Tag: DAB

Digital radio switchover: the Conservative Party viewpoint

Jeremy Hunt, Shadow Culture Secretary, speaking on The Guardian’s Media Talk podcast:

We support the idea of [digital radio] switchover. We have more concerns about [FM] switchoff. There are 120m analogue radio sets and, if we were to tell consumers that, after 2015, those are going to be useless and you have got to chuck them away, people would I think be very angry. And so there’s a lot of work that needs to be done before we can even think about switchoff.

[What sort of incentives do you think you could give to the public to be attracted to digital radio?]

I think the most important thing is not something the government can do, but something the industry can do, which is to develop new services on digital platforms that actually mean there is a real consumer benefit to DAB. At the moment, the benefits are marginal. I mean, there are some benefits in terms of quality, but your batteries get used up a lot more quickly, the reception is a lot more flaky, and a lot of the things that make digital switchover attractive on TV don’t apply to radio in the same way. So I think the industry needs to do a lot more to make it in consumers’ interests to have that switchover. That’s one thing. I think what the government can do, though, is work much more closely with car manufacturers. The French government has bitten the bullet on this. I think we should do a lot more.

[The French government has mandated car manufacturers to put digital radios in cars. Should the British government follow suit?]

Given the French government has done that, there may be no marginal cost to car manufactures were the British government to say the same thing. But, at the very least, we should be looking at incentives to encourage car manufacturers to standardise on DAB because, until you do that, we are not going to get the network to the 97% or 98% coverage that we really need.

[What about all those old [radio] sets? You raised it in your speech here at the Radio Festival – old analogue sets that could become obsolete.]

Well, exactly, and there is an environmental consideration with that as well, because I think people would be very very concerned at the environmental cost of having to get rid of 120m sets. So I think we have got to think about that. We have also got to think about consumer anger. Consumers are people that the radio sector needs. It’s going through a very tough patch. We don’t want to switch off listeners by suddenly saying that we are not going to – that we are going to force you to have a new radio, and there’s a real danger, if we do that, that they might start listening to their iPods and their CD players instead.

[You mentioned a possible swap scheme. How would that work? You take your old analogue radio into Currys and Dixons and get a shiny new digital one?]

Yes, I think this is something that I don’t think is really for the government to do. But I’m just really putting it on the table. I think it’s the kind of thing the industry might think about. If you could swap your analogue radio for a digital one, people might think ‘wow, there’s a benefit to switchover’. At the moment, we seem to be getting into this mindset where we want to force it on the public, even though the public can’t really see what the benefits are.

DAB radio switchover: BBC listener opinions offer exit strategy

The BBC is in a tight corner over DAB. It played a significant role in developing the technology in the 1980s, in experimenting with the earliest DAB transmissions in the UK in the 1990s, and in launching a portfolio of exclusively digital radio stations in the 2000s. During that long period, management teams within the Corporation have come and gone, yet the commitment to DAB as a future technology to replace FM/AM analogue radio has remained resolute. Until now.

Realism eventually rears its ugly head, even in the BBC. And a changing of the guard at the top of the BBC radio division offers a timely opportunity to re-evaluate a strategy for DAB that must have been first decided almost two decades earlier. Across the meeting room conference table, the question is eventually asked by the newcomer – exactly why did we decide to commit so much time and so much money to DAB in the first place? The answers are many and various and have inevitably become muddled over time. The one thing that is certain is that nobody in the BBC could have believed back in the 1980s that we would still be arguing in 2009 as to whether implementation of DAB radio technology is worth the effort. Back then, the bright digital radio future looked attainable within a matter of years, rather than decades. How wrong they were.

The longer you have peddled away, the harder it is to stop and get off the bicycle. Having thrown decades of resources at DAB technology, it would be almost impossible for the BBC to say ‘whoops, it didn’t quite work out so we’ll stop now’. The ire from DAB radio receiver purchasers, the backlash from Licence Fee payers, and the possibility of an incoming Tory government potentially using it as a stick with which to beat the Corporation for wasting money are all too horrible to consider.

So it was interesting to hear Tim Davie, Director of BBC Audio & Music since September 2008, on BBC Radio 4’s ‘Feedback’ programme, ingeniously beavering away at building a potential DAB exit strategy by invoking the will of the listener. As everyone working in BBC radio understands, its listeners are extremely resistant to change – almost however minor it is – and are not afraid to voice their opinions in the media at the slightest inconvenience. It was therefore appropriate that the ‘Feedback’ programme itself should be used to suggest that, if BBC listeners did not want to change over completely to DAB radio, then the BBC might decide it should not happen. Tim Davie said:

“We support the idea of switchover to digital. In terms of the switchover date, our position has always been that 2015 is ambitious. We think that the listeners need to be reassured that coverage levels, quality levels are at a point where switchover is realistic. So we are totally focused on delivering a position where we have hit certain thresholds, we know that we are in a place where switchover can happen without widespread disruption.”

