Joint Committee on The Draft Communications Bill Minutes of Evidence


Memorandum submitted by the Commercial Radio Companies Association (CRCA)

  Note—all references are to the Policy Narrative.

THE CRCA

  The Commercial Radio Companies Association (CRCA) is the trade body for UK commercial radio. It represents commercial radio to government, the Radio Authority, copyright societies and other organisations concerned with radio. It manages the Radio Advertising Clearance Centre which clears national and special category advertisements prior to broadcast. CRCA also jointly owns Radio Joint Audience Research Ltd (RAJAR) with the BBC and was instrumental in the formation of the Digital Radio Development Bureau, a company owned by UK digital radio multiplex owners.

  CRCA members include national commercial radio stations, as well as most local and regional stations. They account for almost 50 per cent of all the radio listening in the UK and over 75 per cent of local listening in the UK. As well as promoting the importance of commercial radio, the CRCA plays an active role in promoting conditions that will enable it to thrive into the future.

COMMERCIAL RADIO'S KEY CONCERNS

  1.  The draft Communications Bill applies disproportionately detailed regulation to radio ownership:

    —  we believe that it is inconsistent to impose a complex points system to control local radio ownership within a draft Bill which has such a deregulatory approach to ownership of other media;

    —  however, we support the government's wider objective of ensuring thre elocal media owners within each area.

  2.  The draft Communications Bill threatens a more regulatory regime for radio in the future:

    —  the role of the Content Board should not go beyond the BSC's existing role in determining acceptable standards or the Radio Authority's duty to establish and monitor radio stations' "formats";

    —  OFCOM's new duty to "promote and protect local content" begs the question of who will define such content and charcter: regulators, broadcasters or listeners?

  3.  Access Radio will only add something new to the radio ecology if it is funded in a new way. To allow it to source commercial funding would enable it to become little more tha publicly subsidised commercial radio.

INTRODUCTION

  4.  CRCA congratulates the government on a draft Bill which is radically deregulatory in much of what it proposes. In particular, we commend the introduction of communications regulation that, for the first time, recognises the value of competition powers in controlling media ownership, thus dispensing with the need for complex point systems.

  5.  However, the draft Bill's deregulatory approach is not even-handed across all media. It does not do sufficient to reduce the likelihood of content micro-regulation and the CRCA Board believes it over-regulates radio ownership.

  6.  CRCA believes that subjecting radio to a complex local points system is inconsistent when considered alongside the draft Bill's removal of all foreign ownership restrictions, its complete deregulation of cross-media ownership (bar a handful of key rules) and its decision to leave to competition law the possibility of a single ITV owning Channel 5. The draft Bill's continued loyalty to such a detailed radio ownership scheme, which was developed over a year ago, ignores the further recommendations for deregulation which CRCA has made during 12 months which have advanced the ownership debate considerably.

  7.  We recommend that the draft Bill's objective of ensuring there are at least three owners of local media be adopted as the Bill's central local ownership policy, leaving sectoral specific controls to competition powers.

  8.  While we are concerned by the inconsistent approach that the draft Bill takes to ownership policies across different media, we recognise that this may be a consequence of amalgamating sectoral drafting. We therefore hope that a more even-handed approach to radio regulation and ownership rules will be applied in the Communications Bill itself.

OWNERSHIP

Foreign Ownership

  9.  We welcome the removal of restrictions on foreign ownership of UK media companies (9.3.1). However, we strongly urge the government to seek reciprocity from foreign governments to ensure that UK media is better able to expand overseas.

National & UK-Wide Radio Ownership

  10.  We welcome the relaxation of national radio ownership restrictions (9.6.1.1) and the abolition of the points system that restricts UK-wide ownership of local radio stations (9.6.1.2).

Local Radio Ownership

  11.  We are pleased in principle that the Bill recognises the need for local radio ownership relaxation by including the 3+1 formula, which CRCA had previously agreed with the Radio Authority (9.6.2.1).

  12.  However, we are disappointed that the further relaxation we were encouraged to propose in the government's consultation document has not been acted on, particularly in light of the overall deregulatory nature of the Bill's wider ownership proposals.

  13.  In particular, given the statement in the legislation that local press and TV are the two most important local media (9.4.4), it is difficult to understand why radio now has the only sector-specific local restrictions in the legislation.

