Select Committee on Communications Minutes of Evidence


Memorandum by RadioCentre

BACKGROUND

  1.  RadioCentre is the industry body for Commercial Radio. Formed in July 2006 from the merger of the Radio Advertising Bureau (RAB) and the Commercial Radio Companies Association (CRCA), its members consist of the overwhelming majority of UK Commercial Radio stations, who fund the organisation.

  2.  The role of RadioCentre is to maintain and build a strong and successful Commercial Radio industry—in terms of both listening hours and revenues. As such, RadioCentre operates in a number of areas including working with advertisers and their agencies, representing Commercial Radio companies to Government, Ofcom, copyright societies and other organisations concerned with radio, and working with stations themselves. RadioCentre also provides a forum for industry discussion, is a source of advice to members on all aspects of radio, jointly owns Radio Joint Audience Research Ltd (RAJAR) with the BBC, and includes copy clearance services for the industry through the Radio Advertising Clearance Centre (RACC).

SUMMARY

  3.  This submission opens by setting out the current economic and regulatory context in which Commercial Radio stations are delivering news to their listeners, noting that Ofcom has recently finished consulting on The Future of Radio, with a statement expected later in the year. When it publishes its statement, Ofcom is expected to propose a new approach to securing plurality amongst radio licensees which relaxes the current ownership restrictions.

  4.  We also cite research showing that Commercial Radio continues to provide a significant volume of local news and information. Research also reveals that consumers currently have more competing sources of news than ever before. This suggests two challenges for regulators and stations themselves:

    —    Firstly, there is increasing pressure on broadcasters to distinguish themselves, something which local stations can only do by focusing on what makes them local.

    —    Secondly, it is less important to secure plurality within radio so much as within the media sector as a whole. Removing the current mono-sector ownership restrictions on radio will allow Commercial Radio groups to seek superior economies of scale through consolidation and the sharing of resources, thus safeguarding their ongoing investment in the content which listeners value at a time when competition for advertising revenue has never been fiercer.

  5.  Many Commercial Radio groups are already taking new approaches to producing local radio news—with notable successes. In particular, concentrating resources and expertise within news hubs has allowed stations under common ownership to broadcast news which is fairer, more accurate, more impartial and more compelling. Accordingly RadioCentre believes that:

    —    the radio-specific rules on concentration of ownership should be removed;

    —    local cross-media ownership rules should be retained; and

    —    the Government should continue to retain the right to intervene in mergers of special public interest.

INTRODUCTION

  6.  The timing of this inquiry into media ownership and the news is welcome, given current events in the Commercial Radio sector. We note that the Committee intends to issue a separate call for evidence focusing on the concentration of media ownership, on cross-media ownership and on the regulation of media ownership. For this reason, we have restricted our comments in these areas to some reflections on the link between ownership and the balance and diversity of news in radio, as prompted by questions 4 and 5.

  7.  Nevertheless, it is worth noting that there is currently considerable market speculation surrounding a number of Commercial Radio companies. Emap is considering options for its radio business as part of a strategic review, Global Radio is an ambitious new entrant into the sector, Virgin Radio is set to be floated and GCap Media and GMG Radio have both been linked with potential acquisitions. In the last year, UTV and SMG have also undertaken merger discussions, Channel Four Radio has entered the Commercial Radio sector and UBC Media has sold its Classic Gold network to GCap.

  8.  Against this backdrop, Ofcom has been consulting on The Future of Radio. The industry is currently awaiting the regulator's final proposals across a range of issues, including ownership, plurality, localness and output diversity. RadioCentre submitted a substantial and evidence based response to the consultation, entitled Shaping Commercial Radio's Future. We have sent a number of copies of our response to the Committee. Electronic copies are available at www.radiocentre.org.