[Are you going to make that judgement yourself or are you going to consult your listeners, many of whom dispute claims that are made by BBC spokesmen about the quality of reception and other things. Have you any plans to consult the audience about whether the time has come when switchover is possible?]

“Absolutely. We are talking to government now about how consultation should take place. From a BBC perspective, whether it be ‘Feedback’ or our constant audience research, the idea that we would move to formally engaging switchover without talking to listeners, getting listener satisfaction numbers, all the various things we do, would be not our plan in any way. We would be – we are – in dialogue now for the next six years.”

[But consultation implies the possibility of changing policy, and a lot of our listeners are sceptical ….]

“I think we are pretty committed to digital. Having said that, since I have arrived at the BBC, I certainly haven’t seen it as inevitable that we move to DAB. We do believe that, if radio doesn’t have a digital broadcast platform, it will be disadvantaged. I’m pretty convinced of that logic. What I’m not saying is that we have to move at 2015 if we haven’t delivered the thresholds – the right levels of listening to digital radio and to DAB. I don’t think we are on a course that is unstoppable to 2015 although we are pretty committed to a DAB switchover over time.” [emphasis added]

[Do you accept, at the moment, that DAB is often inferior to the existing [FM] sound?]

“DAB doesn’t have the coverage of FM at this point, and it’s really straightforward that the quality of your audio is related to how close you are to a transmitter. So, DAB currently has less transmitters. So those people who are further away from a transmitter aren’t getting as good sound. One of the things I’ve been very clear on in my position is – we will not even entertain a switchover unless the level of quality coverage is at 98%, which is in line with FM. So we, as the BBC have said, without the extra 600 transmitters that we would need to put in place, DAB switchover will not be a reality.”

In terms of BBC public pronouncements, these viewpoints on DAB are revolutionary. Under Tim’s predecessor, Jenny Abramsky, public dissention about the DAB future was simply not permitted. Last year, after I had been interviewed for an item on Radio 4’s ‘Today’ programme about the problems facing switchover to DAB, I never again heard a similar item about DAB on the show. Asked about the BBC’s commitment to DAB at conferences, BBC staffers would look sheepish and admit they had been told to make no comments.

What a difference a year makes. The last ten days have witnessed a blizzard of managed dissent on BBC radio. The ‘Today’ programme yesterday morning ran a substantial piece in the important pre-0830 slot that was very critical about the pitfalls of DAB reception in cars. This week’s ‘Media Show’ on Radio 4 devoted considerable time to the DAB issue. Last week’s ‘You & Yours’ on Radio 4 discussed listeners’ issues with DAB in gory detail. And the weekend’s ‘Feedback’ has opened up the possibility of BBC listener revolt on DAB translating into a policy change.

It feels almost as if a subtle marketing campaign is now going on from within the BBC as a response to the radio proposals in the Digital Britain report, softening up the outside world for the BBC to be able to downgrade/dump DAB at some future time. Of course, Tim is a clever marketer from the real world (Pepsi, P&G), whereas his predecessor was a (very successful) career BBC apparatchik. What we might be seeing is the opening salvo of an action folder marked ‘Possible DAB Downgrade/Exit Strategy’. The nuclear button might never have to be pressed, but it’s always useful to know where the exit doors are and how you are going to reach them, however little you might want to think about the DAB plane going down in flames.

Funding DAB radio improvements: who pays?

At the Radio Festival in Nottingham, the final session on Wednesday 1 July 2009 @ 1215 was a discussion about the future of UK radio that was broadcast live on BBC Radio 4’s Media Show and hosted by Steve Hewlett. Part of the discussion was about DAB in the UK following the publication last month of the Digital Britain report.

Amongst its range of proposals, Digital Britain had recommended:
· “at a national level, we will look to the BBC to begin an aggressive roll-out of its [DAB] national multiplex to ensure its national digital radio services achieve coverage comparable to FM by the end of 2014”
· “where possible, the BBC and national commercial multiplex operator should work together to ensure that any new transmitters benefit both BBC and commercial multiplexes”
· “further investment is required if local DAB is ever to compare with existing local FM coverage”

How will this improved DAB infrastructure be paid for? Digital Britain had suggested:
· in some geographical areas, “the BBC will need to bear a significant portion of the costs”
· “however, the full cost cannot be left to the BBC alone”
· “some [commercial radio] cost-savings must support future [DAB] transmitter investment by the local multiplex providers”
· “the investment needed to achieve the Digital Radio Upgrade timetable will on the whole be made by the existing radio companies”

Interviewed about these issues for the Media Show were:
Tim Davie, Director of Audio & Music, BBC [TD]
Phil Riley, former Chief Executive, Chrysalis Radio [PR]

[Tim, where is this money coming from?]