  14.  It is over a year since we were strongly encouraged to seek consensus with our regulator in the matter of local radio ownership. Since then there has been significant change in the broadcasting and telecommunications sector, change which has been reflected in an enabling and deregulatory draft Bill. Radio has, in contrast, not moved on, and remains at the mercy of a complex points system.

  15.  In light of the relaxations afforded to TV and newspapers, we cannot see why radio should still be subject to single medium local ownership rules.

  16.  We believe that local plurality will be sufficiently protected by the combination of competition powers and a scheme to ensure there are at least three local media owners in each market (see below), without imposing radio-specific rules.

Local Cross-Media Ownership

  17.  Consistent with the Bill's wider principle of ownership deregulation combined with a small number of key rules to protect plurality, we support the proposal (9.4.2.c.iii) that there should be three local media owners in each market. This is a simple but powerful concept which, when twinned with competition rules, will deliver local plurality.

  18.  We believe that it is proposed to deliver this objective by building cross media rules on top of the (3+1) local radio points scheme (9.6.2). However, further clarification is needed since neither Policy Narrative nor the recently-published draft Ownership Clauses contain sufficient detail.

  19.  Regardless of what is currently proposed, we believe it is possible to secure the objective of three local media owners with a simple mechanic which would not be dependent upon the radio ownership scheme for its foundations. We are currently developing such a mechanic.

Ownership of Local Radio by Other Local Media

  20.  We do not support increased regulation of local radio ownership by local press (and its corresponding application to ownership by local TV stations) (9.6.2.4).

  21.  There is no evidence to suggest that allowing a local newspaper to own a local radio station has any adverse effect on the accuracy or impartiality of radio output. Indeed the Radio Authority has confirmed that its available records contain no complaints on impartiality or accuracy matters relating to such ownership arrangements.

  22.  Additionally, the draft Bill reminds OFCOM of its duty to continue to maintain impartiality and accuracy in radio output, as the Radio Authority has done in the past (9.10.6).

  23.  We can therefore see no reason to impose press/radio specific ownership restrictions beyond the rule to protect local plurality by ensuring there are at least three local media owners in each marketplace.

OFCOM

Regulatory Approach

  24.  We commend the proposed duty on OFCOM to ensure that unnecessary regulatory burdens are neither imposed nor maintained.

  25.  However, we believe that this is at odds with the comparatively high levels and detail of regulation that the Bill proposes to apply to radio. We believe that the proposed increase in subjective controls such as format variations upon change of control and what appear to be new powers for OFCOM to determine local content and character, runs contrary to the draft Bill's deregulatory intentions (8.4.1.8).

  26.  We support the proposal (5.2.3) that OFCOM should have a similar obligation to that imposed upon the FSA where any increase in regulation needs to be preceded by a cost-benefit analysis.

Competition

  27.  The proposed duality of competition powers between OFCOM and the OFT threatens to maintain the "double-jeopardy from multiple regulators" which the Secretaries of State have said this Bill should bring to an end.

  28.  Certainty for industry is essential. The Communications Bill should give clear direction that OFCOM's views will be in the ascendant in matters of communications competition. OFCOM's understanding of the wider communications market will ensure that such adjudications appreciate issues of market convergence rather than being based on outdated single sector concerns.

Radio in OFCOM

  29.  CRCA recognises that the pace and nature of radio licensing requires a strong team of radio experts to undertake it, just as it does now within the Radio Authority. However, such a team would sit well within an overall licensing department, and the need for such department-specific radio specialists is not justification for subjecting radio to an inappropriate regulatory structure within a converged, deregulatory body.

  30.  OFCOM must be a wholly converged regulator if it is to oversee a converging industry. At a time when radio listening is increasing (as television viewing declines) and given the industry's importance as an advertiser and employer[8], consigning radio to a solo silo would be wholly inappropriate, not least because regulators concentrating on a single medium might be tempted to micro-regulate. Radio should enjoy full status within OFCOM, being represented at the highest level within the organisation and appropriately within each department.