  9.  In Shaping Commercial Radio's Future, RadioCentre addressed Ofcom's proposals for securing plurality by aligning the ownership rules for analogue and digital radio licences. Whilst Ofcom recognises that the current rules are disproportionately restrictive in radio, we believe that this insight should be taken much further, with plurality of voice measured at cross-media level rather than on a mono-sector basis. This argument was predicated on RadioCentre and Ofcom research about radio's role as a news source within the wider media mix. Neither the newspaper nor TV industries are subject to sector-specific ownership regulation, even though Ofcom's own research has shown that they have more important roles in the local media mix. We believe that it is no longer appropriate to single out radio for special plurality protections.

  10.  We hope to have an opportunity to articulate these arguments in more detail at a later point in the committee's inquiry. In this submission we explore issues such as the quantity and range of news on Commercial Radio, the impact of news hubs on news production, the way in which listeners access news, and the economics of news production and Commercial Radio businesses.

RADIOCENTRE RESPONSES TO THE COMMITTEE'S QUESTIONS

Q1.  How and why have the agendas of news providers changed?

  11.  Commercial Radio continues to provide a significant volume of local news and information, in accordance with the licensing regime outlined in the 1990 Broadcasting Act and 2003 Communications Act.[1] Local stories remain at the heart of News Editors' agendas and are arguably becoming even more important in the fiercely competitive multi-media environment. With a myriad of rival media outlets competing for listeners and advertisers, local content is what enables Commercial Radio to stand out. We do not have significant data at our disposal about the state of the media market at the point when the first Commercial Radio station was licensed in 1973, but clearly the continued growth in the number of licensed radio services in the UK has had a significant impact on the quantity and range of news available to listeners.

  12.  There are now 100 more analogue and DAB-only services and nearly 100 more DAB simulcasts of existing services than existed in 1999. Our research indicates that this increase in the number of services has also led to an increase in the amount of news available on Commercial Radio. In 2000, the Commercial Radio Companies Association undertook a survey of Public Service Broadcasting on Commercial Radio which revealed that its members were broadcasting 5.6 million minutes of news, travel and weather information. By 2004 this had grown to almost 10.4 million minutes—an increase of around 85%.[2] The most recent survey also revealed that half of all news provided by Commercial Radio is local.

  13.  In February 2005, CRCA conducted a separate survey of local news output amongst stations owned by Capital Radio, Chrysalis Radio, The Local Radio Company, Tindle Radio, Lincs FM and kmfm. 65% of stations who responded were broadcasting more local news than was required by their format. Of these stations, 85% broadcast more bulletins and 33% broadcast longer bulletins. 57% of the local news provided by respondents consisted of "diary" items (ie stories which are known about in advance). In general, the proportion of diary stories rose as the size of the station fell.

  14.  This latter point illustrates something of the economic constraints on news production. With more local radio stations than ever before, and new sources of news and information through new media, each station has to work hard to compete for its share of advertising revenue and listeners. Inevitably, those stations with more resources at their disposal are generally able to recruit more journalists and invest more in innovative and interesting news output. We supply further thoughts on this in our answer to question 3.

Q2.  How is the way that people access the news changing?

  15.  Ofcom's recent "Review of Media Ownership Rules" found that "in the case of the rules for local radio analogue and digital services, radio multiplexes and local cross-media ownership we believe that further deregulation should be considered in conjunction with other changes to the structure".[3] This conclusion was based on Ofcom's observation that local radio is uniquely burdened with complex ownership rules relative to its net contribution to news provision.[4] At the same time, Ofcom found that the number of people citing radio as the primary source of local news declined from 14% in 2001 to 10% in 2005.[5]

  16.  Earlier this year, RadioCentre decided to explore this in greater detail as part of "The Big Listen",[6] the biggest ever survey of Commercial Radio listeners in the UK. The resulting feedback revealed that Commercial Radio has an important role in the provision of local news and information, but that consumers rely less on radio as a source of information and viewpoints than they did in the past.

    —  Phase 3 of The Big Listen found that half or more of the population are able to access local news and information from TV (50%), newspapers (54%) or the internet (56%), as well as radio (76%).

