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


Memorandum submitted by Scottish Radio Holdings plc


    —  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 the case.

    —  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 and content.

  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 actually intended.

Access radio

  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 local markets.

Licence terms

  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.

June 2002

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