Tag: local radio

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.

Localness: please, sir, can I have some less?

The government’s announcement that an independent review group will look at the ‘localness’ issues relating to content on commercial radio could re-ignite a war of words between the stakeholders that a year ago ended in a tense ceasefire. Last time, hostilities between the large radio owners and Ofcom became elevated to such an extent that the regulator’s chief executive Ed Richards even used the Annual Ofcom Lecture to chastise the commercial radio industry for its persistent lobbying to loosen its ‘localness’ obligations:

“Some [radio owners] have called for a huge relaxation in relation to localness, some in the industry even call for a complete removal of all regulation. They believe that localness is either no longer valued or that its value is significantly outweighed by its cost. The problem is that the evidence is to the contrary. What our research tells us is that people continue to want to hear local programming. …. But we are not convinced that the market alone will deliver this if left to its own devices. We recognise very clearly the significant economic challenges faced by the radio sector, but our forthcoming proposals will not involve eliminating the obligation to deliver local programming or its reduction to a negligible level.”

Ofcom subsequently published its policy statement on localness in February 2008 and although, on the surface, it might have looked as if a ceasefire had broken out between the two sides, behind the scenes the industry’s lobbying for further reductions of its ‘localness’ obligations continued regardless. Ofcom had estimated that its policy changes would save the radio sector £9.4m to £11.7m per annum from a cost base of around £620m. For the radio industry, these potential savings were simply not enough. Andrew Harrison, chief executive of RadioCentre, argued that “the heavy burden of the existing localness regulation and legislation [..] is holding back current profitability and future investment in the sector”. By December 2008, industry lobbying had succeeded in persuading the Digital Radio Working Group to recommend in its Final Report that:

“commercial radio must be given greater freedom to shape its digital future to provide a sustainable future for local radio in a digital world through a relaxation of analogue localness requirements………”

and to comment that:

“…. a model which focuses so heavily on where content is made may not be the best way to deliver either what listeners will most want in the future or allow the industry space to grow. We therefore recommend that the commercial radio sector, Ofcom and the government should look closely at the current localness regime in the coming months……..”

What proved interesting about last week’s government announcement of the independent review into ‘localness’ was that it contained no mention of Ofcom whatsoever. Even though the press release noted that the review would examine “to what extent are the current requirements for a pre-determined number of hours of local content, and the locality in which content is produced, appropriate and sustainable”, as implemented by Ofcom, it did not mention the regulator by name. This omission is downright weird. The Communications Act 2003 states clearly that:

“It shall be the duty of OFCOM to carry out their functions in relation to local sound broadcasting services in the manner that they consider is best calculated to secure: (a) that programmes consisting of or including local material are included in such services but, in the case of each service, only if and to the extent (if any) that OFCOM consider appropriate in that case; and (b) that, where such programmes are included in such a service, what appears to OFCOM to be a suitable proportion of them consists of locally-made programmes.”

Furthermore, the Act states that “OFCOM must: (a) draw up guidance….” and “OFCOM may revise the guidance from time to time”, but it “must consult” licence holders and stakeholders beforehand. The legislation is crystal clear as to where the responsibility resides. What we are seeing in the government announcement is an intervention at a higher level as a result of perceived dissatisfaction with the way that Ofcom has implemented its responsibilities on this “particularly contentious” issue, as Ed Richards described it

Ofcom’s 2007 consultation on ‘localness’ in radio had elicited 43 responses and the regulator “noted the calls from the commercial radio industry for a reduction of locally-made programming….” Ofcom stated determinedly: “We believe that our proposed guidelines already represent a substantial deregulation of locally-made programming in many cases”. However, it looks as if further lobbying has undermined the Ofcom position, and the regulator is now being sidelined by direct government action on this issue, which could lead to new legislation or to new implementation of existing legislation.

So what precisely does the commercial radio industry want changed by Lord Carter in Ofcom’s localness requirements?