    —  It also found that 87% thought there were more different places they could get their local news and information than there were five years ago.

    —  Less than half of those surveyed (42%) said that radio provided content which they could not get elsewhere whereas almost three quarters (73%) attributed that characteristic to the internet.

  17.  Assessing the business implications of these figures requires care. In fact, if radio is indeed becoming less important as a primary source of local news, this does not necessarily mean that stations should reduce the quantity of local news which they broadcast. Instead, these findings suggest two challenges for regulators and stations themselves:

    —    Consumers have never had so much available content (including local content) to choose from—much of it available on demand. This places increasing pressure on broadcasters to distinguish themselves, something which local stations can only do by focusing on what makes them local.

    —    It is less important for regulators to try to secure plurality within radio so much as within the media sector as a whole; such that Commercial Radio ownership matters should only be considered in the context of cross-media efforts to ensure that citizens are exposed to a range of viewpoints. Removing the current mono-sector ownership restrictions on radio will allow Commercial Radio groups to seek superior economies of scale through consolidation and the sharing of resources, thus safeguarding their ongoing investment in the content which listeners value at a time when competition for advertising revenue has never been fiercer.

Q3.  How has the process of news gathering changed?

  18.  With increased competition in media marketplaces putting pressure on stations to stand out whilst also squeezing budgets, the process of news gathering has inevitably had to move with the times. Subject to prior permission from Ofcom, Commercial Radio groups already have the opportunity to introduce news hubs, which allow stations in a similar geographical area and/or under common ownership to share news reading and writing resources, enabling locally-based journalists to focus on newsgathering. Early scepticism of this system included concerns that it would reduce stations' connectivity with their localities, prioritising cost-cutting over content. But it now seems that the evidence points to the success of this modern approach to producing local radio news.

    —    In the five years that Lincs FM and Compass FM have been sharing news resources, both stations have consistently received positive listener feedback about the truly local quality of their news bulletins. Neither has received any comment on the means by which local news and information are delivered, suggesting that listeners are only concerned about what comes out of the speakers.

    —    CN Radio has been able to increase the number of news bulletins and local hours on some stations and provide group wide network features such as entertainment and personal finance news. CN Radio's staff are routinely producing quality live or as—live location work and are being trained to spend more time on research projects and relevant investigative journalism. The group reports that the biggest positive external impact has been among journalists' contacts who now offer more loyalty, believing that news-hubbing stations are as likely to cover stories as the BBC.

    —    Compass FM has found that news hubs improve the quality of its news output, by freeing up extra time for a dedicated reporter to spend news-gathering in the local area.

    —    Town and Country Broadcasting reports that its news hub at Swansea Bay Radio has made recruitment significantly easier across its West Wales stations (where there is no developed media market).

    —    After overcoming initial concerns amongst staff, CN Radio, Town and Country and Lincs FM also report improved morale. Groups with news hubs can offer better pay, more reasonable working hours, more up-to-date equipment and improved career development opportunities, and as a result staff turnover decreases dramatically. News hubs have also reduced stations' reliance on freelancers, since holiday/sickness cover can be provided in house.

  19.  In many of these instances, introducing news-hubs was the only way that stations could continue to offer the quantity and quality of local news that listeners expect. As Ofcom has itself acknowledged, even before a couple of difficult recent quarters in the radio advertising market, 40% of licence-holding companies were losing money.[7] In the case of stations such as Fosseway Radio and Rutland Radio, which both serve small rural communities in the East Midlands, sharing news resources has gone a long way towards securing their long-term viability.

Q4.  What is the impact of the concentration of media ownership on the balance and diversity of opinion seen in the news?

  20.  Clearly news-hubbing is made much easier when stations are under concentrated ownership. CN Radio, Lincs FM and Town and Country have all built their businesses with a core focus on certain geographical regions; the West Midlands, Lincolnshire and the surrounding counties, and South Wales respectively. Indeed in making its radio licensing decisions, one of the key factors which Ofcom (and previously the Radio Authority) is statutorily obliged to consider is the ability of the applicant to maintain the service, something which is made easier when the applicant already has a presence nearby.