TD: The truth is that I can’t say I can find it. What I have been saying very clearly is that I can make a case for it. And, where the money comes, or could come, from I think is pretty well articulated in public debate, which is… We have been spending money against broader digital distribution projects – the digital television switchover – and where we spend the Licence Fee beyond content, it’s this thing called the ring fenced fund where we’ve been investing in digital television switchover. Now, as the radio guy, it’s saying ‘we have a case for this medium’. We love radio. We think there’s a really good case for it being there as an investment ….

[This investment has got to happen pretty quickly to stand any chance of getting us to the 2015 date which the government have set us as their target for switching from analogue to DAB. That means quite a lot of things have got to happen by 2013. That’s into the next Licence Fee settlement. So you need to find £100m for your 600 extra [DAB] transmitters, or whatever it is, in this settlement. Have you got it?]

TD: Well, we have said that we don’t think – and we’re yet to see what that looks like because we haven’t done TV switchover that ….

[Have you got the money? You have to start spending now, you can’t leave it because [otherwise] you’re never going to get there, are you?]

TD: We’ve said that as part of Digital Britain – it’s all in the report – it says that in the course of the next 12 months, even if we wanted to spend money at this point, we don’t quite know what we are spending it on. Without getting too technical, if you look at the ….

[On ‘Feedback’, you’ve said 600 transmitters are needed to get to an equivalent coverage of FM and you said the BBC wouldn’t go there unless coverage was roughly equivalent to FM.]

TD: Specifically, the minority of money is those 600 transmitters that gets you on the national multiplex, which is what the big stations like Radio 4 go on, that gets you to 98% cover. The bigger money is in sorting out the regional and local stations which are a bit of a patchwork and that investment – the numbers are loose because we are going to be doing some detailed planning with the commercial sector on ….

[Very briefly, a one-word answer. Do you have any money set aside now to spend on this purpose?]

TD: No.

[Splendid.]

………………………..

[Does commercial radio have any money to spend on this proposal?]

PR: If you read the Digital Britain report in its totality, there are a number of proposals for changing the way commercial radio operates, in terms of co-location and regional licences becoming national networks. Now, bringing all of that together as a piece, will that free up sufficient additional funds for the commercial sector to be able to roll out more digital? I don’t know. You’ll have to ask the other commercial players.

[What’s your guess?]

PR: ‘No’ is the answer at the moment.

[Because one of the issues with DAB surely is that the commercial side of the equation has already, in commercial terms, failed. Increased costs, but no increased revenues. Not even Channel 4 was able to galvanise it to make it change. Is there a commercial model in DAB at all, do you think?]

PR: I think DAB is a terrific platform. The die has been cast. 9 million sets, 20% of all listening. DAB is here to stay. So, we can’t go back to not having DAB so actually we’ve got to go forward and we’ve got to go forward with as sufficient a pace as we can. My concern would be trying to go forward too fast and falling over ourselves.

[The government has said they want to do this in 2015. They have said that by 2013 they won’t press the button to switch off [FM] until …. They will give 2 years’ notice. So, by 2013, I think they want 50% of listening to be on DAB, and 90%+ coverage of DAB across the country. Is that timetable in any way realistic? The BBC say they have no money set aside just now. You say that you don’t. How’s it going to happen?]

PR: I think Tim famously used the euphemism ‘ambitious’ yesterday and I think ‘ambitious’ is the right word for it. Personally, I can’t see us getting to 2013 although, to be fair to the Digital Britain report, it says it will test it every year from 2013 and when we get there, then we will move on to Phase Two.

[Tim, lots and lots of listeners have contacted this programme and other programmes whenever they have been asked and are very very worried about this. They think they might have 3, 4, 5, 10 – 15 in one case – analogue radio sets and they have been asked to go through all the rigmarole of changing them and ‘what for?’ is the question they ask. ‘Why are you asking me to do this? It’s not broke, don’t fix it’.]

TD: If you look at the industry as a whole, you could argue that we are not ready for the future. Actually, although we have some fantastic services on-air now, we have just talked about commercial radio – their financial model looks pretty broken at this point.