  • local commercial stations required to broadcast no more than 4 hours a day of locally made programming
  • regional commercial stations not required to broadcast locally made programming
  • local news broadcasts on local stations can be produced in centralised newsrooms
  • stations serving populations of less than 750,000 (i.e.: two thirds of the UK’s stations) permitted to locate their studios outside the area they serve
  • the 4 hours a day of ‘local’ programming can be simulcast across co-located stations and still count as locally made programming.

And what concessions would the commercial radio industry offer Lord Carter in return for its newly, co-located, networked content, ‘local’ stations?

  • news bulletins (not all local) 13 hours a day on local stations
  • news bulletins 24 hours a day (not all regional) on regional stations (13 hours a day on specialist music stations)
  • extended news bulletins (of unspecified length)
  • a commitment to safeguarding stations’ remaining local content (weather, traffic, what’s on, charity appeals, community information)

However, these demands and concessions position the ‘localness’ issue strictly in the context of content regulation. In fact, there is a much bigger game being played out, which concerns the further investment required in the DAB platform to try and make it a success with consumers. Essentially, the commercial radio industry is trying to put a gun to Lord Carter’s head and is demanding: ‘we won’t invest any more money in DAB to make it work, unless you stop Ofcom making us do local things we don’t want to do’.

The initial response to the commercial radio lobby was likely to be: ‘you acquired all these local radio stations, knowing that they had localness obligations. If you wanted a national radio station, why didn’t you buy one of those instead?’ It does seem a bit like Stagecoach begging the government to transform its local bus routes into a national coach service. However, Lord Carter is trying to grapple with the issues and forge a compromise whilst still insisting that “government can not, nor should it, be the main driving force for digital radio”.

The biggest danger here is that the ‘localness’ issue becomes a mere sideshow to the much more politically and commercially significant decision over the future of the DAB platform. As such, ‘localness’ risks becoming a mere pawn in a complex set of negotiations that are essentially designed to maintain the balance sheet valuations of the largest radio groups which have already made significant investments over a decade in costly DAB infrastructure.

Sadly, this is not the first time that the ‘localness’ issue has been invoked merely as a quid pro quo within a much bigger game. In the original Bill that became the Communications Act 2003, there was no ‘localness’ clause for local radio, just as there never had been in previous broadcast legislation. It was inserted at the last minute as what the then Minister for Broadcasting, Dr. Kim Howells MP, admitted was “the quid pro quo for greater liberalisation in the radio market”, allowing more concentrated ownership of local radio than the Bill had originally proposed. In the ensuing House of Commons debate, Michael Fabricant MP successfully stoked the flames of fear:

“What if Clear Channel – a United States organisation for which I have a considerable respect, but which the [UK commercial radio] industry is rather concerned about – were to acquire a number of radio stations and found that it could pull in large audiences, based in the US, and not be all that local? Its presenters could be based in New York, for example, and it could put in pre-recorded local identifications. Everything could be done on a PC-based system. The stations would sound like local radio, even though they were not; and, because they had a good playlist, they might pull in a big audience. Would we not want back-stop powers in such a case?”

Six years later, neither Clear Channel nor its competitors have bothered to enter the UK radio market. Instead of the then touted prospect of US-financed global radio, we now have Irish-financed Global Radio wanting to run as much of its UK local radio empire as possible from Leicester Square. At the end of the day, for the listener, does the distinction matter whether a local radio station’s studio is in New York or New Bond Street? If I were a listener in NorthEast England, when I choose to listen to local radio, rather than national radio, if it does not fulfil my desire for ‘local’, then it offers me zero utility. If I am digging my car out of a three-foot snowdrift and the jolly ‘local’ radio presenter does not mention the inclement weather from her faraway studio, it simply isn’t local radio.

Surely, a ‘localness’ policy for radio should put the citizen/consumer/listener at the heart of its doctrine, something which Ofcom policies to date have failed to do. But neither does the commercial radio industry come out of this smelling of roses. I have yet to see one UK case study backed with evidential data which demonstrates that a decrease in local content on a local radio station has resulted in audience growth. Reduced costs? Yes. Improved profit margins? Yes. But local commercial radio stations have always been gifted scarce analogue radio spectrum for free, in return for their public service content commitments. A local radio station that is not trying to maximise its audience but, instead, aims to maximise profits by reducing costs, cutting local content and knowing full well that its audience will inevitably decline, would seem to be misusing valuable spectrum.

