, analogue. At the moment, we are in limbo where stations are paying for both but the profitability of the sector is fragile and there is not a plan. So we absolutely welcome the beginnings of that plan, which we recognise is the start of what is going to be a long and difficult journey as stations migrate and decide if their future is on digital only or their future is on analogue. The quicker we can move the industry there, clearly the better for the fragile economics of the sector.

Mr Baxter: Perhaps I can encapsulate some of the things we sent in to the Carter Review. Our business view generally is that the future is digital. There is hardly the need for me to make that clear to you. Our view has been for the last ten years that we will look at all platforms as we develop our business. We have successful radio stations, primarily operating for example off the audio channels on the Freeview digital television system. However, within that we think it is of real value for radio to have a bespoke platform and the one that is available to us that is a bespoke broadcast platform is DAB. It has, however, taken 12 to 13 years of very slow development for that platform to get to its current state. Therefore, our proposition to Carter’s Review was: let us get on this horse or get off it. We think we should get on it and put every possible energy we can over the next view years into getting consensus, direction and pace into the whole process of take-up, like there has not been during the last 12 years. If that can be achieved, it will produce a new resonance for commercial radio as a whole, indeed for the whole of radio. It will help position radio more effectively in the fragmenting media landscape we all have to deal with and give us an opportunity, as Andrew said, of clarifying our investment levels around platforms where currently we are having to pay for two when, in a future where either one is successful, we would only have to pay for one, thereby allowing resource to be put into developing content and other things around our business.

Mr Fountain: KM Group does have a digital platform. It is currently costing us over £100,000 a year and we get absolutely nothing back from it. I think the company at the time, six years ago, took the view that they wanted to be a part of the future. Circumstances since have not really helped them to be able to develop that particular medium. I think we too take the view that we would want to be part of a digital platform going forward, but there are a number of issues that would need to be overcome, not least of all the cost of entry and also in our particular case our DAB coverage and the coverage of our FM stations is not mirrored. We have better coverage right now on our FM platforms than we do on our one single DAB coverage. The problem around the coast, if you take that from Medway right the way round perhaps as far down as Rye, around the Kent coast and just touching into Sussex, is such that DAB does not actually reach into large parts of that coastal area.

Mr Watson: Would DAB+?

Mr Fountain: I could not answer that because I do not actually know.

Mr Harrison: No, there is no difference in terms of the coverage for DAB or DAB+. DAB+ is just a different method of compressing the signal so you can actually get more signal down the pipe, if you like; you tend to get more stations, but it does not actually affect the coverage.

Mr Fountain: You can see that in order for us to extend the coverage of DAB, there is clearly a cost involved, and there is also a conversation to be had between Ofcom and the French communication authorities as well.

Mr Watson: Presumably you are all relatively happy with what is quite a demanding timetable outlined in Digital Britain if your view is that we should just get on with it and do it?

Mr Harrison: I think you have expressed it exactly right. The timetable is demanding. I think it is set deliberately as being demanding. Digital Britain does not set a date for switchover. What it sets are two criteria that it says are axiomatic to be hit before switchover can be contemplated: one on listener levels and one on coverage, both of which we support. The aspiration in Digital Britain is to try and hit those two gates, if you like, by the end of 2013. On what Travis was saying earlier on, we think that is absolutely right, that the industry now works terrifically hard together, alongside the BBC and alongside the Government and the regulator to do our very best to hit those criteria. Once we then hit the criteria, the Digital Britain report identifies that it will probably take a couple of years from the criteria being hit before we could actually contemplate switchover. That is aggressive but we think it is appropriately aggressive against the context of an industry that is clearly struggling financially now, and the vast majority of my members are highlighting the cost of dual transmission as the single biggest cost issue that they face and self-evidently one that could be eliminated the quicker we can get to a decision one way or the other.

Mr Watson: May I ask you a bit of a left field question? You are quite confident that we should move to digital radio quite quickly. How confident are you that consumers will want to make that journey and that they will not migrate to internet, radio or choose to listen to live streaming sites like Spotify?

Mr Harrison: There are two different points there. We are quite confident, as you say, about the movement to digital, but purely because what the Digital Britain Report sets up are consumer-led criteria to drive that change. The criteria are absolutely that we will not move until coverage is built out to match FM. It would be absolutely suicidal for the industry to switch people off who currently listen and enjoy radio services, so it is axiomatic that we have to build coverage out. Secondly, the criterion is that listenership to digital has to be that the majority of all listening has to be to digital before you would contemplate switchover. We are not going to rush into this without being led by the consumer. What we are trying to do, as Travis said earlier, is inject some pace, momentum and energy into the process. If we wait for the natural replacement of sets and the natural progression of DAB – it has taken a long time to get to the listener levels we have right now, we still have all of the BBC’s services for example available on analogue – it is going to be very difficult to kick start the progression. We are very comfortable but we are comfortable because it is led by the consumer. The second part of your question is: are we worried about competing services? We are absolutely. I think there is a whole generation of new entrants into the market – Spotify, Last.fm, Pandora – available on-line, all of which are unregulated and against which we are competing for listeners and for advertising revenue. When you have a small, heavily regulated, constrained local radio sector competing with an unregulated world-wide series of music offerings, that is one of the challenges we have to face. We are, however, absolutely committed to the importance of a broadcast transmission methodology for digital. That is not to say that the internet will not be an important complement to that but our business model is based on a broadcast signal of one signal to a wider audience. There is very little evidence so far that on-line music offerings are in themselves profitable business models. For UK citizens and consumers, for our listeners, we think it is absolutely critical that radio remains free at the point of delivery. That has been one of its great strengths ever since the BBC was founded in the 1920s. Of course at the moment, although as I heard this morning the cost of broadband is potentially down to £6 a month, nevertheless, to access any internet-delivered service, you have to pay an ISP connection. That may change but I suspect we are a long way away from that.

[edit]

Mr Watson: Do you think the car industry is sufficiently prepared for the digital revolution?

Mr Baxter: I think we have had some very encouraging conversations with the motor industry over the last six months. The response to Carter’s work during the beginning of this year has helped galvanise interest in that area quite significantly, so I think there is a very different aura around those discussions than there was 12 months ago.

Mr John Whittingdale, Chairman: Just on the cost of the digital upgrade, what is your best estimate of how much it is going to cost?

Mr Harrison: I was on the working party, the Digital Radio Working Group, that was the forerunner for Digital Britain. That working group identified the cost of build-out, the one-off capital cost, as between £100 million and £150 million. That is quite a spread. The reason for the spread ultimately depends on what degree of coverage build-out you get to from equalling FM to universality and at what signal strength. Of course, you get real diminishing returns as you go to the very rural areas. That is the reason for the spread. There has been a lot of debate about that number. In reality, the way we have tended to look at it is that if you take that spread of £100-£150 million over the 12 year period of a licence, which is typically when a radio station is licensed or a multiplex is licensed, and if you said for round figures it is £120 million, that is £10 million a year for the licence period. I think it was £10 million a year that the Secretary of State quoted for example last week. Funding that we have always felt is actually absolutely critical to the build-out and conversation to Digital Britain. The commercial sector is absolutely happy to pay its way to the extent that the build-out is commercially viable but, after that, there is a clear public policy imperative. If the Government and Parliament decide that it is important to have a dedicated transmission structure for radio, that will be a public policy decision and it will need funding. That said, we believe that funding is very affordable. If you take that £100 million number, we believe that, for example, the BBC would save much more than that over the period of the 12-year licence just on what it will save on FM transmission alone, so there is a straightforward business proposition. Another way to think about the £100 million over a 12-year licence with the current Licence Fee settlement for the BBC at around about £3.5-£3.6 billion a year is that over 12 years that is £43 billion. The £100 million infrastructure cost for DAB radio is less than a quarter of one per cent of what the BBC’s income will likely be over the next 12 years. So it is eminently affordable if there is a public policy decision that it is important to do that build-out.

