Written evidence submitted by UTV Media
(GB), UKRD Group and The Local Radio Company
1. This is a joint submission to the committee's
Inquiry into "The Future for Local and Regional Media"
by UTV Media (GB), UKRD Group and The Local Radio Company (TLRC).
The latter was acquired by UKRD in May 2009. We are grateful to
the committee for allowing us to make representations after the
initial deadline for written evidence had passed.
2. UTV and UKRD/TLRC represent around 12%
of all commercial radio revenue and are the third and fourth largest
radio groups in the country by number of Ofcom licences held.
The 30 radio stations we operate reach 4.5 million listeners
a week, and we also hold significant interests in local and regional
DAB digital radio multiplexes. Our various analogue and digital
licences cover all four nations of the UK and range from talkSPORTthe
UK's second largest commercial stationto small stations
like Salisbury's Spire FM. Our companies also collectively own
the radio sales house First Radio Sales, which currently represents
national airtime sales for 118 stations, primarily consisting
of local services.
3. Our companies have each recently resigned
from the commercial radio industry body RadioCentre in order to
articulate our opposition to the Government's "Digital Upgrade"
proposals for radio. These consist of plans to move all large
local and national radio stations to DAB at the end of 2015, having
achieved certain migration criteria by the end of 2013. Under
the plans, it is proposed that over 120 local commercial
radio stations will be consigned to an "ultra-local"
tier of community and commercial stations broadcast exclusively
2015 FM/AM SWITCH
4. Our primary reason for opposing the Government's
proposal to switch-off the AM and FM signals of larger radio stations
in 2015 is that it is not in the interests of radio listeners,
and will therefore damage the radio industry:
(i) The current model is delivering for radio
listeners: Radio listening is at an all time high with 90%
of the population tuning in every week. This has been driven by
the wide range of stations available via conventional FM/AM sets,
with listeners choosing between an average of eight national stations
and six local stations.
Digital platforms including DAB, the internet and digital TV have
complemented this choice by catering to niche formats such as
religious or minority ethnic programming.
(ii) There is limited demand for the new services
which DAB migration could deliver: Only 3% of listeners are
presently dissatisfied with their choice of radio stations and
69% of consumers only listen to one to two stations from the wide
The level of consumer interest in the additional data services
and interactivity offered via DAB is also much lower than expected.
As a result, 79% of all radio listening is still to traditional
FM and AM stations, with only 4% of radio listening hours attributed
to digital-only stations and DAB receivers accounting for just
22% of UK radio sales.
(iii) Upgrading to DAB is expensive for consumers:
Studies indicate that there are at least 120 million analogue
radios in the UK, compared with just nin million DAB sets.
This excludes radios in workplaces and public places. The average
price of a new DAB receiver is £85, meaning that the consumer
cost of replacing existing analogue sets could be £10 billion.
For take up to be widespread, DAB must become available for less
than £20 and routinely added to products such as mp3 players.
In fact, the cost of DAB receivers is currently rising due to
changes in exchange rates.
(iv) Consumer take-up is not keeping pace
with Digital Britain projections: Due to the cost of upgrading,
only 16% of consumers say that they plan to buy a digital radio
in the next year,
with low DAB sales meaning that digital's share of radio listening
is currently 21% and set to miss the 2009 year-end projection
of 26% which appeared in the Digital Britain report.
DAB represents just 13.3% of all listening, with other digital
listening coming from the internet and digital television.
(v) The cost of bringing DAB coverage to the
same levels as FM is prohibitive: At present, around 18% of
listeners to popular stations such as Classic FM could be cut
off at switch-off. However, the cost of improving reception to
FM standards is estimated to be in the region of £150 million,
and neither the BBC nor the larger commercial radio groups have
agreed to meet the bill.
(vi) In-car availability of digital radio
is a major challenge: In-car listening is hugely important
to radio, accounting for 20% of all listening.
Yet DAB is currently available in less than 1% of UK cars. Even
if all new UK cars are fitted with DAB as standard by 2014 as
is currently proposed, in-car DAB set penetration is unlikely
to exceed 90% until some time after 2020.
(vii) The growing international popularity
of FM-enabled smart-phones and mp3 players is strengthening
FM's position: 45% of mobile phones are expected to have FM
radio by 2011 with DAB having been sidelined by global manufacturers
such as Apple and Nokia. FM's enduring success is partially due
to the lack of global consensus over digital radio standards,
with other countries overlooking DAB in favour of technologies
such as DAB+, DMB and HD Radio.
(viii) AM/FM switch-off will disproportionately
disadvantage certain sections of society above others: Consumers
in England are 43% more likely to have a DAB radio than those
in Scotland, with similar gaps in Northern Ireland, Wales and
Radio is also a lifeline to vulnerable groups, such as the elderly
or partially-sighted communities. These groups may lose out in
a switchover process.