It remains to be seen whether this latest initiative to review radio’s localness requirements will result in new regulation that finally puts the listener at the centre of its policies, rather than simply responding to the needs of either the box-ticking regulator or the de-localising, large radio groups.

On a personal note, over several years I researched the issue of ‘localness’ and ‘localism’ in local radio, and I wrote an unpublished paper a year ago that examined the issues and suggested a way forward that would reinstate the local radio listener at the heart of localness regulatory policy. If the laws or regulatory regime do have to be changed, my only hope is that they are changed for the better, and not for the worse.

Digital Britain: the devil is in the indefinite article

Commenting last week on the publication of the government’s Digital Britain report, RadioCentre Chief Executive Andrew Harrison said that “the devil will be in the detail”. Absolutely true because, sometimes, a single word can tell you more about the direction that government policy is taking than a weighty tome. In the case of DAB, the wording of the Digital Britain report raised one such question: does the government want the DAB platform to supplement FM/AM radio, or does it want DAB to supplant it?

The Final Report of the Digital Radio Working Group last December had recommended:
“DAB as the primary platform for national, regional and large local stations” [emphasis added].

However, last week’s Interim Report of Digital Britain made a commitment:
“to enabling DAB to be a primary distribution network for radio” [emphasis added].

This may seem like an insignificant detail but, for the radio industry, it certainly is not. If DAB is to be the primary platform, the implication is that if your radio station is not available on the DAB platform, your business will be marginalised. It implies that the FM and AM platforms will be closed down, which would be a disastrous outcome for smaller commercial radio stations who may not be able to afford the cost of DAB transmission and/or who cannot find space on their local multiplex (if that multiplex even exists) [see ‘Committed to its listeners’].

On the other hand, if DAB is to be a primary platform, the implication is that it will be available to consumers as an adjunct to existing FM/AM radio and to IP-delivered content. In this scenario, the ideal radio receiver of the future will be one which, to the user, is ‘platform neutral’ but has capabilities to receive DAB, FM/AM and IP. The user would simply select “Radio 4: live” on the radio’s interface and the radio itself would determine which was the most reliable delivery platform in that location to serve Radio 4 live. Or, the user might select “Radio 4: The Archers” and it would deliver the most recent episode by IP.

Strangely, the subtle difference between “a” and “the” seemed to be ignored by some stakeholders:

Laurence Harrison, director of consumer electronics at Intellect, said:
“This commitment to DAB as the primary distribution network for radio is exactly the sort of strong and decisive leadership we wanted to see from government” [emphasis added]

Frontier Silicon, in its first press release:
“…..welcomed the Government’s commitment to DAB as the primary distribution network for future radio broadcasting in the UK” [emphasis added]

Frontier Silicon, in a second press release:
“…..the Government’s endorsement of the digital migration of radio and commitment to DAB as the primary distribution network for future radio broadcasting” [emphasis added].

The precise wording was also reported badly by some media:

The Guardian’s Media Monkey wrote:
“….DAB radio was the ‘primary distribution network’ for radio….” [emphasis added].

The Sunday Times wrote:
“….DAB digital technology, set to become the ‘primary distribution network’ for radio….” [emphasis added].

The Daily Mail wrote:
“Lord Carter, the Communications Minister, said: ‘We are making a public commitment to DAB as the primary distribution medium’…” [emphasis added].

The Telegraph wrote:
“The Digital Britain report…… gives a firm commitment to digital radio (DAB) as the primary way of listening to content in the future” [emphasis added].

The BBC wrote:
“The culture secretary said digital audio broadcasting (DAB) will become the ‘primary distribution network’…..” [emphasis added].