Chairman: Those two arguments suggest that you are looking for the BBC to pay for this.

Mr Harrison: We have said very clearly and very fairly that we are absolutely happy to pay our fair share in our way to what is commercially viable.

Chairman: What does that mean?

Mr Harrison: That means that we have already put our hands in our pockets substantially to build out coverage on a local and a national basis as far as we judge is affordable. I think realistically, given the state of the sector, the vast majority of the cost going forward, which is primarily designed to meet the BBC’s obligations of universality rather than the commercial sector’s obligations of viability, should rest with the BBC.

Chairman: So whilst RadioCentre is keen to move ahead with the digital upgrade, the economics of your sector at the moment means that you cannot really afford to put any more money into it?

Mr Harrison: We believe that transmission coverage build-out is axiomatic; it is one of the criteria to effect switchover. We cannot afford it but we absolutely believe the BBC can.

Philip Davies: Andrew, on this part can I ask you about how representative your view is of the industry as a whole? It was over this issue it seems more than any other that UTV Radio quit the RadioCentre and said that it felt that it was no longer representing the interests of the wider industry and gave too much power to its biggest member.

Mr Harrison: Yes, UTV did say that. Scott Taunton, the UTV Radio managing director, actually represented the commercial radio industry with me on the Digital Radio Working Group through all the per-work that was done for Digital Britain, and so they have been intimately involved. To be fair to UTV’s position, they have a particular reservation over the date and the timing for digital, but to be fair to the Digital Britain Report, and indeed we await the clauses of any potential Bill because it is not yet written, there has never been a formal switchover date actually agreed. Although, for example, I think Scott in his Guardian article yesterday talked about a 2015 date being farcical, that date has never been set. What have been set are two consumer-led criteria that have to be hit and then a transition period after that before we all migrate. As Travis said earlier, the majority of opinion across the sector, and certainly across my members and representing my board, is that we need now to put our foot on the gas and work hard to deliver the criteria. Inevitably, there is going to be a spectrum of views with different businesses in different places in terms of their own business models as to the urgency or not they see behind that. UTV are absolutely right to have their own position. They are more at the tail end of the timing.

Philip Davies: UTV did not just say that they had a different position to you. They said something a bit more fundamental than that that they felt that you were no longer representing the interests of the wider industry. It was not just as if they had a disagreement. They were indicating that there were others in the sector who shared their view. Do you accept that there are many others or some others in the sector that would share their view?

Mr Harrison: I would absolutely accept that we are a broad church and there is a breadth of opinion. I represent large and small stations, local and national, rural and metropolitan, so there is a breadth of opinion. To give you an example of that, our other major national station member that is on AM is Absolute Radio and they believe that the timing for digital should be sooner rather than later. They already have over 50% of their listening on digital platforms, one way or another, so they would move sooner. I have a number of digital-only stations in membership, stations like Jazz and Planet Rock, which clearly are already digital-only and would like to be in the vanguard. Inevitably, there is a spectrum of opinion and we try our best to reflect the overall views. The truth is that it is very unfortunate that UTV have left membership but we continue to represent the vast majority of the sector and its stations and will continue to try to steer a path, helping Government and helping the regulator through this tension.

Funding DAB radio infrastructure upgrade: still ‘no’

The Media Show, BBC Radio 4, 2 September 2009 @ 1330

Steve Hewlett interviewed Tim Davie, Director of BBC Audio & Music

We talked at the Radio Festival a few months ago and you talked a lot about DAB. The criteria have been stated now for moving forward to switchover, or before anyone contemplates switching off the analogue FM signal, of 50% of listening and 90%+ of coverage. Do you think that’s realistic by 2015?

I use the word ‘ambitious’ and I mean it. I think it’s tough. It is possible. I think the radio industry to date has shown an incremental path towards digital and, unless you get a big step change, you’ll never get there. And, to be fair, the BBC has driven this harder than anyone.

When we last spoke about it, there was a discussion of £100m or so being needed to pay for the rollout of not the BBC stuff but whatever is necessary for the commercial sector to go digital. At that time, I asked you specifically whether there was any money in your budget identified for that purpose and you said ‘no’. Has anything changed since we last spoke?

It’s another ‘no’. No, nothing has changed and until the plan ….

This is not going to happen, is it?

I think that radio will move to digital, and I think that ….

Will it be DAB?

I think at this point, it will be …. I believe in DAB. I say ‘at this point’ because I think we have hurdles to jump over.

Digital radio: Parliamentary Question

House of Commons: Written Ministerial Statements: 9 September 2009

Digital Broadcasting: Radio

Tim Farron: To ask the Secretary of State for Culture, Media and Sport whether his Department’s proposals for the analogue radio switch-off in 2015 have been submitted for rural proofing to the (a) Commission for Rural Communities and (b) Rural Advocate.

Mr. Simon: The Digital Britain White Paper set out our commitment to a full impact assessment of the Digital Radio Upgrade; including consideration of the rural impact. To inform these assessments we will work closely with the relevant stakeholders, such as the Commission for Rural Communities and the Rural Advocate.

Tim Farron: To ask the Secretary of State for Culture, Media and Sport what assessment he has made of the merits of providing financial assistance to (a) low-income households and (b) households in hilly rural areas in respect of the analogue radio switch-off in 2015.

Mr. Simon: The Digital Britain White Paper set out our commitment to conduct a full impact assessment, including a cost benefit analysis of DigitalRadio Upgrade. The results of this impact assessment will help determine whether there is a case for a Digital Radio Help Scheme, and if so, what its scope would be. In addition, the Consumer Expert Group, which brought together key consumer representatives to inform the Digital TV switchover process, has been invited to extend its scope to cover radio and will ensure that the Digital Radio Upgrade programme takes account of the wide range of listener needs.

UK Commercial radio revenues Q2 2009

Commercial radio revenue figures for 2009’s second quarter have been published.

Q1 2009 DATA
£119.7m total revenues – lowest since Q3 1999
£34.8m local revenues – lowest since Q1 2001
£60.0m national revenues – lowest since Q1 1998
£24.8m branded content

YEAR-ON-YEAR
Total revenues – down 10.8%
Local revenues – down 6.0%
National revenues – down 16.1%
Branded content – down 3.7%

QUARTER-ON-QUARTER
Total revenues – down 6.9%
Local revenues – down 5.4%
National revenues – down 12.3%
Branded content – up 6.0%


FOUR-QUARTER MOVING AVERAGE DATA
£514.6m total revenues
Down 13.4% year-on-year (last quarter: down 13.1% year-on-year)


Whatever may be going on elsewhere in the economy, it is hard to see any green shoots of recovery in the UK commercial radio …. yet. Total revenues in Q2 2009 fell by 10.8% year-on-year to £119.7m. Initially, this might look mildly positive compared to the 19.5% year-on-year fall experienced last quarter. But remember that the downturn in UK radio first hit in Q2 2008 and had already reduced that quarter’s revenues 10.1% year-on-year. As a result, Q2 revenues in 2009 are now 20% below what they had been two years ago, a decline so significant that it will prove difficult to recapture even when the economy does improve.

National advertisers remain the weak spot for UK commercial radio, with revenues in Q2 2009 down 16.1% year-on-year. But once again, Q2 in 2008 was the start of the downturn and that quarter showed a 15.9% fall year-on-year. National revenues in Q2 2009 are now 29% below what they had been two years ago. It will be a mighty challenge to recoup such losses.

The notion that UK commercial radio is merely experiencing a cyclical blip and will quickly show recovery once the overall economy improves is a great feelgood story, but one that is not supported by the industry’s own data. Long before the ‘credit crunch’ hit us all, UK commercial radio revenues were already showing structural decline, a trend that the current economic cycle has merely exacerbated.