  21.  Yet there is no evidence that balance and diversity of opinion have suffered as a result of these smaller groups' news-hubbing arrangements. With companies of this size, sharing news operations allows for a higher quality of news production and more formalised editorial structures, with anecdotal reports suggesting that this tends to reduce the incidence of mistakes with regard to fairness, accuracy and impartiality. In addition, common ownership helps stations to gain better access to external content, revenue and marketing opportunities. A high profile figure, such as a politician, is more likely to provide a station with an interview if s/he knows that they may be heard across a number of stations serving a whole region, something much easier to achieve if those stations are under common ownership. Clearly, the benefits of common ownership are not confined to news production; an advertiser with a significant regional presence may wish to get their message out efficiently across a wider area than a single station is able to offer.

  22.  Significantly, the smaller stations served by these groups' news hubs do not tend to overlap in terms of MCA (Measured Coverage Area) and audience. For instance, CN Radio does not own another station in Coventry besides 96.2 Touch FM. Instead, Coventry listeners have the choice of tuning into Mercia FM, Gold (both owned by GCap Media) and BBC Coventry and Warwickshire, as well as the regional stations based in Birmingham such as Kerrang (owned by Emap) and Galaxy (owned by Global Radio).

  23.  Larger groups with larger, city-based or regional stations such as GCap, Emap, GMG and Global Radio often do share news resources across stations with overlapping audiences. This approach avoids duplicating the work involved in researching, writing about and reading national or regional news items. In turn, this frees up journalists at individual stations to make their local area or target audience their editorial priority, tailoring their output with bespoke items of relevant interest. This approach encourages a more specialised approach to each area of news production at a given station, which tends to ensure that items receive more rigorous or expert treatment, with the result that the core news values which the committee is interested in are more likely to be upheld.

  24.  For instance, GMG Radio has recently announced plans to expand its news operations in Manchester, London and Glasgow by launching three new regional hubs. The hub in Manchester will be the largest, supporting the existing local and regional teams at each of GMG Radio's three Manchester-based stations. When it launches in 2008, 106.1 Rock Radio will be available across Greater Manchester, joining Century 105.4 and the recently launched Smooth Radio which are available throughout the North West. GMG Radio's new hub at Salford Quays will provide bespoke regionalised bulletins to all three stations 24 hours a day.

  25.  This approach is expected to substantially improve the quality of GMG Radio's news provision in the North East, Scotland and London, reducing the group's reliance on national news feeds from IRN and Sky News and allowing it to increase investment in online news operations. Accordingly, each of GMG Radio's local and regional stations will be able to concentrate on continuing to generate in-house peak hour and daytime bulletins, with supplementary material supplied by the respective regional hub.

  26.  Nevertheless, whilst each station using the hub will have its own bespoke content, as befits the range of differing demographics which they target, it is clear that within Manchester, there will be three stations available which share an editorial approach in some areas. Clearly any concerns in this regard are countered by the total number of stations available in Greater Manchester. For instance, a listener in Oldham can choose between Century 105.4, Smooth Radio and (from 2008) 106.1 Rock Radio (all GMG Radio), Gold (GCap Media), Galaxy 102 (Global Radio), Magic 1152 and Key 103 (Emap) BBC Radio Manchester and 96.2 The Revolution (UKRD). Greater Manchester listeners generally also have access to at least one licensed community station (around seven community licences have been granted in and around Manchester so far) as well as several more commercial stations available via DAB.

  27.  Within markets like this, it is natural that station operators will seek a degree of concentrated ownership. In fact within our response to Ofcom's consultation on "The Future of Radio", RadioCentre argued that given radio's relative contribution to overall media plurality, as noted in paragraphs 15 and 16, it would be more appropriate to concentrate on protecting cross-media plurality, creating scope for further consolidation within radio. This would allow resources to be spread less thinly, leading to fairer, more accurate and more impartial radio news, as journalistic best practice is shared amongst stations.