[Isn’t the key question ‘content’?]

TD: I think the case to the listener is really clear, which is – digital radio can present a much wider range of national stations, it can offer functional benefits. We’ve seen what that can bring in something like television. There is a real challenge for the industry to step up to the plate and deliver that content, and that has to happen. And, to be very clear, I am very worried, like the listeners, that if you have all these old [analogue radio] sets and there is no benefit, we should not be moving. What’s happened in the last few weeks though, and months, is that the radio industry as a whole has said ‘we’re going to go for DAB and we’re going to try the transition to digital’. We haven’t said that it is actually happening until we’ve earnt that, which will be at a threshold level.

DAB radio in cars by 2013? – "extremely challenging" say car makers

The UK association of car makers, the Society of Motor Manufacturers and Traders [SMMT], has cautiously welcomed the Digital Britain report but has expressed “reservations about the ambitious timetable” to ensure that DAB radios are available in all new cars by 2013. It has also expressed concern about the 32 million vehicles already on the road, of which it says “only a small percentage” already have DAB radios fitted, noting that the timetable to fit them with “aftermarket devices” is “extremely challenging”.

SMMT has emphasised that the government’s ambition to accelerate the take-up of DAB radio will be “contingent on all national and commercial broadcasters investing in content”. Its Chief Executive Paul Everitt said: “The long-term challenge will be for the broadcasters to invest in content and coverage to create demand for these [DAB radio] products to be provided as standard”. The commercial radio industry has yet to make explicit statements, in the wake of the Digital Britain report, as to how it plans to enhance its exclusive digital radio content to accelerate consumer interest in the platform, or how it plans to finance the build-out of necessary DAB infrastructure upgrades to improve UK coverage.

The Digital Britain report had set out a five-point plan to encourage take-up of DAB radio receivers in cars:
· to work with car manufacturers so that vehicles sold with a DAB radio are available by the end of 2013
· to support a common logo for DAB car radios
· to encourage the development of portable analogue-to-digital radio converters
· to promote the introduction of more sophisticated traffic information within DAB broadcasts
· to work with European partners to develop a common European approach to DAB radio in cars

The last of these points has already received a setback, following the decision last week of commercial radio in Germany and Switzerland not to commit investment to the development of DAB as a replacement platform for their existing FM/AM services. An announcement from Austria is anticipated soon.

Asked about the DAB situation with cars, Tony Moretta, Chief Executive of the Digital Radio Development Bureau [DRDB], the agency charged with marketing DAB in the UK, had said on BBC Radio 4’s ‘You & Yours’ show last week:

“One of the things that has held back the car industry slightly with DAB in the UK is that the UK has been ahead of the rest of the world in going to digital radio. Now if you’re a mainstream car manufacturer, you want to be able to manufacture a car with a radio that will work all around Europe. It’s only been relatively recently that you’ve seen France and Germany and other countries commit fully to digital radio. And so the car manufacturers now have a common standard they can build a radio into their car and it can work across the whole of Europe. So you’re starting to see a big change now. Most car manufacturers now offer DAB as standard in a car or as a factory-fitted option starting for as little as £55. So that’s for new cars, and we saw the other day Ford and Vauxhall announce their support for Digital Britain’s recommendations. What we are going to have to do is look at adapting those cars that haven’t been changed by that point.”

The DRDB has cited the more enthusiastic Ford and Vauxhall responses to Lord Carter’s Digital Britain report, but has not yet mentioned the considerably more “cautious” SMMT response. It should be noted that Ford has been a long time minority shareholder in the MXR regional DAB multiplexes, and thus would benefit financially from improved uptake of the DAB platform in the UK, whether in-car or otherwise.

In-car DAB radios are still a rarity in the UK:
· Out of 2.4m new vehicles registered in the UK in 2007, only 20,000 buyers chose to install a DAB radio
· Out of 34m cars on the road in the UK in 2007, it is estimated that between 170,000 to 200,000 had DAB radios fitted.

Commercial radio in Germany and Switzerland rejects DAB radio

The commercial radio industries in Germany and Switzerland have both rejected proposals that they should invest in developing the DAB digital radio system in their countries to replace existing FM/AM transmissions. The German argument against DAB was that the significant investment required simply did not justify the lengthy wait for a financial return, based on evidence from other European countries that have already introduced DAB radio.

This news is a blow to UK broadcasters and technological companies who have long hoped that the DAB system would become the pan-European digital radio broadcast standard. In June 2009, the Digital Britain Final Report had proposed the government would “work with our European partners, including the European Commission, to develop a common European approach to digital radio”. This proposal drew on the work of its predecessor, the Digital Radio Working Group, whose Final Report had noted in December 2008 that “Germany has plans to launch DAB+ across the country in 2009, while France will launch DMB audio services at around the same time”.