(ix) AM/FM switch-off will have significant
environmental costs: At least 120 million analogue sets
may become redundant and require disposal as a result of the "digital
(x) Switch-off carries significant costs for
the car industry: UK car manufacturers are being forced to
invest heavily in DAB car radiosexpenditure which will
be passed on to motorists.
(xi) Migration of larger stations threatens
local radio: The plan to leave smaller local radio stations
on FM will consign over 120 stations to an "ultra-local"
tier of radio, making them invisible to DAB listeners and threatening
their viability. We develop this point under a separate heading
(xii) There is no "digital dividend"
for taxpayers: Vacated analogue TV spectrum will be auctioned
off by the Treasury, generating £billions for the UK taxpayer.
However, the best technical use of AM and FM is to broadcast radio.
This means there is no "digital dividend" to offset
the cost of the "digital upgrade" to consumers.
(xiii) Loss of national licence auction revenue
for taxpayers: As part of the proposed "digital upgrade",
Government is offering Classic FM, Absolute Radio and talkSPORT
free licence extensions to take them up to the planned AM/FM switch-off
in 2015. This deprives taxpayers of auction revenue due under
current legislation and removes the opportunity for new entrants
5. In the context of this review, we wish
to particularly draw the committee's attention to the threat which
the Government's proposed "digital upgrade" plans pose
to local radio. As outlined above, over 120 stations currently
lack a clear route to DAB transmission and it is therefore suggested
that they should remain on FM (or in the case of local AM stations,
move to FM) whilst larger stations migrate to DAB.
6. The reason why this group of stations
is unable to move to DAB is that the coverage of local and regional
DAB multiplexes is based on much larger transmission footprints,
tailored to the needs of large local and regional BBC and commercial
radio stations. In fact, under the Government's Digital Britain
proposals, it is proposed to merge some of these local multiplex
areas into single large regions, making them even less well suited
to the needs of stations covering smaller towns or rural communities.
7. Forcing 120 smaller local commercial
radio stations to remain on FM while larger stations move to DAB
will result in these stations becoming the poor relations of larger
and more prosperous services participating in the digital revolution.
The affected stations will become less prominent amongst DAB listeners
and be downgraded in the eyes of advertisers. This will weaken
their viability and imperil their long-term sustainability.
8. The fact that 120 local commercial
radio stations are unable to participate in the digital migration
plan also locks in an infrastructural disadvantage for commercial
radio against the BBC, which has the opportunity to migrate 100%
of its radio services to digital.
9. This damage to local commercial radio
stations should be of significant concern to both listeners and
policy-makers, given evidence that such stations often have the
strongest links with their local communities. Smaller local radio
stations often have deeper commitments to local programming and
community action than their larger rivals, since it is only by
super-serving their localities that these services can stand out
in their local marketplaces. This has seen smaller stations become
invaluable lifelines to constituencies across the UK.
10. A good example of this is provided in
Annex A, which details the impact of Radio Wavea UTV Media
(GB) stationin Blackpool, Wyre and the Fylde Coast. The
station has embedded itself into the heart of its community by
demonstrating a long-term commitment to high quality local programming
and active participation in local life. 26% of the local population
currently tune into Radio Wave every week, demonstrating the direct
link between local relevance and listening.
However, DAB transmission is currently out of reach to this station.
Its best option for digital distribution would be to secure a
carriage agreement with the local DAB multiplex for Central Lancashire.
However the cost of this platform is out of reach for a comparatively
small station like Radio Wave, whilst the coverage offered does
not correspond with its current Blackpool and Fylde Coast transmission
11. Finally, as well as weakening the positions
of smaller local radio stations, the "Digital Upgrade"
proposals could also undermine the provision of local and regional
content by larger stations. This is because the Government is
proposing to grant concessions to the larger local radio stations
moving to DAB allowing them to broadcast regional or national
programming in place of existing local content.
12. Rather than being sidelined in a drive
to digital tailored to serve the financial interests of some of
the large commercial groups, economic data indicates that smaller
commercial radio stations should be at the vanguard of efforts
to, in the words of the Digital Britain Final Report, "devise
a regulatory regime which secures the provision of local content
but that equally reflects the economic realities of local media
Or in the words of Ofcom, to secure a "sustainable and universal"
tier of local radio.
13. The April 2009 "Independent
Review of the Rules Governing Local Content on Commercial Radio"
conducted by John Myers for DCMS revealed that 80% of smaller
local commercial radio stations are loss-making or generate annual
profits of less than £100,000.
Larger stations generally remain profit-making, despite the recent
downturn and migration of local advertising spend to the internet.
This finding was reinforced by analysis subsequently obtained
by Ofcom from Value Partners, which reveals that many smaller
services are either unprofitable or operating at the margins of
viability, with the recession having intensified competition for
revenue between stations.
