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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