Joint Committee on The Draft Communications Bill Appendices to the Minutes of Evidence


Memorandum submitted by Saga Group Limited


  The Saga Group is well known for providing a broad range of services designed to meet the needs and interests of people aged 50 and over. The company was established over 50 years ago and has over two million customers in the UK.

  Saga's activities include publishing (Saga Magazine is a subscription-based periodical, with a monthly circulation of 1.2 million), and radio broadcasting. Saga Radio last year successfully launched a new regional FM station, Saga 105.7fm, serving the West Midlands region, and is in the process of applying for further analogue licences. Saga operates national and regional digital radio channels. PrimeTime Radio is broadcast nationally on the Digital One multiplex, and via satellite and cable distribution. Saga Digital Radio broadcasts via DAB digital radio to London, Glasgow, Edinburgh, Bristol and Bath, and Southend and Chelmsford. The objective of Saga Radio is to provide independent radio programming which caters for the tastes and interests of older listeners. People aged 50 and over are poorly served by independent radio, which concentrates—particularly at local level—on age groups 15-45. Research has consistently demonstrated the unsatisfied demand among older listeners for greater radio listening choice.


  We would like to confine our observations on the draft Communications Bill to certain of the provisions as they apply to Radio broadcasting. To summarise, Saga:

    —  supports provisions for restriction on the multiple ownership of radio stations, and believes that the standard set for plurality of voice (three plus the BBC in developed markets) should not be further relaxed;

    —  questions the relaxation of rules regarding foreign ownership of broadcast companies in cases where reciprocal freedoms are not available to UK owners;

    —  recommends more explicit support for promoting diversity and inclusivity, in radio broadcasting in particular; suggests that the provisions of Section 105 of the 1990 Broadcasting Act regarding the issue of new radio licences could be re-stated and strengthened in this Bill;

    —  supports the general aim of convergence in regulation, provided this does not add delay to decision-making or increase the cost burden on companies which have to fund the regulators;

    —  questions how OFCOM will manage the processes involved in the issuing of radio broadcast licences, both new and at renewal;

    —  suggests that the Bill could go further in trying to develop a level playing field for commercial radio broadcasters versus the BBC, in areas such as spectrum usage and content regulation.


(a)   Plurality

  Saga supports the provisions designed to maintain plurality of voice and ownership of radio at local level. We would recommend that the "three commercial operators plus the BBC" approach, which was developed by the Radio Authority and supported by the Commercial Radio Companies Association, should not be diluted. These proposals attempt to balance the interests of major radio groups, smaller operators and the public. They open the way for further consolidation, yet leave open the possibility of new operators bringing new services to market which may better meet the public interest. The reason that such restrictions are required is that Radio broadcast spectrum is a public asset with limited and finite capacity, severely limiting the operation of a "normal" free market and entry of new operators. It is therefore proper and appropriate that regulation on ownership be applied in the public interest. If the UK were to find itself in a position where spectrum availability were such as not to provide such a significant barrier for new entrants who could challenge incumbent companies on purely commercial or service grounds, then OFT governance would become sufficient. However, this is most unlikely to be the case within the foreseeable future.

(b)   Foreign Control

  Saga has doubts about the wholesale removal of the restriction on non-EU control/ownership of radio broadcast companies, since there remain many jurisdictions where equivalent rights will not be available to UK or EU companies. For example, UK companies would not be able to have controlling interests in US broadcasters under current rules. We believe that the Bill should qualify the relaxation on foreign ownership by making it subject to reciprocal rights being available in the foreign company's home country.


  Saga believes that the Bill could be more explicit in supporting the interests of regions, localities, communities and interest groups. One way would be to reinforce the rules governing the decision-making on new local radio licence awards by OFCOM. Section 105 of the 1990 Broadcasting Act requires the regulator to consider of new radio licence applicants the extent to which their proposals "broaden choice and cater for tastes and interests not previously catered for". This test is a key to encouraging diversity and inclusivity in radio programming. However, on many occasions it has not been clear to what extent this important provision has been considered in licence awards. As a result, despite the 1990 Act, many communities of interest are still not catered for by independent local radio. For example, people aged 50—who represent 40 per cent of the adult population, have less radio programming choice than younger ages, because local commercial radio has concentrated on attracting younger listeners. This deprives older citizens of the choice of radio programming which they should expect to share in from a public resource (ie radio broadcast spectrum). The Bill ensures that the provisions of Section 105 of the 1990 Act will continue to apply to decisions by OFCOM. However, it is arguable that an opportunity is being missed to elevate the drive for diversity and inclusivity in terms of importance when deciding on the award of new local radio licences.