Nothing demonstrates the long-term trend more starkly than a glance at the year-on-year changes to commercial radio’s total revenues in recent quarters. Of the last 20 quarters, only 7 have demonstrated year-on-year revenue growth (one quarter in 2004, one quarter in 2005, one quarter in 2006, three quarters in 2007 and one quarter in 2008). The most recent quarter’s total revenues were 29% below the peak achieved as long ago as Q4 2003. If these comparisons were adjusted for the effects of inflation, the decline would look even more stark.


For the commercial radio industry, business will never be the same again. The ‘goldrush’ 1990s are never going to happen again, at least not without some kind of radio revolution (such as the BBC wilfully destroying Radio Two’s popularity, as they did with Radio One in the early 1990s). As a result, the commercial radio industry will need to change its modus operandi more substantially than ever before, not to thrive, but in order simply to survive. If it doesn’t change, we won’t have much of a commercial radio industry left at all.

The seemingly widely held belief that commercial radio MUST continue to exist in its present form because it is a highly regulated and licensed industry is simply false. If there was one lesson that should have been learnt from the implementation of DAB radio in the UK, it was that ensuring that a small group of commercial interests control a technology and the access to it counts for nothing if there is almost no demand for it. With DAB, radio broadcasting groups got what they wanted – their cartel became the licensed gatekeeper and owner of DAB. But if nobody wants your DAB, you are left being gatekeeper to a field of nothing.

It’s the same with commercial radio. If advertisers and listeners don’t want your product, there is no reason for it to exist, regardless of you waving around your scarce Ofcom licence. Not so long ago, station owners could still foist crappy radio content on the public because listeners were starved of alternatives, but digital audio and the internet have changed that FOREVER. No longer is there any market for second-rate radio. And, in commercial radio, if unwanted or irrelevant content doesn’t attract listeners, it won’t last long.

In this context, the latest Ofcom radio

consultation (“Radio: the implications of Digital Britain for localness regulation”) is a remarkably disappointing document. At a time when commercial radio is at a crossroads in so many senses (profitability, consolidation, platforms, localness, public service, interactivity, CPM, etc), this latest chapter in Ofcom’s many attempts to map out “The Future Of Radio” is no more than tinkering at the edges of existing radio regulation.

What was needed was a full-blown, courageous effort to overhaul the radio regulatory system in order to ensure that commercial radio continues to exist financially and that the diminishing number of licensees genuinely serves the public’s articulated radio needs. Instead, we have an Ofcom consultation that is no more than a grudging reaction to Lord Carter’s Digital Britain proposals, some of which are now adopted as if they were Ofcom’s own, some of which are watered down, and some of which have been ignored altogether.

The reluctance drips from every page. There are 81 uses of the word ‘if’ in this 82-page document. Almost every one of its proposals is tainted with uncertainty – “if and when new legislation is passed” or “if Parliament decides not to take forward”. Rather than seizing the opportunities that arise from the painful ‘crossroads’ when change is an inevitable necessity rather than a nicety, Ofcom seems happy to sit in the back seat and respond “whatever!” to ideas it receives, rather than grabbing at innovation and pushing it forward. It reads very much as if written by nobody who has ever themselves run a commercial business where painful life and death decisions have to be made, sometimes at breakneck speed and often without the aid of a parachute.

Ofcom continues to treat the commercial radio industry like a naughty child who, although 36 years of age now, cannot be trusted with more than a five pound note. Every Ofcom proposal continues to keep its centralised, London-based decision making about local commercial radio firmly within its own control, without trusting licensees to co-regulate in any meaningful way. For example:
· Proposal 1 requires stations to submit a request every occasion they seek a change
· Proposal 2 will lead to “a short consultation upon receipt of such a request”
· Proposal 3 requires stations to submit a request every occasion they seek a change
· Proposal 4 will lead to “a short consultation in most cases”
· Proposal 5 will lead to “short consultations in most cases”.

Only one thing is certain – Ofcom will be drowning in consultations for the foreseeable future. These five proposals alone (out of eight) multiplied by 300 stations plus DAB multiplexes yields a potential 1,000+ new consultations or requests. And yet the document claims that these Ofcom proposals are “broadly deregulatory”.

Sadly, more than anything else, the Ofcom document completely lacks any kind of vision as to what the commercial radio landscape might look like in the future, the antithesis of what the Digital Britain consultation exercise was trying to achieve. This is a missed opportunity for Ofcom. Not just this latest document, but in 2009 when the whole “what is the future of radio?” debate is probably at the most critical point in commercial radio’s history. It appears to many in the industry that Ofcom has simply disengaged from radio. This is a particular irony for an industry that prides itself on its success in one-to-one communication.

It may seem a stupid question……. If Ofcom still sees itself as the party with the skills necessary to make 1,000 potential individual decisions on the future of individual commercial radio stations, how is commercial radio presently in such a sad state of affairs as a result (partly) of previous regulatory decisions? We tend to respect and trust people who can demonstrate a positive track record. Why would I let a doctor operate on me who had killed almost every patient he had ever consulted?

Digital Britain: the Implementation Plan

The government has published the Implementation Plan for Digital Britain, setting out its action plans for the proposals made in June 2009’s Final Report. These are the sections that directly concern the radio sector:

PROJECT 1: DIGITAL ECONOMY BILL
LEAD: Colin Perry

GOVERNANCE
– Bill Project Board oversees the delivery of the Bill. Members are David Hendon (BIS)/Jon Zeff (DCMS) – joint SROs, Carola Geist-Divver (DCMS legal), Eve Race and Jose Martinez-Soto (BIS legal), Colin Perry (Bill Team Leader), Laura Williams (secretariat)
– Bill Management Group tracks progress and drives delivery of the Bill. Members are Colin Perry (Bill Team Leader) chair, Deputy Directors BIS/DCMS, Carola Geist-Divver (DCMS legal), Eve Race and Jose Martinez-Soto (BIS legal), Laura Williams (secretariat). Other policy leads attend as appropriate.

ACTIONS COVERED FROM THE FINAL REPORT [exceprts]:
􀂃 Amending the Communications Act 2003 to make the promotion of investment in communications infrastructure and content one of Ofcom’s principal duties.

􀂃 Ensure the Board of Ofcom has a statutory obligation to write to the Government alerting Secretaries of State to any matters of high concern regarding developments affecting the communications infrastructure and in any event to write every two years giving an assessment of the UK’s communications infrastructure.

􀂃 Encouraging, where appropriate, adjoining radio multiplexes to merge and extending existing multiplexes into currently un-served areas rather than awarding new licences. Grant Ofcom powers to alter multiplex licences which agree to merge.

􀂃 We will make an amendment to the existing legislation to support a change in the localness regulatory regime to allow location in mini regions defined by Ofcom.

􀂃 Grant a further renewal for up to seven years of analogue radio licences for broadcasters which are also providing a service on Digital Audio Broadcasting (DAB).

􀂃 Grant Ofcom new powers to insert a two year termination clause into all radio licences awarded or further renewed before the Digital Radio Upgrade date.

PROJECT 6: DIGITAL RADIO UPGRADE
LEAD: John Mottram

ACTIONS COVERED FROM FINAL REPORT [in full]:
􀂃 Develop Action Plan for Digital Radio Upgrade, including a Cost/Benefit Analysis.

􀂃 Invite Consumer Expert Group to extend its current scope to inform the development of the Digital Radio Upgrade.

􀂃 Facilitate the roll-out of the BBC’s national multiplex to ensure it achieves coverage comparable to FM by the end of 2014.

􀂃 Encourage, where appropriate, adjoining local multiplexes to merge and extend coverage into currently un-served areas. Grant Ofcom powers to alter multiplex licences which agree to merge.

􀂃 Allow for the extension of multiplex operators’ licences until 2030, if part of an agreed plan towards Digital Radio Upgrade.

􀂃 Consider with Ofcom the case for delaying the implementation of AIP on DAB multiplexes until after the Digital Radio Upgrade is completed.