The Content Board

  31.  We are uncertain about aspects of the proposed new Content Board. As a mature and responsible industry, we should not be subject to an interfering style of regulation: one which might forget that, in the end, listeners are often the best regulators, judging the quality and suitability of output or device better than any watchdog. We believe listeners will punish broadcasters who dare to provide poor quality programming by using the "off" or "re-tune" switch.

  32.  We support the continuation of the BSC's role in determining acceptable broadcasting standards and ensuring fairness. However, the term "content" implies something quite different from "standards". A radio station's "content" is defined by the format (promise of performance) which is agreed (and should continue to be agreed) with the regulator. Content regulation which goes beyond the BSC's existing codes, current advertising and programme impartiality and accuracy safeguards or the format restrictions imposed in radio licences would be an unwelcome increase in regulation.

  33.  The Policy Narrative makes clear that OFCOM will have new powers "to promote and protect the local content and character of local radio" (8.4.1.8). In the face of massive competition from other local and national commercial and BBC stations, competition for local audiences is fierce and local stations dare not compromise their local appeal. In such an environment, it is illogical to suggest that a regulator is better placed to determine what comprises local content and character than those working daily within the community.

ACCESS RADIO

  34.  We are concerned that the draft Bill does not preclude OFCOM from enabling Access Radio to source at least some of its funding from commercial sources (8.4.2). Whilst we are generally in favour of expanding the radio sector, we are wary of this initiative's potential to become publicly subsidised commercial radio.

  35.  Access Radio must be a wholly new sector of radio, both in its structure and funding. To enable it to access commercial revenues would both undermine its own social-action objectives and threaten the smallest and most community-focused commercial radio stations.

DIGITAL RADIO

Service ownership

  36.  Given the increased number of services available, we can see no reason to impose greater restrictions on digital sound services than on analogue local radio stations. We therefore propose that digital sound programme services should be included within a three-local-media-owners rule.

Multiplex ownership

  37.  We recognise the important and influential role that multiplex owners have and agree that there should be multiplex ownership rules. We recommend changing the proposed rule limiting each company to ownership of one multiplex per area (9.6.3.2) to one that ensures that there are at least two owners of multiplexes in each market large enough to accommodate them. This would be future-proof in the event of more spectrum becoming available thus allowing markets to contain more than two multiplexes without all of them having to be separately owned.

LICENSING

Licence Terms

  38.  We welcome the lengthening of analogue radio licences from 8 to 12 years (8.4.1.3).

  39.  In addition, we recommend that analogue services already rolled in return for participation in digital services, merit a further roll at the end of the current analogue licence period. The rate of digital radio take-up of has been slower than anticipated. Income from analogue broadcasts will continue to subsidise digital activity for some time to come.

Changes to Licences

  40.  We welcome the introduction of two new circumstances in which a radio station's licence may be altered (8.4.1.5):

    —  where a departure would be conducive to maintaining or promoting fair competition; and

    —  where there is significant support for the change.

Onward Sale of Licences

  41.  The draft Bill seeks to prevent a change of control leading to a move towards a middle ground of national taste (8.4.1.8). With a 77 per cent share of local radio listening[9], in the face of ever-increasing competition, commercial radio sees little evidence of such an erosion of local character.

  42.  The draft Bill also seeks to protect the character, range and quality of local radio in the face of ownership changes (8.4.1.8).

  43.  It suggests that both these dangers can be prevented by empowering OFCOM to change a radio station's format in the light of a change of ownership control. At the moment, the Radio Authority may only prescribe a tightening of a station's format, or a clarification to output or editorial arrangements when ownership changes are subject to a public interest test.

  44.  These content protection objectives are already met by the "format" system. Tightening or altering a format for a new owner of a licence already issued is not the proprietor-neutral regulation that we have been told this Bill intends. Neither does it achieve the intended certainty for industry.

OTHER AREAS

Fines

  45.  We believe that a five-fold increase in fines is excessive (8.4.1.7).

Complaints

  46.  We believe that OFCOM's complaint handling role should be backstop only. CRCA recommends that, while OFCOM should approve and review relevant codes, it should direct all complaints in the first instance to the licensee concerned (8.5.2).

May 2002





8   Broadcast radio employs more people than TV (23,200 people as opposed to 20,200 people) Skillset 2001. Back

9   RAJAR Q1, 2002. Back


 
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