Not only do the German and Swiss announcements impact the prospects of UK consumers benefiting from economies of scale that could have reduced the retail prices of DAB receivers. They also throw doubt over the willingness of European car manufacturers to install DAB radios in new cars, if the broadcast technology is still only implemented in a handful of countries. A week ago, UK technology company Imagination Technologies, whose processors are used in over 80% of DAB radio receivers, had said that “recent announcements from France, Germany, Denmark and Eastern Europe …. mean that the global market for digital radios and digital radio technology is due to take off”. Frontier Silicon, the UK’s leading supplier of DAB radio chips, had announced a US$10m investment in production of a new advanced DAB chip at the beginning of 2009 and had noted that “penetration of DAB radios in the year continues to rise, with ageing analogue broadcasting systems [due to be] switched off in Switzerland ….” The profitability of both companies is very dependent upon the uptake of DAB technology more widely than only their home market.

In Germany, the association of private broadcasters (VPRT) issued a statement on Thursday which said: “The conditions required for a successful introduction, always a prerequisite, have not been met. … For VPRT’s private radio companies, the significant initial and operating costs are too great. Against the backdrop of the economic crisis, such investments are a certain risk. … The VPRT member radio companies have, therefore, concluded that DAB+ has no economically viable future. Even with significant promotion of the system by public funds for at least the next five to ten years and under regulatory pressure, there is only a slim chance of partially recovering (the costs) within the market. Against this background, the VPRT speaks against the planned introduction of DAB+ in the autumn of 2009.”

The World DMB Forum, the international agency promoting the adoption of DAB technology, describes Germany as “among the leading European proponents of DAB Digital Radio” with 546,000 DAB radios sold to date and 116 different radio services available on the platform. Its June 2009 update said that “it is planned that by 2012 most of the German population will have access to the [DAB] services”. Without the co-operation of commercial radio operators, it now looks unlikely that this target will be met.

In Switzerland, the Association of Private Radios (VSP) issued a statement the same day as the Germans, which said: “Today’s ruling by the VPRT makes even more difficult the launch of DAB+ in the whole German-speaking world and VSP recommends that all members use realistic calculations before beginning.” VSP said that the pursuit of DAB radio could create an additional cost of 5 to 8 million Swiss francs “until break even is reached”. Whilst it acknowledged that such an investment could “make sense for strategic market reasons” for one or two players, for the rest of the commercial sector it felt that the financial requirements “exceed the entrepreneurial risk”.

Switzerland presently has around 20 million FM radio receivers, but only 300,000 DAB receivers and an unknown quantity of newer DAB+ receivers. The commercial radio industry there noted that it anticipates greater competition for radio listening will derive from internet-delivered services. Both German and Swiss commercial radio have warned that a phasing out of FM technology would lead to lower revenues, reduced investment and fewer jobs in their companies, and would thus reduce diversity of media voices in their markets.

At the same time, elsewhere in Europe, the decision by the French government that every new car in France will have to include a digital radio from 2012 is looking increasingly challenging. At the recent EBU Digital Radio conference, it was revealed that the decision had been made by the Ministry of Industry without the benefit of prior consultations with technology companies. The French media regulator, the CSA, is only now meeting industrialists this month to discuss the urgent requirement to manufacture car radios by 2012 that include the T-DMB digital standard (a variant of DAB) adopted in France.

Although both the DAB+ and the T-DMB technologies are part of the DAB family of standards, the overwhelming majority of the 9m DAB radios purchased to date in the UK are unable to process either DAB+ or T-DMB signals and would therefore be of no use in Germany or France. Swiss commercial radio, meanwhile, has expressed more interest in using another technology, ‘HD Radio’, which is not part of this DAB family of standards but is the digital radio broadcast system already used in the US and which requires altogether different radio receivers.

[Many thanks to Michael Hedges for his translations and for his excellent ongoing coverage of these issues in Follow The Media]

Digital Britain: is the 50% criterion for digital radio listening achievable?

Both Digital Britain and the final report of the Digital Radio Working Group which preceded it have placed considerable emphasis on one performance metric – the date when the proportion of listening to all radio via digital platforms surpasses 50%. This date will be a ‘trigger point’ for policy changes that will impact the entire radio broadcast industry and it is therefore important to ensure that the data used to determine it are entirely correct.