􀂃 Grant Ofcom new powers to extend the licence period of all national and local licences, broadcasting on DAB, for up to a further seven years, although this decision will be kept under review. In addition, amend the rules under which Ofcom grants analogue licence renewals to ensure that regional stations which do become national DAB stations do not lose their current or future renewal.

􀂃 Grant Ofcom new powers to insert a two year termination clause into all licences awarded or further renewed before the Digital Radio Upgrade date.

􀂃 Work with broadcasters and vehicle manufacturers to implement the ‘Digital Radio in vehicles: a five point programme’.

􀂃 Agree with Ofcom a two-year pilot of a new output regulatory regime.

􀂃 Reduction in number of locally-produced hours in exchange for enhanced commitment to local news.

􀂃 Ofcom to consult on a new map of mini-regions which balances the potential economic benefits but also the needs and expectations of listeners. We will make an amendment to the existing legislation to support this change.

􀂃 Consultation seeking views on proposals for a new licence renewal regime for community radio. This consultation will include proposals to remove the 50% funding limit from anyone source and the restriction preventing a station being licensed in an area overlapping with a small commercial service and extending our commitment to promoting best practice within the community sector and encouraging self-sustainability by allocating a small portion of the Community Radio Fund to support the work of the industry body, the Community Media Association.

􀂃 Insert two year termination clause into all new licences.

􀂃 Grant Ofcom new powers to extend the licence period of all national and local licences, broadcasting on DAB, for up to a further seven years (keep this decision under review). If by the end of 2013 it is clear the Digital Radio Upgrade timetable will not be achieved we will use the powers, set out above, to terminate licences and the existing licensing regimes will apply.

􀂃 Amend the rules under which Ofcom grants analogue licence renewals to ensure that regional stations which do become national DAB stations do not lose their current or future renewal.

Digital radio switchover: ‘you can’t move faster than the British public want you to move’

Feedback, BBC Radio 4, 31 July 2009 @ 1330

Sir Michael Lyons, chairman of the BBC Trust, interviewed by Roger Bolton and listeners:

[Do you think the principle of moving across to DAB is a good one?]

The BBC has been a strong supporter of digital radio, believing that it will actually offer an improved service, and …

[Improved in what way? The quality of the existing services will be made better? Or it allows you to provide a range of other services as well?]

I think both. But, of course, you only satisfy the first of those two tests when you’ve actually got the same sort of coverage [on DAB] that you’ve got on FM. And indeed, it’s important to say that the BBC has already picked up what commercial radio was going to do in terms of more investment to get to 90% of the population, and that will be achieved by 2011. But I think we’re going to go on to the question of ‘[FM] switch-off’ because actually that’s a different issue altogether ….

[Well, one of the key things of public service is universal access and, clearly, a lot of people are saying [that] until 2015 there won’t be one because, unlike a television set, perhaps we’ve got five or six radios around the house and a different radio in the car. And are you telling us we are going to have to buy five or six new radios and a new radio for the car in order to listen to something we might not want in the first place? That’s the argument.]

Well, let me underline that I’m not saying that. That’s actually in the government’s Green Paper – they propose a date of 2015. The Trust is very clear actually. Who comes first in this? Audiences and the people you pay the Licence Fee. It is an extraordinarily ambitious suggestion, as colleagues have referred to, that by 2015 we will all be ready for this. So you can’t move faster than the British public want you to move on any issue. So there’s no doubt that 2015 looks challenging.

[Chairman, are you prepared to say, on behalf of the listeners, to the government, whichever government is in power, if they are insistent in pushing this through and you believe that listeners will be significantly disadvantaged, are you prepared to say ‘no, the BBC can’t go along with this’?]

Well, as things stand at the moment, [in] the Digital Britain report, it seems that the BBC will find the money for this final stage, so there are serious discussions to be had about how it’s going to be funded, as well as whether actually 2015 is in any way a realistic timescale. Now, what I can say now, is that those have already formed part of our discussion with Ministers and will continue to form part of our discussions with Ministers.

[But, to repeat my question, are you prepared to say at some point, or countenance saying, to a Minister ‘no, we can’t go along with this because, in doing so, we will provide a disservice to our listeners’?]

Well, I think I’ve said as much I need to say today …..

[…. as a diplomatic chairman …..]

…. and also, you know, it’s very important that I don’t try and conduct any discussion I’m having with Ministers over the air.

Paying for Digital Britain’s ‘Digital Radio Upgrade’: who, me?

The Digital Britain Final Report published in June 2009 proposed that the UK radio industry embark on a ‘Digital Radio Upgrade’ which would seem to involve (take a deep breath):

· Providing greater choice and functionality for listeners (para.15)
· Listeners who can currently access radio can still do so after Upgrade (para.15)
· Building a DAB infrastructure which meets the needs of broadcasters, multiplex owners and listeners (para.21)
· Redrawing the regional DAB multiplex map (para.21)
· The BBC beginning “an aggressive rollout” of its national DAB multiplex to ensure its coverage achieves that of existing FM by 2014 (para.23)
· Commercial radio to extend the coverage of its national DAB multiplex and to improve indoor reception (para.21)
· Investment to ensure that local DAB multiplexes compare with existing FM coverage (para.24)
· The extension and improvement of local DAB coverage (para.25)
· Measures to address the existing failings of the existing DAB multiplex framework (para.26)
· The merger of adjoining local DAB multiplexes and the extension of existing multiplexes into currently unserved areas (para.26)
· The existing regional multiplexes to consolidate and extend to form a second national commercial radio multiplex (para.26)
· Convincing listeners that DAB offers significant benefits over analogue radio (para.28)
· DAB to deliver “new niche [radio] services” and to gain better value from existing content (para.29)
· DAB to offer more services other than new stations (para.30)
· DAB to offer greater functionality and interactivity (para.31)
· Implementation of digitally delivered in-car traffic and travel information (para.31)
· DAB radio receivers to be priced at below £20 within two years (para.32)
· Introduction of add-on hardware (similar to Freeview boxes) to enable consumers to upgrade their analogue receivers (para.32)
· Energy consumption of DAB radio receivers to be reduced (para.33)
· New cars to be sold with digital radios by 2013 (p.99 box)
· A common logo to identify and label DAB radios (p.99 box)
· Development of portable digital radio converters (p.99 box)
· Integration of DAB radio into other vehicle devices such as ‘SatNav’ (p.99 box)
· Work with European partners to develop a common approach to digital radio (p.99 box)

A lengthy list. And who is going to pay for all this? Digital Britain stated that “the investment needed to achieve the Digital Radio Upgrade timetable will on the whole be made by the existing radio companies” (para.44). This means the BBC and the commercial radio sector. And what exactly do these radio broadcasters think about having to pay for all these proposals without the aid of specific government funding? A seminar organised by the Westminster Media Forum this morning gave us an opportunity to find out. Here’s what was said about the Digital Radio Upgrade issue (speech excerpts):

Caroline Thomson, Chief Operating Officer, BBC [‘CT’]:
“The [Digital Britain] report is clear that there is an ambitious target for analogue switch-off in 2015. It is an ambitious target. Radio switch-off is a very different issue from television switchover, but we are supportive of this ambition and we will work with partners in the industry towards delivering it. And we have already made a lot of progress working with commercial radio to develop the policies on this. But, at the heart of it, we must remember that we must put listeners first and be careful not to damage the ability of listeners to tune in to the content they love. Working with commercial radio to secure the digital future in a way that will work for all our listeners is a crucial part of this. As my colleague Tim Davie, Director of [BBC] Audio & Music, said recently: ‘unless we huddle together for scale, we are going to be in trouble’. The BBC is drawing up our digital rollout plans in radio to see where and when it is possible to extend DAB coverage, and how much it would cost. We are willing partners, and DAB is a good example of an area of the Digital Britain report where we are helping to meet the charge.”

