Written evidence from UTV Media (GB), UKRD Group and The Local Radio Company (FLM 47)
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
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 via FM.
2015 FM/AM switch off is not in the interest of consumers
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 8 national stations and 6 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 1-2 stations from the wide range available. 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 120m analogue radios in
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
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
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 rural areas. 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 upgrade' plans.
x. Switch-off carries significant costs for
the car industry:
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 below.
xii. There is no 'digital dividend' for
taxpayers: Vacated analogue TV spectrum will be auctioned off by the
Treasury, generating £billions for the
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 and investment.
The impact of the proposed 'digital upgrade' on local radio
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
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
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
10. A good example of this is provided in Annex A,
which details the impact of Radio Wave - a UTV Media (GB) station - in
Blackpool, Wyre and the
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.
An alternative vision for the future of radio - with listeners at its heart
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 markets". 
Or in the words of
13. The April 2009 '
14. Given that both
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
17. The Government's priority for radio should be
1: 'Making Waves'