Figure 6 on page 93 of the Digital Britain Final Report is a graph that shows three things:
· Historical data for the share of all radio listening listened to on digital platforms from 2005 to date
· A trendline demonstrating how this share would continue to increase through “organic growth”
· A forecast demonstrating how this share would grow faster if a “drive to digital” were to be pursued.

In the Digital Britain graph, the historical data for digital platforms’ share of radio listening is shown as 7% at year-end 2005, 12% at year-end 2006, 17% at year-end 2007 and 20% at year-end 2008.

However, the historical data I have from RAJAR (the radio industry’s official radio ratings body) show these figures as 11.0% for year-end 2005, 12.5% for year-end 2006, 16.6% for year-end 2007 and 18.3% for year-end 2008.

So there may be minor differences in the precise numbers for each year, but is that really such a big deal in the overall scheme of things? Well, in this case, yes it is. Whilst the numbers look relatively close on paper, it is only when you draw them onto a graph that you can see the significant differences.


In the Digital Britain report, the trendline for continuing ‘organic growth’ demonstrates that the important 50% criterion would be reached in 2015. The government is proposing that, through a concerted “drive to digital”, that date could be brought forward to 2013. Left to its own devices, the 50% criterion would be reached six years from now, but concerted action could reduce that time to four years.

However, instead of using the data in the Digital Britain report, if a graph is constructed of the official quarterly data from RAJAR, the resultant trendline displays a noticeably less steep gradient. Using this industry data, the 50% criterion is unlikely to be reached through ‘organic growth’ until 2018. In this scenario, the government’s concerted “drive to digital’ would pose the challenge of reducing the interim period from nine years to four years.

Whilst it might seem realistic in Digital Britain to propose reducing a six-year period to four years through concerted action to push digital radio, the reduction of a nine-year period to four years represents a considerably more substantial challenge for the industry to achieve. Some might say it could prove impossible.

The issue becomes even more critical for the commercial radio sector when you realise that the Digital Britain report threatens to revoke stations’ licence renewals if the radio industry as a whole does not succeed in achieving this 50% criterion by 2013. In other words, the government is holding a gun to the radio industry’s head – either achieve this specific goal by 2013, or you may lose your livelihoods.

This is what makes this single dataset so critical to the future of the radio industry. Is the 2013 goal a reasonable target that can be realistically attained, as Digital Britain argues, or is it unrealistic if the interim period has to be somehow slashed from nine years to four years?

When you agree to join a game of poker, you should always check first that the odds are not overwhelmingly stacked against you winning.

[NB: The trend lines in the above graph are straight-line trendlines generated automatically by Microsoft Excel from the datasets, not my subjective judgement.]

[Thanks to Phil for sharing his concerns]

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.

Digital radio: never mind the content, feel the bandwidth?

“It’s a simple equation. The BBC has had an unfair share of the analogue spectrum but digital enables the commercial players the space to compete on a much more equal footing.”
Steve Orchard, operations director, GCap Media in Music Week, 9 December 2006, p.10.

For almost an eternity, the UK commercial radio industry has complained vociferously that it has been discriminated against because the BBC has the use of more analogue spectrum than it does. The argument has been made repeatedly that commercial radio will always ‘under-perform’ against the BBC as long as the BBC is allocated more space on the FM waveband. To support this argument, its proponents hold up the fact that the BBC has four national channels on FM, whilst commercial radio has only one (they choose to ignore the fact that, additionally, the BBC has 40 local stations on FM, whilst commercial radio has 200+ local stations on FM).

When DAB radio arrived a decade ago, there was a widely held notion within commercial radio that the new technology provided an opportunity to even the score with the BBC. Whereas the government was unlikely ever to re-allocate analogue spectrum to provide equal amounts to the BBC and its commercial competitors, in digital spectrum the commercial sector pushed ahead with DAB (before the BBC did) and a successful ‘land grab’ rewarded it with much more DAB spectrum than the BBC. The prognosis was that, in the future, DAB would replace analogue usage, and that the commercial sector’s dominance of digital spectrum would eventually reward it with the dominance over the BBC it craved.

It is difficult to say precisely how much more DAB digital spectrum the commercial radio sector has than the BBC. With DAB, there is a degree of flexibility because you have the choice to either use a section of spectrum for one station (in high audio quality) or for two or three stations (in lower audio quality). Commercial radio and the BBC each have one national DAB multiplex (though their coverage of the UK is not identical). Additionally, commercial radio has 46 operational local and regional multiplexes that cover the most populous parts of the UK. These multiplexes probably more than double commercial radio’s superiority over the BBC in DAB spectrum. But then commercial radio also leases some space on its local multiplexes to the BBC for its local stations. This makes comparisons complicated.