Andrew Harrison, Chief Executive, RadioCentre [‘AH’]:
“The real choice, which Digital Britain identifies, is which broadcast platform do we want – FM or DAB. And here, the genie is out of the bottle. DAB now exists on 10m sets, the BBC will not withdraw 6Music and BBC7 or the Asian Network or Five Live Extra – it never withdraws services – and commercial services will not fold DAB-only stations like Planet Rock or Jazz FM. Digital Britain has been clear in its aspiration – national, regional and larger local stations will have a clear pathway to upgrade to DAB and switch off FM. Smaller players will have a clear opportunity to remain on FM without an obligation to move across to DAB. Strategically, that’s a simple resolution – both will co-exist. So, next we need a plan to work out how we might achieve the migration criteria – on transmitter coverage, set sales and in-car penetration. The devil inevitably will be in the detail. But we need two strong interventions from government – on coverage and on cars – before any migration plan will be taken seriously. On cars, Digital Britain falls short of mandating manufacturers, unlike in France, to put digital radio in all cars from 2013. Encouragingly, Ford and Vauxhall have both confirmed their intent to upgrade in line with the timeline for 2013, but we need government to force the pace. On coverage, Lord Carter has ducked the funding issue. The commercial sector has already built out its national and local multiplexes as far as is commercially viable. So I’m delighted to hear Caroline emphasise that the BBC is supportive of the direction and ambition for digital radio and are willing partners helping to fund the change. It’s now time for the BBC and government to stop their wider dance around the BBC’s future role and theoretical possible future uses of the Licence Fee which have never been paid for before, and [to] instead consider how to broker a coverage plan for digital radio that will make it happen.”

Carolyn McCall, Chief Executive, Guardian Media Group [‘CM’]:
“It’s hard to escape the feeling that what the Digital Britain report has done is just gone: ‘we recognise the issue, big issue DAB’. They said something like that, which is pretty important, but they have just gone: ‘Ofcom, deal with it’. That’s how it strikes me. It just seems that so much of this on radio is being left to Ofcom to deal with. And if what I read is true, David Cameron doesn’t want an Ofcom anyway. So that is quite a serious issue for us as an industry. The most worrying aspect of the report in relation to radio is the assertion that investment needed to achieve the Digital Radio Upgrade will be made by existing radio companies. Effectively, the promise of deregulation is being made conditional on commercial radio funding digital [upgrade], stumping up more money that the commercial industry simply cannot afford. We’ve always had too much regulation for a small industry struggling in an unregulated digital world. While we back DAB, I don’t think any commercial broadcaster is going to feel comfortable about paying for those developments. The final point on radio is that, at a time when that industry in particular needed some clarity, the report does not give us any clarity. What new powers will Ofcom have, what role will they be expected to play, what is the position on the vital issue of Format change, what is meant by greater flexibility in relation to co-location, and mini-regions? The list goes on. I would say to Stephen [Carter], or Ben [Bradshaw], or indeed Jeremy Hunt, we need urgent clarifications on these issues and quickly.”

Q&A session [excerpts]:

[Is analogue radio switch-off going to include the [BBC] Radio 4 Long Wave signal?]

CT: That is the government policy. The policy is to switch off all analogue radios.

[Existing DAB coverage is not good enough?]

AH: Right now, self-evidently, DAB coverage is not good enough for anyone to consider switchover. There is a bill to be paid to deliver that public policy imperative. As long as that bill is met and covered, I think the BBC and the commercial sector would confidently switch over knowing the coverage is better ….

[Unless you start spending money now, and if you are, where is it going to come from, it’s not going to happen, is it?]

CT: First of all, we will not do the analogue switch-off unless it is the case that there are very big thresholds that have already been passed, particularly about car radios. And the challenges of getting to those thresholds by 2013, which is what we’ve said, are enormous, even if we build out the transmission. So let me just be clear. It is not the BBC’s policy to switch off FM or Long Wave until we are secure and clear – that is why I made the reference to listeners in my speech – that that is the policy which will work for listeners. On the money, for now we don’t have the money to build out beyond 90% – that is our current build-out – and the final 10% costs much more per percentage than the previous 90%, but we will look forward to a discussion with the government about it. We would like to be able to do it because, in the long term, as for commercial radio, running dual illumination [FM/DAB simulcasting] costs a lot of money so a switchover in 2020 costs us more than a switchover in 2015. But we won’t do the switchover in 2015 unless we believe particularly that car radios are up …..


CM: This point about digital radio [switchover]. There are no funds. I am not really convinced […noise…] and margins are slim because everyone has been hit by the recession quite badly. I don’t know where the money is going to come from for digital switchover of radio.

AH: I remain confident that where we are now with Digital Britain from the radio perspective is into the negotiation now – who pays for this? Frankly that is a negotiation that is far more likely to be concluded positively in the next few months between the BBC and a Labour government than under a Conservative government, so I remain optimistic that both sides will be brought to the table. In terms of who pays and who can afford this, the reality is that the BBC Licence Fee is £3.5bn, that’s seven times the total income of commercial radio. The cost of DAB coverage build-out is about £5m a year – that’s less than Jonathon Ross’ salary or Michael Lyons’ pension fund – so it’s purely a question of priorities for the BBC. I would have thought that it is quite within the limit of the BBC’s talented management to come up with a solution that can meet the public purposes set out for DAB and still deliver all the wonderful content that we enjoy.

Radio in Digital Britain – sense and sensibleness

In the 13-page radio section of the Digital Britain Final Report published yesterday, there was not one mention of the word ‘switchover’ in the context of ‘digital radio switchover’. Neither was there a single mention of the word ‘switch-off’, as in ‘FM radio switch-off’. Throughout the document’s radio section, the new buzz phrase is ‘Digital Radio Upgrade’, meaning a drive to make DAB radio better and improve its consumer take-up. In Digital Britain, the notion of switching off FM radio broadcasting, notably for local stations, has been buried for good.

Not that you would have realised this fundamental policy shift by reading some of the press reports. “FM radio switched off by 2015”, said the headline in The Telegraph. “Government sets 2015 as digital radio switchover date”, said the headline in Media Week. “Digital radio switchover set for 2015”, said the headline in Broadcast. “Analogue radio switch-off set for 2015”, said the headline in The Guardian. These bold press assertions are contradicted by the Report’s recommendations that “FM spectrum is to be re-planned to accommodate the current MW services” (paragraph 43) and that “a new tier of ultra-local radio [which] will occupy the FM spectrum” (paragraph 39). The report is perfectly clear that FM is not to be switched off (at least, not in my lifetime).

It was almost as if the lobbyists for FM switch-off – the large commercial radio groups, most notably Global Radio – had written the press headlines the way they had wanted the outcome, regardless of the actuality. This was reinforced by an article that appeared in Media Week yesterday morning – only hours before Digital Britain was published – in which “a well-placed source” predicted “a schedule for the shutdown of FM radio” under the headline “Digital Britain to give radio licensees guaranteed protection”. That source proved not to be so well-placed.

The Media Week headline referred to the owners of the three national commercial stations who had been lobbying to have their licences extended by another term in order to avoid the impending auction of their frequencies, as required by existing legislation. I have written previously about Global Radio’s determination to seek an automatic renewal of its Classic FM licence, which otherwise expires in September 2011. So did Digital Britain give Global, TIML and UTV the renewals that they wanted?

The answer appears to be both ‘yes’ and ‘no’. Digital Britain will:
· extend all commercial radio licences, national and local, “up to a further seven years” for stations that simulcast on DAB
· insert a two-year termination clause into all new licences
· review all licences in future and determine whether the Digital Radio Upgrade is likely to be achieved by the end of 2013
· terminate licences if the Digital Radio Upgrade is not achieved
· then re-advertise the national licences under the existing auction scheme.