No wonder the public is confused. The potential implication of the Digital Britain report on areas of the UK where DAB reception is presently non-existent is just starting to be realised. “FM reception in Eden Valley may disappear” said one local Cumbria newspaper headline yesterday. More coverage like this will inevitably follow.

How many civil servants must have scoured the precise wording of the Digital Britain report before it was published? The change of emphasis from “the” to “a” is unlikely to have been accidental. If the DAB platform were to fail (no acceleration in consumer take-up, no increased exclusive content), then the government will find it needs a ‘get out of jail free’ card. The word “a” provides it with the perfect caveat, next month, next year, whenever.

Abbey FM – the tip of an iceberg

Nobody likes to see radio stations close. Nobody likes to see committed radio staff thrown out of their jobs. Nobody likes to see the population of a town deprived of having their own local radio station. Nobody likes to see local businesses of any type disappear.

Abbey FM in Barrow closed at 3pm yesterday after two years on-air, with six full-time staff and six freelancers made redundant. The station was jointly owned by The Local Radio Company [TLRC] (35%), CN Group (30%), and Martyn Rose Ltd. (35%).

Station manager Amanda Bell said yesterday:
“This also means that Barrow will never again have its own radio station. There won’t be another licence issued for Barrow. It was very, very sudden. We had the support and backing of all three shareholders until three weeks ago, when TLRC withdrew their support, which forced the hand of the other shareholders. I was only told of their decision at 12.30pm today. We were doing extremely well and heading towards making profits until July last year and then the economic situation got worse……”

Robin Burgess, CN Group chief executive, said yesterday:
“Abbey started broadcasting in late 2006 but unfortunately has never been profitable. In the present economic climate and, in particular, the effect the recession is having on media revenues, the directors saw no realistic prospect of the station getting into profit in the foreseeable future.”

But can this closure so easily be credited solely to the advertising downturn? Or is its closure a symptom of a much wider issue concerning the licensing of small commercial radio stations in the UK? Both Amanda and Robin mentioned the station’s lack of profitability – what is the real problem?

Abbey FM served an area of only 84,000 adults. It was one of the 21 local commercial radio licences that Ofcom has awarded to date which serve populations of 250,000 or fewer adults. Ofcom’s own research found that local stations serving between 50,000 and 150,000 adults make an average annual loss of £20,000. However, by continuing to licence new stations serving populations as little as 39,000 adults, Ofcom has created even more local stations that are mostly condemned never to make an operating profit. Worse, new stations tend to cannibalise the audiences of existing local commercial stations heard in the same area.

The problem is that, in its radio licensing system, both Ofcom and most of the applicants for its licences embark upon a merry dance together that has little basis in real world radio economics. Ofcom appears to advertise new licences such as Abbey FM’s without any prior analysis of whether the local economy, Barrow in this case, can produce enough new advertising revenues to support a new local station.

Licence applicants submit to Ofcom a business plan (in confidence) and the imperative is almost always to make the figures fit so that the station looks as if it will break even by the end of its third year on-air. This is the greatest stress point for truthfulness. The smaller the station, the less likely it will be (in reality) to break even in Year Three. To make this breakeven work ‘on paper’, the smaller the station, proportionately the greater its projected audience has to be (because radio is largely a fixed cost medium).


Abbey FM acknowledged in its application that “a long-term investment strategy is what is required for this station; there are no short cuts to sustainable profitability”. However, its forecasts for the station’s performance were the outcome of market research which concluded that “66% of all radio listening adults in Barrow would be definitely, very likely or fairly likely to tune in to a new station….” The application then asserted that “a combination of experience and prudence has dictated that we forecast reach of 17% in year 1 rising to 23% by year 3”.

This is voodoo forecasting, where the audience figures are often calculated as the last part of the puzzle to be solved (after profits, revenues and costs), rather than making them the cornerstone of the business plan. This is not intended as a specific criticism of the Abbey FM application. It is an inherent failing of most radio licence applications submitted to Ofcom. The bigger problem is that, if you were to honestly appraise the potential audience of such a small station, the financial forecasts would be unlikely to ever show an operating profit. Put simply, a radio station this small is often not a going concern. Yes, Abbey FM had failed to achieve its targets, but those targets were probably fictional anyway.