Whatever the detail, it is obvious that commercial radio has control of far more DAB digital spectrum than does the BBC. To compound the situation, commercial radio also has control of far more Freeview digital radio spectrum than does the BBC. So, as had been hotly anticipated a decade ago, surely by now commercial radio must have the upper hand over the BBC in digital radio listening. The answer is ‘yes’ – commercial radio had almost been winning the digital race – and ‘no’ – it is no longer. In fact, the latest RAJAR data show that commercial radio’s share of digital listening (40.5% in Q1 2009) has fallen below its share of analogue listening (41.6% in Q1 2009) for the first time.

These data cover all digital listening to all stations available on digital platforms (including simulcasts of analogue stations). However, because of the RAJAR methodology, the data do not include time-shifted listening to ‘listen again’ and ‘podcast’ radio content. These are both areas in which the BBC offers far more content (and markets it much more heavily) than does commercial radio. If it were possible to incorporate this time-shifted listening into the above data (which it is not), it is likely that commercial radio’s share of listening would be much lower than its present 40.5% via digital platforms.

The long-held belief that commercial radio would somehow automatically win the war with the BBC on digital spectrum purely because it controlled more spectrum had always been mistaken. This belief assumes, somewhat bizarrely, that each consumer randomly spins their radio dial and then leaves it on whatever frequency the radio has landed on. Only by utilising such a random system of selection would usage ever be proportionate to the amount of spectrum. Unfortunately for the commercial radio sector, consumers are not mindless idiots. Anyone endowed with an Economics GCSE can easily see the gaping holes in this notion. Apparently few in the commercial radio industry could.

Consumers make choices and the radio station they decide to listen to is the one from which they expect to derive the most ‘utility’. This is why ‘content is king’. This is why BBC Radio Two and Three both use equal amounts of spectrum, but the former has a 16% share, and the latter 1%. And this is why one fantastic radio station will always attract more listening than any number of mediocre ones (viz Atlantic 252, Laser 558, Luxembourg 208). It is not about how much spectrum you occupy, but about what you do with it. Consumers are motivated to listen by your content, not by your spectrum.

For commercial radio, after a decade of trying to convince itself and others that its abundance of digital spectrum would somehow entitle it to automatically trash the BBC, the dream (and it was a dream) is now over. Belatedly, it is back to the drawing board. As the BBC, PrimeTime, Bauer and Planet Rock have demonstrated, if you put some content on digital radio that consumers want to listen to, then they will listen (if they are made aware it exists through a marketing campaign). Digital radio would have a lot more listeners today if that simple truism had been understood by more players in the commercial radio sector a decade ago.

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?

UK Commercial Radio in numbers: Q4 2008

Click here for my latest presentation containing data for the UK commercial radio industry’s key performance metrics in Q4 2008 on revenues, audiences and receiver sales.

Revenues

Commercial radio had started 2008 positively with revenues in Q1 up 7.3% year-on-year. After that, everything slid downhill. Q2 revenues were down 10.1%, Q3 down 7.8% and Q4 down 14.5% year-on-year. 2008 ended with Q4 revenues of £129m, the worst performing quarter since 1999. However, in 1999, only 244 commercial radio stations had been licensed, whereas that total now exceeds 300. The result is a revenue squeeze on commercial radio businesses unseen since the 1990/1 recession.

The present situation is a direct result of a severe contraction in national advertising expenditure on radio, the last three quarters’ totals having been down 15.9%, 12.2% and 21.2% respectively year-on-year. Whereas, in 1990, national advertising had accounted for 47% of commercial radio’s total revenues, by 1999 it was contributing 67%. National advertisers’ enthusiasm for radio had contributed significantly to the commercial sector’s growth in the 1990s, but it has also made the medium more vulnerable to national economic trends and the shifting marketing priorities of the big brands.

Although more concentrated sector consolidation had once been touted as the saviour of the commercial radio industry, the sector is now in grave danger of being crucified by the very policy for which it had lobbied. Two owners now control two thirds of the UK commercial radio industry, which would render the potential failure of one of them a catastrophe of hitherto unseen magnitude. Current economic pressures are likely to create casualties at both ends of the scale, with some smaller radio groups proving just as likely to run out of cash as their larger rivals. Whether your radio group’s bank loan is £2m or £100m, debt servicing has now become your biggest headache.

Audiences

With so much industry attention focused on sharply falling revenues and the necessity to cut group central costs and station overheads, it is inevitable that investment in content has not been a current priority for many players. Total hours listened to commercial radio (427m per week) have continued their long-term decline, with Q4 2008 being marked as the second worst quarter this millennium (Q1 2008 was the worst). Although commercial radio’s audience reach has been maintained, average time listened fell back to 13.7 hours per week in Q4 2008, equal to the all-time low in Q1 2008.

