Thursday, 23 May 2013

Global, the Competition Commission and Ofcom

This week the Competition Commission has shown that it has some teeth where Ofcom has only been provided with gums.  The Commission told Global Radio it must dispose of some stations in seven regions following concerns over its £70m purchase of Real and Smooth services from GMG Radio.

Global must sell some of the stations it bought as part of the GMG deal, or offload its own services such as Heart and Capital, in seven areas: the East Midlands, Cardiff, North Wales, Greater Manchester and the north-west, the north-east, central Scotland, South Yorkshire and West Yorkshire.
It is notable that the Competition Commission has decided that there would be “significant adverse effects”  in most regions outside London as a result of the merger. Although recognising that commercial radio operates in what it calls a two sided market – with separate competition for listeners and advertisers - the Competition Commission largely restricted its analysis to the effects on the advertising market, which is what it was essentially set-up to do.

In north-east England, where the heritage ILR services were both owned by EMAP (now Bauer Radio), the Radio Authority and Ofcom had over the years licenced three separate region-wide licences to compete with them:  Century Radio (now Real Radio); Galaxy (now Capital); and Smooth (which covers a slightly smaller region).   We now face a situation where all three region-wide alternatives are owned by Global. The only other players, apart from Bauer, are town or city-sized commercial services covering places away from the main conurbations of Tyneside and Teesside or a few community radio stations with very limited range.
Plainly it is sensible for the Competition Commission to decide that, as Bauer pointed out in their submission, this gives Global too great an influence in the region’s radio advertising market.  But why does Ofcom not see this as a potential reduction in plurality for radio LISTENERS too?

Ofcom would claim that radio listeners also have the alternative of BBC stations and digital media, but then advertisers have alternative outlets in other media as well. It is odd that, when it comes to money, the competition regulator sees this centralisation of control as a risk but, in matters of editorial policy and cultural variety, the broadcast regulator does not.
An while Ofcom argues that the regulation of “Formats” guarantees a choice and diversity of programming for listeners the Competition Commission’s report undermines this to an extent.  The report points out that, while the Capital North East Format specifies a target audience of 15-29 year olds the average age of their listeners is in fact 31.  Similarly while Smooth is supposed to aim for listeners 50+ the average age in practice is 47.  The Formats of these three originally distinctive regional stations have become so watered down that they are all effectively competing for slightly different versions of the same familiar middle ground.

Targeting radio programming is not an exact science, and I do not blame any operator for trying to occupy the high ground in terms of audience numbers, but why is Ofcom so content to acquiesce in allowing this narrowing of choice?


  1. "...why is Ofcom so content to acquiesce in allowing this narrowing of choice?"

    Global's acquisition of GMG Radio complies with the current rules on ownership - the 2003 Communications Act simply requires there to be at least 2 commercial radio operators, plus the BBC, in any 'significant market'.

    There is, therefore, no issue with plurality as far as the law - and Ofcom - are concerned. It's only because of issues with advertising that the CC became involved.

    While I agree Ofcom has sometimes made some odd, or poor, decisions the real "villains" here are the 2003 Comms Act and the 2010 Digital Economy Act.

  2. I agree Paul, the issue at the heart of this is a lack of "political" will at the DCMS to encourage local radio, all the emphasis being on driving digital take-up. There's nothing wrong with switching to digital in principle - it's just that in the UK this has become completely equated with a form of DAB which does not easily accommodate truly local stations.
    As a result this consolidation is not matched by any newcomers in the market.

  3. I notice that there have been a few constructive threads on some of the radio forums regarding community radio becoming the new local commercial radio. Certainly in the Tees Valley, towns such as Hartlepool and Bishop Auckland are fortunate indeed in still having any independent 'local' radio service (albeit through low power FM CR licences).

    There is a problem however with the CR regulations in terms of the normal 25w ERP on FM, the drying up of grants as a result of government and austerity and saturation of the advertising market as a result of so many paid-for and free newspapers and broadcast media outlets.

    To sustain a quality community radio service is extremely difficult, especially when it involves the need for skilled staff in terms of IT and journalism (and why there is so little local news on CR). To rely totally on volunteers is very difficult and yet the current legislative framework doesn't much room for growth in a station's revenue and the possibility of acquiring a core of paid staff to bring things together. The phrase "hands tied behind one's back" seems very appropriate for the prospects of CR, and I'm sure is a major reason behind the fact that such a large number of CR stations fail (I read somewhere that it is approximately one third!).

    Bearing this in mind, even CR then finds itself descending a route of either jukebox automation (a charge of course levelled at commercial radio) or an alternative output of unprofessional programmes. Either way, it's a loss of listeners, and vicious cycle of financial problems!

    Regarding DAB, I have owned a Grundig DAB radio since 2003 and have listened to it on a handful of occasions. DAB in this country is plagued by low bit-rates, a system that is 20 years old and a product that is inferior to analogue stereo FM. The lack of budget sets for cars and homes hasn't helped of course. In a recession, a £3.99 FM/MW/LW (like the one I bought from Woolies a few years ago) looks so much more attractive, especially when CR for example isn't even available on DAB where the multiplexes are monopolised by the big groups!!!

    Great blog by the way Brian!

  4. Ofcom is not interested in the slightest in community radio. It is there to do the bidding of the borg stations who run rings around ofcom. My adice to anyone wishing to provide anything resembling local or community radio is just do it! Piracy is the best policy!