Not only does this add considerable strings to licence extensions of “up to” seven years, not only does it allow those extended licences to be terminated at two years’ notice, but it also puts the onus squarely on the licensees to make sure that the DAB platform succeeds (something which has not been achieved in the last decade). If the Digital Radio Upgrade does not hit its targets, the licensees lose their stations. This is a poker game that, whilst offering national stations a potential second life, also threatens to take that life away not so far down the line. For an owner trying desperately to convince its bank lender of the long-term value of its national commercial radio licence, Digital Britain has not offered anything in the way of future guaranteed revenue streams. As a result, indebted radio owners now have two guns pointed at their head – one from their bank manager and the other from Lord Carter.

Worse, even the licence renewals proposed by Digital Britain require new legislation to be enacted. If there is renewed turbulence in government, and with the ever-present threat of a snap general election, it is looking doubtful whether media legislation will be a priority in a Parliamentary timetable that will be rushing to legislate more significant political issues during this government’s final days. If new legislation doesn’t happen soon, then Ofcom will have to rush to advertise the Classic FM licence in an auction by early 2010 at the latest.

Furthermore, even if digital platforms do succeed in accounting for more than 50% of radio listening by the end of 2013, which station owner (either commercial or BBC) is going to be prepared to switch off their analogue signal and lose 50% of their listening at a stroke? In the case of a commercial station, losing 50% of listening would mean losing 50% of revenues, an idea that nobody will entertain. In this way, regardless of the speed with which the 50% criterion is reached, the outcome is the same – stations will have to simulcast on both analogue and digital broadcast spectrum for many years to come, a necessity that is almost doubling transmission costs during a period when sector revenues are falling precipitously.

For smaller local analogue radio stations, the future remains rather unclear. Another Digital Britain proposal (paragraph 26) to amalgamate local DAB multiplexes into bigger geographical units makes sense in order to bring economies of scale to multiplex owners, but unequivocally transforms DAB into a large-scale broadcast platform for national or regional operators. A local analogue station in Bridlington, for example, will find it even more expensive and inefficient to be on a ‘Yorkshire’ multiplex, thus restricting that local station’s future distribution platforms to FM broadcast and online. Neither will such a local station benefit from the automatic analogue licence renewal promised only to stations simulcasting on DAB. If anything, such stations’ predicament will ensure that FM continues to be the consumer platform for local radio, which still accounts for 40.7% of all radio listening [RAJAR Q1 2009].

Digital Britain’s acceptance of the important citizen benefits of local radio broadcasting is underlined by its (unexpected) proposal to license “a new tier of ultra-local radio” on FM and to re-plan the FM waveband if existing stations (ever) migrate from FM to DAB. Although the report is at pains to explain that it does not intend to “blur the lines between commercial and community stations”, it makes sense in the long run to consolidate a third tier of radio with the flowering of a whole new set of radio stations that genuinely want to serve local communities. With many small local commercial stations now barely breaking even, it might make sense to turn some of them into companies limited by guarantee and thus let them seek public subsidy from local councils and regeneration schemes.

Such an expansion of radio content in local markets could potentially invigorate the entire radio medium, making ‘local radio’ more of a ‘must have’, particularly following cutbacks in local news provision by local newspapers and regional television. It is also a potential antidote to the continuing transformation of many of our former local commercial radio stations into regional or quasi-national services (see the example of Radio 210 in my previous article on ‘Heart-ification’). As Digital Britain commented: “Today’s radio industry has been shaped more by the scarcity of the analogue spectrum than by market demand” (paragraph 4).

On the issue of public subsidy, the biggest disappointment for commercial DAB radio owners/operators must be Digital Britain’s insistence that “the investment needed to achieve the Digital Radio Upgrade timetable will, on the whole, be made by the existing radio companies” (paragraph 44). The report acknowledges that “this will require a significant contribution from the commercial operators” (paragraph 21) but suggests it should be funded by:
· savings from the negotiated 17% reduction in transmission charges as a result of the Arqiva/National Grid Wireless merger (paragraph 22)
· future savings from the ending of simulcast analogue and DAB transmission (paragraph 22)
· cost savings from the anticipated relaxation of co-location rules and the automatic extension of analogue licences (paragraph 25).

Although there is a brief mention of “residual access” to some of the funds left over from the BBC’s Digital Switchover Help Scheme being used to support DAB infrastructure build-out, the overwhelming message is ‘you guys are on your own to make DAB work’. The worry is that, when times were relatively good in the late 1990s/early 2000s, commercial radio did not manage to develop sufficient traction for the DAB platform. How is it ever going to succeed now in an environment where sector revenues are falling so rapidly?

So the conundrum continues, same as it ever was. Everybody wants DAB to work. Nobody except the BBC wants to pay for it. Commercial radio simply isn’t making a profit anymore. We can argue about how/why it got to that desperate situation, but nothing changes the fact that there is no surplus cash slopping around ready to invest in either DAB infrastructure or exclusive digital content. Without an ongoing commitment to both, even the limited migration of national radio services from analogue to digital transmission proposed in Digital Britain is unlikely to ever happen. Consumers follow content, not platforms (or, as Digital Britain says: “consumers will adopt new technologies when they are affordable and the benefits are clear” (paragraph 8)).

This is not at all to imply that Digital Britain does not offer a lot of sensible recommendations. Whereas the outcome of the Digital Radio Working Group in December 2008 was a remarkably theoretical report that appeared to bypass the harsh economic realities of the radio sector, the Digital Britain document is realistic and pragmatic, telling the radio sector that much of what it needs to do to make the DAB platform a success is in its own hands. How the radio sector moves forward with these issues in the coming weeks will determine how much further we continue to plod along the long DAB road. There is an increasingly stark choice for commercial radio – to give up now and accede the DAB platform to the BBC and Arqiva, or to press on and further endanger the viability of the entire commercial radio sector.

Lord Carter proffered a lot of home truths in Digital Britain and he threw down this gauntlet: “Any good business will invest in its future if it understands that future and the potential returns from its investment” (paragraph 8). What he did not do was throw commercial radio a map to get it to the buried treasure.

——————————-
On a purely personal level, I was pleased to see Digital Britain embracing several policies I had advocated for the radio sector:
· the two-year pilot scheme for an output focused radio regulatory regime takes up the idea of the Local Impact Test I proposed in November 2007
· the proposal to use the surplus from the Digital Switchover Help Scheme and the savings from the Arqiva/NGW merger for DAB infrastructure build-out was a strategy I
suggested in October 2008
· the notion that ‘localness’ will prove a commercial radio station’s Unique Selling Point in the future global media village is a scenario I have included in client briefings and conference presentations for several years.

For the purpose of transparency, I contributed radio sector analysis to two documents that were part of the Digital Britain process – a pre-consultation overview and the regulation of local radio.

Digital radio switchover – searching for the Credible Plan

Ed Richards, Chief Executive, Ofcom [ER]
Q&A @ Radio 3.0 conference, London (excerpt)
21 May 2009

Q: Isn’ t the big issue with DAB ‘[FM] switchoff’?….

ER: It is one big question but it definitely isn’t the only big question. And the difference with TV is very instructive. One of the profound differences with TV, of course, is that in the case of TV you couldn’t extend Freeview digital television without turning off the analogue spectrum, and that’s a profound difference. One of the other differences, of course, is that the value of the spectrum released by analogue switchoff in television is extremely high. Indeed, people are fighting each other metaphorically to get hold of it and have been ever since we mooted the idea some years ago. So there are some very big differences. The other obvious differences are that people have more radios than they do have TV’s, and so on and so forth. It is a very big question but I don’t think it’s the only one. That is why we put as much emphasis on the inherent sustainability and viability of digital [radio] services. It is always going to be asking people a lot to simply look forward, especially in the context of no switchoff date – and even if there was a switchoff date, it would be some years away – it’s always going to be asking them a lot to take losses for a long period. If only we can get to a point where DAB services are essentially at least breakeven, the better because that gives you a base from which to plan the other more challenging things, which include switchoff, and we want to work quite hard at that alongside the debate about Digital Britain.

Q: Without a date, it feels like it’s almost over the horizon. People I talk to in radio nearly all say ‘what we need is a date’. Is Digital Britain going to give us a date, do you think?