The blame for these declines can be laid at the ears of listeners aged under 35, who are choosing to spend less time with commercial radio. Over the last eight years, 15-24 year olds’ listening to commercial radio has fallen from an average 15.3 to 12.8 hours per week, while 25-34 year olds’ listening has fallen from 16.1 to 13.1 hours per week over the same period. These changes, combined with the declining numbers of these younger demographics within the UK population, can only make commercial radio more susceptible to long-term decline.

At the same time, the BBC continues to chip away at commercial radio’s ‘heartland audience’ of 15-44 year olds, with Radio Two maintaining its position as the UK’s most listened to station. In London, the BBC performed particularly well in Q4 2008, pushing commercial radio’s share of listening below 50% for the first time probably since the early 1990s. As noted previously, commercial stations outnumber BBC stations in London by a factor of three, demonstrating that it is ‘quality’ rather than ‘quantity’ that creates success with listeners.

Digital Radio

The grim figures for digital radio only add to the commercial sector’s woes. Although cumulative sales of DAB receivers passed 8.5m in Q4 2008, unit sales were down 10% year-on-year, the first occasion that the vital Christmas quarter has exhibited negative growth. The danger is that the relatively high price tag of DAB radios will not entice buyers in Credit Crunch UK, particularly when the content offered on the platform is not being expanded or enhanced.

It is ‘content’ that continues to hold back digital platform growth. Only 4.6% of commercial radio listening was attributed to digital-only radio stations in Q4 2008, the lowest level since 2007, and a consequence of several commercial digital station closures in 2008. An increasing proportion of commercial radio listening via digital platforms is to stations already available on analogue (76% in Q4, up from 72% a year earlier) which demonstrates that exclusive digital content is not effectively driving consumer uptake.

Although the radio industry has been busy with discussions about the future of the DAB platform for more than a year now, almost nothing has changed from the perspective of the consumer. In Q4 2008, Bauer closed five-year old Mojo Radio, Sunrise closed five-year old Easy Radio, and Islam Radio in Bradford closed. The revived Jazz FM replaced GMG brands on four regional DAB multiplexes, but owner The Local Radio Company is already seeking a sale of this digital station.

As noted previously, many of the remaining digital-only stations (both commercial and BBC) suffered significant audience losses in Q4 2008.

Commercial Radio Station Transactions

As yet, there has been no announcement from Global Radio as to the sale of its local stations in West and East Midlands that had been required by the Office of Fair Trading in August 2008 as a condition of its acquisition of GCap Media.

On 31 August 2008, Global Radio quietly handed back the AM licence for its Gold brand in Exeter and Torbay. On 23 December 2008, UTV closed its Talk 107 station in Edinburgh. On 30 January 2009, Abbey FM in South Cumbria was closed by joint owners CN Radio, The Local Radio Company and The Radio Business. In November 2008, CN Group had said it would close its Touch FM stations in Coventry and Banbury if it did not find a seller, but nothing further has been reported. Ofcom decided at its November 2008 radio meeting to “start formal licence revocation proceedings” against KCR FM in Knowsley which has been “failing to broadcast in line with its licensed format” since 24 October 2008.

In September 2008, UKRD sold Star Radio in Cheltenham to a local company, and The Revolution in Rochdale to Steve Penk. Tindle Radio sold Dream 107.7 in Chelmsford to Adventure Radio in September 2008, and sold Dream 107.2 in Winchester to Town & Country Broadcasting in November 2008. In January 2009, UTV sold Imagine FM in Stockport to Damian Walsh. In February 2009, UKRD sold Star Radio in Bristol to Tomahawk Radio. No prices were reported for any of these transactions.

The insolvency of Laser Broadcasting in November 2008 resulted in control of five of its licences – Bath FM, Brunel FM in Swindon, 3TR in Warminster and QuayWest in Bridgwater and Minehead – being transferred to Southwest Radio. It appears that control of Laser’s Sunshine FM in Hereford & Monmouth has transferred to Murfin Music.

The Local Radio Company, one of only two remaining plc’s in the radio sector, is seeking to raise £1.51m gross through a share issue. The company’s auditors noted on 5 March 2009 that “until it is successfully completed there remains in existence a material uncertainty which may cast significant doubt about the Company’s ability to continue as a going concern”. These concerns, which could apply equally to several other radio groups, are likely to result in a rash of transactions and an unprecedented number of station closures during the rest of this year.