However, the merry dance continues because Ofcom exists to licence new stations (even if they are likely to fail), and most radio groups think they exist to win radio licences (even if they are likely to fail). As a consequence, by opening more loss-making stations, the overall profitability of the UK commercial radio sector becomes increasingly eroded, until the profitability of an entire group is weighed down by the number of loss-making stations it is trying to support.

Ofcom often comes close to acknowledging that these small local stations are destined to fail when it explains why it has awarded their licences. For Abbey FM, Ofcom said that:
“…..the committee felt that the backing of three shareholders with, collectively, extensive and current experience of operating smaller radio stations enhanced the likely ability of Abbey FM to maintain its proposed service. The group’s business plan was considered to demonstrate a good understanding of the local market and of the issues that the new station may face, and the ability to save costs through resource-sharing with nearby stations was felt to further enhance the strength of Abbey FM’s financial proposition.”

In other words, this new station will need to be subsidised for an indeterminate number of years by other, profitable stations owned by the same group(s). This is why, almost on every occasion, new small, local stations are awarded by Ofcom to owners that already have radio stations, often in a nearby area. In Abbey FM’s case, CN Group’s station The Bay already enveloped the entire Abbey FM area. Would it not have made more sense for Ofcom to offer the citizens of Barrow a local opt-out of The Bay, so they at least would benefit from some of their own local programming? As it is, they are now left with nothing at all.

So who is to blame? Firstly, Ofcom for having advertised small local licences in the first place which are condemned never to be profitable. A business is not a business unless it covers its costs. Secondly, radio groups who (collectively) have applied for every radio licence advertised by Ofcom. There has not been a single licence, however small, that has not attracted at least one applicant. Thirdly, Ofcom (again) for not having the guts to NOT award a licence to any applicant in an area, where it is plainly obvious that none of the applicants are telling the truth in their business plans and stand almost no chance of ever making a profit. Fourthly, radio groups (again) for seeing each licence win as a way to enhance their balance sheets, regardless of whether those licences can ever be made into profitable businesses.

So the merry dance between radio owners and Ofcom (and its predecessor) has led us to where we are today. Sadly, Abbey FM is merely the first of many local stations that will have to close in 2009. This is not the way it should be. I did not spend the 1970s and 1980s campaigning for MORE local radio stations (ComCom, CRA, etc) to see them close down like this. However, I don’t know of a single, small radio group that is presently not willing to discuss selling some or all of its stations. In my own backyard, there is a local station which is likely to sell soon for £1, or close. Never before have there been so many sellers and yet a complete lack of buyers for local radio.

Abbey FM, RIP. The losers are the citizens of Barrow. The UK radio licensing system has failed them. Why does it appear that no one is willing to step forward and take responsibility (just like the financial sector) for such institutional failures?

Heart disease – turning 'big fish/small pond' into 'big pond/small fish'?

Today has seen Global Radio extend its Heart FM brand to more local markets in England, replacing heritage names such as Chiltern, Hereward and Broadland that seem to have existed for decades. There seem to be at least three different issues involved in these changes:

1. The loss of ‘heritage’ station names. One of radio’s biggest long-term challenges has always been the difficulty users have had finding stations on their analogue radio and identifying them properly. The more crowded the AM/FM wavebands become, the more imperative this ‘finding’ and ‘identifying’ becomes. In the early days of UK commercial radio, most station names did not include their frequencies simply because there was so little choice on the dial. Although the switch to Heart FM does not involve frequency changes, it is bound to cause confusion amongst some listeners that their radio might have tuned to something other than their favourite station. If they then switch the dial, there is the potential to lose their listening to a competitor. Anything that encourages dial twiddling can only be a bad thing.