  Saga supports the formation of a single Regulator (OFCOM) in response the convergence of media and communications. Many of the regulatory activities (for example, dealing with complaints, developing codes of conduct in respect of content, advertising etc; management of broadcast spectrum; fair competition issues; public interest determinations) are common to most if not all sectors of the media and communications industries, and would benefit from some commonality of approach. However, in view of the proposed structure of OFCOM we have some concerns as to: (a) whether there will be improvement in the speed and efficiency of decision-making as regards the radio industry in a regulator where other areas of responsibility may take priority (eg TV and Telecommunications are both bigger industries); and (b) whether costs will be reduced, thereby reducing the cost burden on companies which fund the regulators (recent reports suggesting that no cost reductions will be realised despite the apparent streamlining of regulation and introduction of a more "light touch" regime).


  Saga is concerned that while most aspects of Radio regulation can be managed alongside other media within the single regulator, OFCOM, one aspect of radio regulation is not explicitly discussed, although it takes up a great deal of the time and resource of the current Radio Authority: licensing of new local radio stations. New local radio licences are awarded on a "beauty parade" basis. Each applicant sets out in an applications document, supported by research annexes, the reasons why his proposals for use of the frequency should be awarded the licence. Applications documents typically run to over 130 pages, and it is not unusual for there to be up to 15 or more applicants for the more attractive new opportunities. In addition to new broadcast licences, the Radio Authority deals with renewal of licences, issuing of multiplex licences, restricted service licences, and has now taken on the pilot scheme of "third tier" access radio. During 2001 the Authority awarded seven new analogue licences, re-awarded 15 analogue licences and renewed 42. 13 digital multiplex licences were awarded, as well as licences for 15 access radio projects.

  Given the many and diverse responsibilities of OFCOM, and the stated intention that the OFCOM board will be a small team, we believe it will be virtually impossible for OFCOM board members to adopt the same hands-on role in the award or re-award of local radio licences as has been the case with the members of the Radio Authority. We believe that it would be appropriate for OFCOM to set up a subsidiary committee, made up of suitably qualified persons, to make recommendations on radio licence awards. Such a body would include radio expertise, as well as people whose primary role would be to represent the public interest. We are concerned that if such a structure is not put in place, then the OFCOM board may have to become too reliant on recommendations made by executives alone, and that the transparency which should adhere to such decisions may be diminished.


  While the Bill proposes to bring the BBC under the rule of OFCOM in certain respects, it appears that these do not touch on the key areas of concern to the independent radio sector: namely the preferential position held by the BBC in respect of regulation of content, and its disproportionate share of radio broadcast bandwidth. Independent radio broadcasters are awarded licences on the basis of a "promise of performance" which is subsequently expressed as "format". This specifies the type and proportions of music and speech which can be broadcast, and seeks to maintain the character of the service. The broadcaster can only change this format with the formal agreement of the regulator. BBC radio services are free to radically amend their content output (and have done so on numerous occasions) without reference to the Radio Authority, and would not be obliged to refer such change to OFCOM. The BBC will continue to be free to move into content or audience "territory" developed and occupied by commercial broadcasters, without scrutiny, and since it is funded by the licence fee it is able to this with a guaranteed income stream (a commercial competitor doing the same thing would have to compete not only for listeners but for advertising revenues.) OFCOM should have a role in reviewing such developments where they may threaten to distort markets.

  Secondly, the BBC's dominant position of occupation in analogue radio bandwidth remains unchallenged. The BBC's share of bandwidth is far in excess of its share of audience, and many BBC local stations continue to simulcast programming on FM and AM frequencies, long after independent radio was forced to split programming. There is an opportunity for OFCOM to be empowered to review and where appropriate to rationalise the BBC's use of bandwidth, in the interests of freeing up frequencies for use by independent broadcasters, with new services designed to increase diversity and to cater for tastes and interests of people and groups not currently catered for.

  Saga believes that the Communications Bill and the formation of OFCOM presents an opportunity to ensure that the development of radio broadcasting is managed in such a way as to promote competition and to safeguard the interests of all communities and interests. We are particularly keen that the interests of older viewers and listeners are given due weight and attention. Saga welcomes the opportunity to assist the Joint Committee, and is happy to provide further help or to answer any questions arising from this submission. Please contact Tim Bull, Strategic Planning Director, telephone 01303 771003 or e-mail [email protected]

June 2002

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