ER: That is a common theme that you hear, it is true. Before answering the thrust of that, I reiterate that I think you need to address the date and the migration issue, but you need to address the underlying economics first and immediately at the same time. And that means a frequency plan, savings in transmission, and so on and so forth, and it means continuing growth and more listeners on DAB. I hear everybody, a lot of people, say that we have to have a date. Will Digital Britain give us a date? I don’t know. There are a number of things we don’t know about Digital Britain yet.

Q: Would it be helpful if it did give us a date?

ER: It depends what the date was. It wouldn’t be helpful if the date was next year. I think the most important thing is … Let me rephrase the question slightly. You can only have a date if you have got a credible plan that delivers that date. So I could give you a date now but it would be meaningless. It would be rather like the television switchover date in one or two countries around the world – which I won’t name because it would get me into trouble – but they name dates, the governments stand up and puff up their chests and name dates but they are meaningless and, as soon as they have left the room, everybody laughs. So a date is meaningless without a credible plan to get there, so I recognise ….

Q: It’s a bit chicken and egg, isn’t it?

ER: Well, you have to have one in order to have the other. I think where people really are on this is, when they say we must have a date, that is another way of saying we must have a credible plan which gives us a date, and I would agree with that ….

Q: But how close are we to a credible plan?

ER: We are getting closer. We are doing a lot of work, as I said in my contribution, around the re-planning and I think the re-planning is very important to it. We need to have a clear set of proposals about quality of service and coverage and all those sorts of things, and those things need to be in place before you can have a credible plan. But there is work actively taking place on that and being driven forward. But better to get that right and to have a sense of urgency and determination, than just to pluck a meaningless date out of the air.

…..

Q: I’m still struggling slightly with [FM] switchoff only because it strikes me that almost everything hinges upon this and what you say is perfectly sensible – you can’t really have switchoff until you have a credible plan – but we know that, in the real world, unless we are forced by one thing or another, we don’t actually face this and businesses are very similar to life and everybody is still hedging their bets on FM. I speak to mobile phone manufacturers who say ‘well, look, we only have room in our phones for so many transmitters and receivers. We have got Bluetooth, we have got infra-red, we have da-da-da-da-da and all our users tell us they really value FM’. So they are not going to switch it until they have to. People with DAB radios in their cars are still a rarity and the manufacturers are not going to start installing them as standard until someone says ‘OK, 2013, 2012, 2011, whatever it is – that’s it’.

ER: Well, that’s the attraction of setting a date and driving everyone to it. But I’m trying to think of something different to say than what I said earlier.

Q: Would you favour it as an option?

ER: If there is a credible plan, yes. You’ve got to have a credible plan. And what you can’t do is just pluck a date out of the air and say ‘we’re all going to get there’ because I know what will happen under those circumstances. What will happen is that it will be fine for about a month and then, going for coffee outside the conference room, everyone will say ‘well, that is not going to happen, is it?’

Q: Except in TV, it has and it is.

ER: In TV, we wrote the original document which said ‘we will push on to digital switchover in this timeframe and here is how you can do it’. We wrote that document and said ‘these are the six of seven things you have to do to deliver it’ and we knew what you had to do to re-plan, we knew what you had to do to lead people across, we knew about the re-tuning, we knew the vast majority of things and there was a plan. That plan was then picked up by the creation of Digital UK, and so on. We’ve got to get to that next step, so I think it’s an exciting prospect but we’ve got to believe that it’s credible and deliverable. So I know that I’m repeating myself and not being particularly helpful but I do genuinely believe that and we need to – senior people in the industry need to sit round, look at this, stare at the steps and say ‘will that deliver it, is it consistent with what is in the audience’s interest?’ There’s no point in doing something which audiences then regard as a disaster. We have to do something that audiences, as it took place, will regard as a good thing. That’s an acid test and I think that’s possible, but there’s a lot of work to do and we’ve got to see if we can get there.

Exclusive digital radio content: saying it and doing it are two different things

Everyone seems to agree – it is the availability of exclusive radio content on digital platforms that will drive consumer uptake of the hardware and digital listening.

In its Final Report, the Digital Radio Working Group had said in December 2008: “We must present a compelling [DAB] proposition for consumers not only through new content, but in building a whole new radio experience”.

In its Interim Report, Digital Britain had said in January 2009: “We will expect the radio industry to strengthen its [DAB] consumer proposition both in terms of new and innovative content and to take advantage of the technological developments that DAB can offer”.

In its report commissioned for RadioCentre, Ingenious Consulting had said in January 2009: “…. there is not as much DAB-only material as hoped, and very little that’s truly compelling – there’s no ‘must have’ content as with sports and movies on Sky [TV]”.

In its submission to Digital Britain, Ofcom had recommended in March 2009 “the creation of new commercial radio stations to create a consumer proposition analogous to Freeview: a wide range of popular and niche services, delivered digitally”.

The Digital Radio Working Group had spent a year meeting throughout 2008 and made its final recommendations in New Year 2009. Five months later, for the consumer turning on their DAB radio, the choices do not seem much different than they were then. While the industry continues to talk and talk and talk and talk endlessly about what should be done, the consumer proposition for digital radio seems to be disappearing down the tubes. The data from the Q1 2009 RAJAR audience survey demonstrates that.

For commercial radio, its digital stations are now capturing a lower proportion of its listening (4.5%) than a year ago (5.5%). Only 23% of listening to commercial radio via digital platforms is to exclusively digital content, compared to 30% a year ago. These results are not surprising, given the closure of many digital stations during 2008 (Core, Oneword, Life, TheJazz, Virgin Radio Groove, Yarr, Easy, Mojo and Islam Radio). In 2009 so far, Stafford’s Focal Radio and London’s Zee Radio have also closed.

For the BBC, the results are almost as disappointing. Its digital stations have recovered from a poor performance last quarter, but it appears that much of this improvement may have been due to heightened public interest in 6Music following the Ross/Brand affair. BBC digital stations now capture 2.9% of listening to the BBC, compared to 2.7% a year ago. Only 14% of listening to the BBC via digital platforms is to exclusively digital content, compared to 16% a year ago. For the BBC, it is beginning to look as if interest in its digital content is no longer growing as it had been during 2006 and 2007.


The summary graph (below) of hours listened to exclusively digital radio stations demonstrates the trend’s recent tendency to have levelled out, primarily as a result of commercial radio’s performance since 2007, but now also as a result of the BBC’s performance in recent quarters. Whilst commercial radio experienced significant station closures in 2007/8, the BBC’s portfolio has remained constant and is receiving as much cross-promotional marketing exposure as ever.


It is true that some new initiatives to provide exclusive digital radio content have happened in recent months:

* Colourful Radio launched on DAB in London on 2 March 2009.

* BFBS Radio is available nationally on the Digital One DAB multiplex from 20 April 2009. The station is government funded and aimed at British forces and their families. Unfortunately, listening to BFBS by the general public is likely to substitute for either commercial radio listening, reducing its ratings and revenues, or substitute for BBC radio, reducing its ratings. In the end, neither result will help commercial radio or the BBC make DAB a successful platform.

* NME Radio launched on DAB in London on 13 May 2009.

* Amazing Radio is available nationally on the Digital One DAB multiplex from 1 June 2009 on a six-month trial. Amazing Tunes is a UK website showcasing unsigned bands and musicians. This is a great idea for an on-demand internet service but I am not sure this content will prove so appealing as a broadcast station. The problem, as Xfm discovered with its own disastrous experiment two years ago, is that listening to a playlist chosen by listeners can be as entertaining as looking through a relative’s 300 holiday snaps. Out of several million people’s playlists on Last.fm, I find there are no more than a handful of other people’s selections that I can sit through. What works well online for Amazing is not necessarily going to work in the broadcast medium.

