Twenty First Report Contents

Draft Legislative Reform (Renewal of National Radio Multiplex Licences) Order 2022

1.This draft Legislative Reform Order (LRO) has been laid before Parliament by the Department for Digital, Culture, Media and Sport (DCMS), together with an Explanatory Document (ED). The draft Order is proposed to be made under section 1 of the Legislative and Regulatory Reform Act 2006 (“the 2006 Act”) which allows a minister to amend primary legislation by order to remove or reduce a burden, such as a financial cost or administrative inconvenience.

2.According to DCMS, the purpose of the draft Order is to amend section 58 of the Broadcasting Act 1996 to allow Ofcom to renew the two national commercial digital radio multiplex licences1 (which are due to expire in 2023 and 2028 respectively) until 31 December 2035, without an open competition.

Background

3.DCMS says that the two commercial national multiplexes are an essential means of distributing national commercial radio stations and programming across the UK, and that they have encouraged an increase in national commercial radio stations and enabled competition with the BBC.

4.The Department explains that the policy objective of the draft Order is to “provide clarity and long-term certainty to the commercial radio sector”, and that this “will provide commercial radio with stability at a time of uncertainty in the industry and national broadcasters with the confidence to continue to invest in their digital services and support the further development of digital radio”.

5.Under the current legislation, Ofcom has no power to renew these licences. Without legislative change, Ofcom would need to re-advertise the licences through an open competition.

Proposed changes

6.The main proposal in the draft Order is to give Ofcom the power to renew the two national commercial radio multiplex licences without an open competition. The proposal is to extend both licences to the same expiry date of 31 December 2035, equivalent to a 12-year extension of the first licence and a seven-year extension of the second licence.

Tests in the 2006 Act

7.The Committee considered whether the proposals meet the statutory tests set out in the 2006 Act. It appears that the draft Order would remove or reduce a burden by generating cost and administrative savings for both current licence holders and Ofcom, as a competitive re-advertisement of the national licences would be avoided. With regard to the balance of interests of businesses that may wish to enter the market, current licence holders who would benefit from renewal of their current licences and listeners, the Department says that the costs of a competitive process would lead to licence holders having to divert investment away from developing digital radio content and services. The ED also demonstrates that there appears to be limited interest in a competitive process: only one respondent to the consultation expressed an interest in bidding for a national licence, and past licence competitions were met with limited interest. In addition, DCMS says that the barriers to entry to the market are high, and that commercial digital radio is recovering from the financial pressures of the pandemic, when advertising revenues dropped sharply, and from competition through online services. During public consultation, six out of ten respondents supported the proposal to extend the licences without open competition.

Parliamentary Procedure

8.DCMS has proposed that the LRO be subject to the affirmative resolution procedure.

Conclusion

9.In the light of the information provided by the Department, we are satisfied that the Order meets the tests set out in the 2006 Act and is not otherwise inappropriate for the Legislative Reform Order procedure; and also that the affirmative resolution procedure proposed by the Government is appropriate.


1 A radio multiplex (network) is the platform on which digital radio services/stations are broadcast.
It consists of several stations bundled together to be transmitted digitally on a single frequency in a given licensed geographic area, in this case across the UK.




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