2. Brand duplication. In markets such as Bedfordshire, Heart FM was already heard across parts of the area from the Londonwide station of the same name. In Dunstable/Luton, Heart FM London attracted a 3.1% share, compared to local station Chiltern FM’s 8.6%. From now on, two Heart FM’s can be heard on different frequencies. How exactly will RAJAR determine if a respondent in Bedfordshire was listening to Heart FM Dunstable or to Heart FM London, particularly at times when they carry the same programmes? For the consumer, is this not reducing the content choice in the market? For Ofcom, is this not wasteful duplication of frequencies, something for which the commercial sector has always been quick to point an accusing finger at the BBC?

3. Networked programming. Heart FM stations will retain local programming on weekdays 0600 to 1000 and 1300 to 1900. The PR script from Global HQ to be used as quotes in the local press runs:
“We have increasingly found our listeners have more than just a local outlook. They read national magazines like Hello and Heat, they watch national TV shows and they surf the net, too. As well as local news and information, listeners are telling us they want more showbiz gossip, more celebrity interviews and a bigger professional sound from their local station. Currently, they have to switch to national stations like Radio 1 and 2 to get this.”
The networked shows on Heart FM are presented by Toby Anstis (1000 to 1300), Matt Wilkinson (1900 to 2200), Simon Beale (2200 to 0100) and Gareth John (0100 to 0600). I am sorry but, when you compare this talent to the name presenters and significant editorial content on Radios One and Two, it pales by comparison.

The problem? Global Radio, just like GCap Media before it, and GWR Group before that, bought a bunch of local commercial radio stations and wanted to turn them into something they are patently not – an almost, kind of, quasi-national station. In the UK, we have local commercial radio stations licensed to serve local populations, and separately we have national commercial radio stations licensed to serve national audiences. They are different. If I were to buy a grocery store in Dunstable, and then I buy a similar store in Luton, and suddenly hang an identical sign on the front of both of them that says “Global Supermarket”, it does not automatically put me in the same league as Tesco, Asda or Sainsbury. Surely, the way a local shop can thrive commercially is by striving to perfectly complement the offerings of the big supermarkets, not by trying to emulate them. As a consumer, if I want Asda, I will go to Asda. If I want Radio Two, I will go to Radio Two, not jumped-up, local-ish, quasi-national Heart FM.

Global Radio’s aspirations ‘to make a station what it is not’ are no different than many previous radio station owners. When Jazz FM won the first specialist music licence in London, its owners tried their hardest to make it anything other than a jazz music station. When EMAP bought KISS FM in London, it wanted it to compete head-on as a pop music station with Capital FM. When EMAP bought Melody Radio in London, it wanted it to be anything other than an easy listening station. A succession of owners of Virgin Radio tried to make it anything other than a straight ahead rock music station. Now that Global Radio has bought Choice FM, it seems to want it to be another KISS FM, rather than a station for black Londoners. I could go on and on…. The wheel is being constantly reinvented day in, day out. Many times, in radio, it turns out square.

Forgive me a short anecdote. Soon after it had opened, I visited the new local commercial radio station for Reading called Radio 210 for a guided tour. I lived only 14 miles away, but I could not pick up the station’s signal because its transmitter covered only the city of Reading. In 1979, the station had a weekly reach of 41% adults and cumed 2.4m hours/week [JICRAR]. Between then and now, the station’s owners lobbied the regulator successively (and successfully) to allow them to extend the station’s area by adding relay transmitters and increasing power outputs. Today, that same station covers most of Berkshire, North Hampshire and as far west as Andover, which is almost 50 miles from Reading (does anyone in Andover feel a connection to faraway Reading?). Today, Radio 210’s weekly reach is 28% and it cumes 1.3m hours/week, even in its much expanded coverage area [RAJAR].

The conclusion. You can become a big fish in a small pond, with a lot of hard work and effort. You can deliberately move to a bigger pond. But you must accept that you will now be a smaller fish….. and the massive risk is that you might never be a big fish ever again….. anywhere, any when.

For the US experience, “Why Local Radio Is No Longer Local” is a very worthwhile (lengthy) read [thanks to Mark Ramsey for the tip].