14. Given that both Ofcom and Government
have identified smaller local radio stations as facing particularly
acute economic challenges, we believe that the priority of policy
makers should be to reform the operating environment for this
group of stations. Efforts to deregulate commercial radio can
and must be separated from plans to migrate larger radio stations
to DAB-only transmission.
15. Furthermore, rather than pursuing an
AM/FM switch-off plan that lacks listener support, radio's future
success depends on embracing a multi-platform ecology which provides
radio output to listeners on their terms, rather than on those
of the operator. This will depend on continued industry investment
in multiple platforms, allied with appropriately "light touch"
licensing and regulatory policies from the regulator. For our
own part, we plan to maintain our current investment in both analogue
and digital radio with a view to realising this vision.
16. There is no doubt that commercial radio
faces significant commercial challenges. These have been drawn
to the committee's attention in the submissions of Ofcom, RadioCentre
and others, and are reflected in the draft provisions of the Digital
Economy Bill. However, regulatory and licensing reform for commercial
radio is possible without a digital radio switchover plan.
17. The Government's priority for radio
should be to free Ofcom to provide our industry with the certainty
it so desperately craves regarding its future licensing, regulation
and distribution. In turn, the secure operating environment which
this creates will allow the debate about the future of radio to
be refocused on the needs of the most important stakeholders of
RADIO WAVE'S COMMUNITY IMPACT IN BLACKPOOL,
WYRE AND THE FYLDE COAST
Radio Wave has established itself as an important
force in Blackpool, Wyre and the Fylde Coast, with committed on-air
and off-air activity over a number of years placing the station
at the heart of community life. Regular weekly activity includes
such staples as an Events Diary, which promotes local events on-air
every hour, backed up by a comprehensive online guide. But here
are just some of the other events and initiatives the station
has got involved in recently.
Radio Wave's annual celebration gives local
heroes a chance to be awarded for work they have done or for their
achievements. The award winners are nominated by members of the
These recognise businesses across the area that
have been nominated for these prestigious awards, with winners
chosen by members of the public.
Radio Wave's designated local charity benefits
from the continuous support of the station and its staff, both
through profile building and special fundraising events
Radio Wave supports this important fixture in
the local fundraising calendar with Outside Broadcasts at each
Members of the community recently joined Radio
Wave in raising funds for the local children's hospice.
Radio Wave works in conjunction with the community
to ensure that less fortunate local children do not miss out on
the chance of a special gift at Christmas. Listeners are invited
to leave gifts at drop off points all over the Fylde Coast.
CREATE A CHRISTMAS
Radio Wave works with local educational facilities
for primary school children to design a Christmas card. The winner
gets the card printed and the card is sold within the community
with the proceeds going to Brian House.
Radio Wave has developed close ties with local
schools and created opportunities for pupils to learn about how
radio is made.
Radio Wave presenters got closely involved in
this campaign to encourage members of the community to cycle all
over Blackpool by holding many events throughout the area.
Radio Wave has forged a close relationship with
the local Hilton Hotel to raise funds for deserving causes.
This exciting competition gave an opportunity
to one deserving child to win a limo ride to school for them and
Radio Wave got together with the local NHS,
using its studios as the unusual setting for special one-off clinics
which promoted the benefits of regular health assessments.
Radio Wave's listeners pulled out all the stops
to donate Easter Eggs to children in the community.
The opening of St John's Square in Blackpool
was an important local event, and unsurprisingly Radio Wave was
at the heart of the action, with an Outside Broadcast live from
The Illuminations are a symbol of Blackpool,
and this event brightened up life for patients at a local hospice.
Radio Wave broadcast live from the midnight walk, with staff also
taking part in the fundraising efforts.
Radio Wave supported contestants with an Outside
Broadcast and live commentating from Radio Wave presenters.
118 Ofcom, The Communications Market Report, August
Ofcom, The Communications Market Report, August 2009 Back
RAJAR; Ofcom, The Communications Market Report, August 2009 Back
RAJAR/UTV analysis/DRDB Back
Ofcom, The Communications Market Report, August 2009/Digital Radio
Development Bureau Back
Ofcom, The Communications Market Report, August 2009 Back
Digital Radio Working Group 2008/UTV Media analysis Back
Digital Radio Development Bureau/SMMT/UTV Media analysis Back
Ofcom, The Communications Market Report, August 2009 Back
BIS/DCMS, "Digital Britain Final Report", June 2009,
page 100-102 Back
Ofcom, "Radio: the implications of Digital Britain for localness
regulation", July 2009, page 4 Back
John Myers, "Independent Review of the Rules Governing Local
Content on Commercial Radio", April 2009, page 34 Back
Ofcom/Value Partners, "UK Radio: Impact of regulatory relaxations",
May 2009 Back