Memorandum submitted by Scottish Radio
The proposed Bill contains serious
ownership flaws at odds with the much-heralded liberalising intentions
of the Government.
The proposals on local radio ownership
are designed for London and the major metropolitan areas. Other
parts of the UK become more heavily regulated than is presently
SRH cannot believe that it was really
the Government's intention to single out local commercial radio
for further bureaucratic controls.
OFCOM powers are sufficiently substantial
to ensure balance, impartiality and fairness, and to protect against
potential news bias without further heavy-handed ownership restrictions.
If proposed local ownership rules
are left unchanged, listener choice outside the major conurbations
will be affected.
Scottish Radio Holdings plc (SRH)
SRH began life as Radio Clyde, launched in Glasgow
in 1974 on capital of £150,000. The company was the third
of the new commercial stations to come on air and was an instant
success with its unique blend of news and wide-ranging programmes.
In 1991, Clyde and Radio Forth in Edinburgh joined together, along
with a number of other Scottish stations to form SRH and were
joined by Downtown in Northern Ireland and, more recently, CFM
in Carlisle and West Cumbria, Wave 105 in Southampton and Today
FM, the national station in the Republic of Ireland. SRH is fully
listed on the London Stock Exchange with a current market capital
of circa £300 million.
An industry player
SRH is a founding member of the industry trade
association, the CRCA, and the Radio Advertising Bureau. We have
led many industry initiatives and support the various institutions
that underpin what, by any measure, should be regarded as a great
UK success story.
Local radio ownership
We have never supported the Radio Authority
proposal, apparently accepted by Government, that in any local
marketplace there should be at least three commercial radio owners
plus the BBC. Despite constant trumpeting that these proposals
were supported by the radio companies, our voice went completely
unheard, perhaps because, alone of the major radio groups and
industry bodies, we are not based in London. On top of this impossible
to fully implement proposal (many marketplaces are simply too
small to sustain so many separately owned services), we then have
a complex points system and restrictive cross-media regulations.
In our submission to the DCMS (never acknowledged
by them), we proposed that in local commercial radio, wherever
commercially sustainable, there should be a minimum of two
commercial radio operators plus the BBC.
On local cross media ownership, we suggested
that current UK and European Competition Law was sufficiently
robust and best able to be effective.
Our view has been subsequently vindicated by
the widespread powers proposed for OFCOM and, in particular, its
role in overseeing content, its obligation to ensure balance,
impartiality and fairness of treatment in local news reporting
Many of our colleagues in the industry and our
trade association, the CRCA, now suggest that in order that we
avoid local commercial radio being more heavily regulated than
ever before, all radio specific ownership matters should be a
matter for the normal and considerable competition powers that
already exist and yet to be invested in OFCOM. We can find no
argument with that so long as local cross-media matters are treated
in a similar fashion and the complex and unfair proposed points
system is abandoned. Failing that, our original proposal of two
commercial owners plus the BBC is a reasonable fallback.
SRH ownership rationale
SRH has within its portfolio some of the highest
audience rated radio stations in the UK, ranging from Clyde at
the large, metropolitan end of the scale to Radio Borders at the
other, serving a small, rural population. Our stations have won
many awards over the years for outstanding service to the community,
innovation and high quality programming. We believe in devolving
responsibility to those working within each of our stations and
therefore we invest in people, in local news and programme operations,
local communities and marketing initiatives. At the same time,
we are able to amortise expensive support systems across our stations
in terms of IT systems, research, national sales revenue generation,
Westminster, Scottish Parliament and Irish Assembly coverage,
all of which we have invested in constantly over the years.
We believe that much of the regulation and administration
of the commercial radio system in the past has worked against
this emphasis on diverse local programming, forcing out the crucial
elements that should make local radio distinctive and hampering
commercial radio as the competitor to the BBC while making listener
choice the poorer. By attempting to "shoehorn" a minimum
number of owners into a marketplace irrespective of how that might
affect the economic environment of that market, the local radio
ownership proposals, as contained in the draft Bill, will further
force local radio into the centre ground of music dominated formats,
with less and less local news and local interest programming.
The draft Bill then goes even further by suggesting a complicated
points system. It would be difficult to imagine a more draconian
and repressive series of regulations designed to penalise innovative
programming, career development, investment and listener choice.
If SRH believed that it could provide a second
commercial radio service within the Scottish Borders, or anywhere
else for that matter, and it could economically do so by amortising
"below the line" costs, concentrating investment in
programming, then why should consumers be denied such a choice
of output, simply because SRH was willing and able to supply what
others could or would not? Companies owning a number of stations
within a given market have no wish to dilute the audience of one
service by duplicating another, thus listener choice is protected
and guaranteed while the listener benefits from further choice.
At the macro level, the BBC is the prime example of diversity
of services under one owner, with its range of national and local
offerings. OFCOM, after all, will have sufficient powers to ensure
that editorial integrity, balance and fairness are maintained.
While this proposal provides for increased listener choice, particularly
in areas where this might be economically difficult, it also and
importantly assists staff development without forcing people to
constantly move from one company to another in order to progress
their careers with all the accompanying disruption of employment
benefits and family upheaval.
We would appeal to the members of the Committee
to address this issue in the interests of the consumer and to
allow the development of a healthy local commercial system outside
the major conurbations where a multiplicity of owners is less
likely to be a problem and which is what we believe the Government
We have no difficulty with the concept of access
radio but it should be clear as to what this "new tier"
actually is to be and how it will be funded. If access radio is
to contribute something extra to the broadcasting environment,
then it must be about filling a void rather than duplicating current
provision. Equally, access radio should be funded in a different
way to local commercial radio. If access radio licence holders
are able to tap into public funds or be operated by those reliant
on the public purse, then access to commercial sources should
not be allowed. To allow a separate tier of local radio to mix
and match its funding that would grossly distort competition and
We welcome the lengthening of analogue licences
from eight to twelve years but would suggest that licences be
reviewed prior to the end of the period. Subject to satisfactory
review of the performance of the licence holder, which should
include a public consultation exercise, then the licence should
be rolled on for a further licence period. In the event that OFCOM
feels that the licence should be re-advertised, then that should
be done, giving sufficient time for a new licence holder to provide
a replacement service.
Multiplex ownership and digital radio
Given the increased number of services available
via digital radio and that the Government is not simply legislating
for today but for tomorrow, then we see no reason why digital
radio service should not be included within local ownership rules.
On multiplex ownership, we believe that limiting one per company
per marketplace is probably sensible, subject to OFCOM being able
to review this as more spectrum become available.