However, at the same time:

* Bauer Radio has relocated Q Radio from London to Birmingham, and Heat Radio from London to Manchester, effectively downgrading these digital stations and making redundancies

* Bauer Radio has removed five stations (Kerrang!, The Hits, Q, Heat, Smash Hits) from the Sky platform

These downgrades are significant because Bauer is easily the biggest player in digital radio, now that Global/GCap/Chrysalis has sold/closed all but two of its digital stations, both of which (The Arrow and Chill) survive only as music jukeboxes. Commercial radio’s commitment to exclusive digital content seems to be hanging by the barest of threads. If Lord Carter decides not to respond positively to the commercial radio industry’s demands for some kind of financial support in the Digital Britain report published in a fortnight, that thread is in imminent danger of snapping.

And so the talk about the need for exclusive digital radio content is likely to run and run and run. But, as long as it remains talk rather than significant action, consumers will remain unimpressed and the graphs above will continue their present trajectories. Nobody wants this to be the outcome, but nobody seems to be doing anything concrete to stop it happening.

DAB: actions speak louder than keynote speeches

Giving the commercial keynote speech at the Radio Reborn 2009 conference this week in London, Global Radio chief executive officer Stephen Miron banged the drum for the radio medium, banged the drum for Global Radio, and banged the drum for digital radio.

It was the last of these three exhortations that appeared particularly contradictory, given Global Radio’s track record with the DAB platform. However, nothing could stop Miron from proclaiming:

* “At Global, we believe that the government must set a clear and rightfully ambitious programme for digital migration.”
* “As you would expect from the largest commercial radio broadcaster, we plan to play an active role in helping ensure the successful delivery of that [digital] strategy.”
* “We back digital and we back the [Digital Britain] strategy, but we cannot afford to get this wrong.”
* “Digital Britain has made us focus our minds. Now the government must focus theirs.”
* “We have embarked on a clear path to digital, to DAB, and we need to make serious progress and do it quickly.” [emphasis added]
* “This means naming a date for [digital] migration …. A firm date needs to be set.”
* “The future of our sector is intrinsically linked to the successful implementation of the government’s digital strategy and to the successful migration to DAB.” [emphasis added]
* “We need more of this in the coming weeks and months. Not just words, but action.”
* “We need to get our act together to make the best possible case for consumers to switch to digital.”
* “Global is up for the challenge and, as the largest commercial player, we are prepared to lead this charge.”

Miron’s comments seem particularly difficult to reconcile with Global’s ‘actions’ on DAB, which hardly demonstrate confidence in the platform.

1. Global Radio exits DAB multiplex ownership
On 6 April 2009, it was announced that Global Radio sold its 63% stake in the sole commercial radio national DAB multiplex owner Digital One to transmission provider Arqiva. Global Radio also sold its local DAB multiplex business Now Digital to Arqiva. After almost a decade of operation, these multiplexes were still to generate an operating profit. Global Radio’s involvement in DAB multiplexes was thus reduced, at a stroke, from having been the biggest player to zero, writing off a decade’s worth of massive investment in the process, because the transaction is likely to have happened for a nominal amount.


2. Global Radio/GCap Media closes digital stations
Digital stations Capital Life and TheJazz, both of which had been carried on the national Digital One DAB multiplex, were closed on 31 March 2008, the day that Global Radio acquired GCap. (GCap had already closed another national digital station Core in January 2008).

In a recent interview, Tony Moretta, chief executive of the Digital Radio Development Bureau, tried to explain the closures of these stations: “Well, the main stations that went away – aside from all the Channel 4 stuff, which never launched and was nothing to do with DAB – where the GCap stations, such as The Core and thejazz also had nothing to do with digital.” [sic]

3. Global Radio turns digital station The Arrow into music jukebox
In December 2007, Global Radio dropped live presenters from the digital radio station The Arrow which it had acquired from Chrysalis Radio. The Arrow was removed from DAB in London in May 2008, and is now only available over-the-air on the 5 MXR regional DAB multiplexes. However, Global’s recent sale of its share in these multiplexes to Arqiva puts a question mark over the station’s future. Why would Global Radio pay Arqiva to carry a digital station in which it is has demonstrated no interest to develop?

4. Global Radio does nothing with digital station Chill
Part of Global Radio’s acquisition of GCap Media, Chill is also only available over-the-air on the 5 MXR regional DAB multiplexes (and not in London on DAB). Like The Arrow, Chill’s future looks very precarious. However, it would prove embarrassing to close these two digital stations before Lord Carter’s final Digital Britain report is published.

5. Global Radio cancels deal with Sky for digital news radio station
In October 2007, Global Radio cancelled the contract with Sky inherited from its acquisition of Chrysalis Radio that would have created a national Sky News Radio station on DAB. A spokesperson said then that “Global was not prepared to make the necessary investment in this project”.

6. Global Radio scraps digital-only shows on Galaxy Radio
In January 2008, Global Radio dropped dedicated shows from the digital version of its Galaxy Radio brand, instead simply simulcasting its local FM output on DAB multiplexes that also carry it.

So what is going on here? Miron’s speech is a large part of Global Radio’s public campaign to cosy up to Lord Carter ahead of the publication of his final Digital Britain report. Global needs a big favour from Carter if it is to retain a shred of intrinsic value on its corporate balance sheet – an automatic renewal of its Classic FM national analogue licence (see my earlier blog entry). In return for the favour it seeks, Global is responding to Lord Carter’s insistence that the radio industry speak with one voice on the issue of the transition from analogue to DAB radio.

The important thing here is to be seen to be saying the right things publicly about DAB – it’s great, it’s the future, we are committed to it, we love it. Forget the past. Forget our recent ‘actions’. Conveniently forget that, less than a month ago, we transformed our company from the leading player in DAB infrastructure into less than an also-ran. DAB is the future – we are part of that future. Our commitment is to say all the right things, and probably to do absolutely nothing. The endgame is to persuade government to amend primary legislation so that Global Radio can hang on to Classic FM, as Ashley Tabor explained: “It is one of those times when common sense has to prevail. Classic FM is a national treasure and to lose it would be tragic.”

The consumer and trade press willingly obliged by reprinting chunks of Miron’s speech without any kind of critique. This ensures that the press cuttings, demonstrating Global Radio’s glowing confidence in DAB, will land on Lord Carter’s desk and, Global hopes, convince him of the ‘common sense’ of not bothering to auction the Classic FM licence to the highest bidder (which is required by existing legislation). Here is a selection of that press coverage.

Broadcast magazine reported that “Miron’s comments mark the first time that Global Radio – the largest commercial player in the UK radio sector – has come out so strongly in favour of DAB and migration” under the headline “Global Radio chief demands DAB deadline”.

Radio Today reported that “Global Radio has also called on the government this morning to set a switchover date for DAB” under the headline “Industry unites for a DAB future”.

Marketing Week reported that Miron wanted the government “to name a date for a switchover from analogue” under the headline “Radio industry needs to be bold, says Miron”.

Media Week reported: “Global Radio has made one of its biggest interventions in the debate over the future of digital radio, with chief executive Stephen Miron calling on the Government to set a date for digital radio switchover”. The headline was “Global boss Miron calls on Government to name digital radio switchover date”.

The Guardian, to its credit, published the only report which acknowledged Global had “sold its majority stake in national DAB platform Digital One to transmission business Arqiva earlier this month”, though its headline nevertheless read “Government must be bolder on digital radio, says Global chief Stephen Miron”.

But today’s Sunday Times developed the theme by including this comment from Global Radio’s Ashley Tabor about digital switchover: “I am really confident now that all the right things are happening that will get us where we need to be. We are in favour of switch-off, so can we do it quickly please?” Maybe Lord Carter is tiring of Tabor’s persistent phone calls, so Ashley is now having to turn to weekend press puff pieces to labour his point.

The Sunday Times article’s headline, without a hint of irony, is “Global evangelist for digital radio”. Closing digital stations, selling off DAB infrastructure, baling out of DAB development deals – is this some kind of ‘do as I say, not as I do’ evangelist?