  28.  As it stands, the total number of Commercial Radio services in the UK is higher than ever before and yet the industry's total advertising revenue has been impacted by the growth of online advertising. Against this economic backdrop, RadioCentre believes that further concentration of ownership is both desirable and inevitable—as indeed does our regulator.

Q5.  How should the public interest be protected and defined in terms of news provision?

  29.  As we have already suggested, RadioCentre believes that the Communications Act 2003 does indeed ensure a plurality of debating voices—in radio at any rate. When the Act was passed Ofcom was requested to review the ownership rules on a triennial basis, which it did in 2006 with its "Review of Media Ownership". As we have already explained, Ofcom concluded that the existing rules were broadly appropriate, except to say that "options... exist for a more radical overhaul of the radio rules"[8]—something which Ofcom promised to address in the forthcoming consultation on "The Future of Radio". The report suggested two possible routes:

    —    Combining the rules for local analogue and digital services.

    —    Abolishing the rules for local analogue and digital services altogether.

  30.  In "The Future of Radio" Ofcom has chosen the first option. Although we welcome Ofcom's general agreement that the existing radio ownership regulation merits reform and liberalisation, we believe this is the wrong approach and that the evidence points towards a more radical revisiting of the rules. Our response outlined that:

    —    Parliamentary actions and previous regulatory work have both suggested that overhauling ownership rules may be required in the light of changing market conditions.

    —    Mono-media plurality rules are of decreasing importance in a multi-media, multi-platform world; and it is inappropriate that only the smallest section of the traditional media landscape should continue to be subject to them.

    —    Although radio continues to be an important source of local news, this is due to its ubiquity and real-time nature, rather than a genuine need for radio alone to provide plurality of viewpoint.

    —    Consumers are finding new and different ways to access news and information.

    —    Ofcom's proposals are not future proof; their implementation would require new primary legislation and yet they take now account of new broadcasting technologies which may be considered in the future (such as Digital Radio Mondiale)

    —    The existing rules are a disincentive to investment in the radio industry.

    —    Further consolidation could bring genuine benefits to consumers and the economy.

  31.  We proposed that:

    —    the radio-specific rules on concentration of ownership should be removed;

    —    local cross-media ownership rules should be retained; and

    —    the Government should continue to retain the right to intervene in mergers of special public interest.

  32.  These measures cannot be implemented immediately. As we have already explained, new ownership rules for radio require primary legislation. Accordingly we commend the committee for deciding to examine these issues now, and look forward to continuing to engage with its work later in the year.

September 2007



1   Ofcom has recently supplied reflections on radio news provision in its discussion document New News, Future News, July 2007, pg 37-39. Back

2   CRCA, Commercial Radio: in the public service, September 2004. Back

3   Ofcom, Review of Media Ownership Rules, November 2006, pg 4, para 1.16. Back

4   Ofcom, Review of Media Ownership Rules, November 2006, pg 9, figure 1. Back

5   Ofcom, Review of Media Ownership Rules, November 2006, pg 13, figure 6. Back

6   The Big Listen was a substantial research project undertaken by RadioCentre consisting of three phases:
- Phase 1: Four qualitative focus groups (Feb 2007) administered by Ipsos-MORI;
- Phase 2: Quantitative study (April/May 2007) conducted by Ipsos-MORI, 1001 ex-RAJAR (Q4 2006) respondents, aged 15-44; and
- Phase 3: Online survey www.thebiglisten.com (June 2007) promoted by a week-long on-air campaign across more than 200 Commercial Radio stations, administered by YouGov. Total sample 10,736 Commercial Radio listeners. 
Back

7   Ofcom, The Future of Radio, April 2007, pg 37-8, para 3.37. Back

8   Ofcom, Review of Media Ownership Rules, November 2006, pg 33. Back


 
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