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Global Radio may lose Classic FM licence
MikeBr
Posts: 7,914 Forum Member
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The Times reported today that "Global Radio faces the prospect of losing its lucrative Classic FM licence after communications minister Lord Carter rejected a proposal to extend it beyond 2011.
Without a change in legislation, the Classic FM licence will be advertised within the next 12 months and auctioned to the highest bidder."
Full article:
http://business.timesonline.co.uk/tol/business/industry_sectors/media/article5627243.ece
There's a much longer piece in Grant Goddards blog:
"The system for national commercial radio licences is simple. Sealed bids are placed in envelopes. Ofcom opens the envelopes. The bidder willing to pay the highest price wins the licence. That’s it. This system is enshrined in legislation. Even if Ofcom wants a different system, it cannot change it without legislation."
He argues that due to DAB take-up being lower than forecast the licence is worth far more than Global are currently paying for it.
"The licence format does not have to be classical music – the licensee can operate any format of its choice, apart from pop music (this caveat is in the legislation)."
However:
"Ofcom adopted a new policy in 2007 that all its analogue local and national radio licences would be scheduled to expire on 31 December 2015, or five years from their commencement, whichever is longer. For Classic FM, this means that its next licence period would theoretically run only from 1 October 2011 to 1 October 2016."
Full piece:
http://grantgoddardradioblog.blogspot.com/2009/01/classic-fm-always-check-expiry-date.html
Without a change in legislation, the Classic FM licence will be advertised within the next 12 months and auctioned to the highest bidder."
Full article:
http://business.timesonline.co.uk/tol/business/industry_sectors/media/article5627243.ece
There's a much longer piece in Grant Goddards blog:
"The system for national commercial radio licences is simple. Sealed bids are placed in envelopes. Ofcom opens the envelopes. The bidder willing to pay the highest price wins the licence. That’s it. This system is enshrined in legislation. Even if Ofcom wants a different system, it cannot change it without legislation."
He argues that due to DAB take-up being lower than forecast the licence is worth far more than Global are currently paying for it.
"The licence format does not have to be classical music – the licensee can operate any format of its choice, apart from pop music (this caveat is in the legislation)."
However:
"Ofcom adopted a new policy in 2007 that all its analogue local and national radio licences would be scheduled to expire on 31 December 2015, or five years from their commencement, whichever is longer. For Classic FM, this means that its next licence period would theoretically run only from 1 October 2011 to 1 October 2016."
Full piece:
http://grantgoddardradioblog.blogspot.com/2009/01/classic-fm-always-check-expiry-date.html
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Comments
Virgin Radio were also the second highest bidders for the INR2 licence.
From memory I'm sure the RA decided in both cases that the highest bidders had bid too much to be able to sustain a viable quality service, and therefore awarded the licences to the second highest bidders. I don't think there was a judicial review in either case, but I could be wrong.
I would still fancy Classic FM to retain this licence in 2011, after some "behind the scenes negotiations". The "exceptional circumstances" could be taken to mean anything, as they were in 1991 apparently.
As for the national speech station on DAB, what's the betting that this will include a large amount of LBC content? In fact, why not just transmit LBC with an increasing amount of opt-outs over time?
I would like to see that although suspect this relates to the Digital One advert for potential providers which asked in particular for a provider interested in supplying a plays books and comedy service.
You are correct, Showtime failed to get the backing it required and the licence was reawarded to classic FM.
It would be quite sad to loose Classic FM on FM but there is a school of thought that DAB availablity is sufficient. I suppose it all depends on how much cash the government want to make from the auction.
That's INR2. INR3 is the speech station, originally Talk Radio, currently that pale shadow of its former self, TalkSport.
The licence format does not have to be classical music – the licensee can operate any format of its choice, apart from pop music (this caveat is in the legislation)."
So No Radio 2 and possibly no Galaxy, Kerrang , XFM (unless they romved the POPular contempoary music from format and hence, become none commercial viable to put in a higher enougth bid to win in the first place). Its the LAW.
Intresting to know what Ofcom"s defination today of Pop is compared with the Radio Authority of the early Nineties. Formats have been simplified, although that does not stop managers getting them wrong before being handed yellow and Red Cards by Ofcom.
I'm pretty sure that Talk Radio never made a profit.
talkSPORT on the other hand has been a star performer for UTV with increasing revenue and profitability, before the recession anyway.
Laws can be changed very easily, and that part of the legislation could be changed at the stroke of a pen by the current Government.
In the digital age this clause is pretty irrelevant, and awarding it to the highest bidder (with no conditions) would be consistent with other spectrum auctions under this Government.
Quoting the 1990 Broadcasting Act brought in by Margaret Thatcher is fair enough as things stand, but it isn't set in stone.
Maybe a return of Virgin?
The legislation really ought to be changed for everyone's benefit. Ofcom have to work within the legislation. I am surprised the Labour Oppostion at the time now in Government for the last 12 years has done nothing to change it. Maybe no surpirses on second thoughts.
Even that isn't rock solid- twenty years on is pre-1960 now equivilant to pre-1980-i.e. would an 'oldies' service be acceptable?
In practice I'd be amazed if we get anything other than Classic FM.
I can't say I'm really bothered - I'm a satellite geek really - but I'm confused by this.
Low demand = low price? Surely?
Do enlighten me if otherwise!
In which respect... them losing the breakfast television licence/contract, or them originally being involved in INR2 (anyone remember the brief test transmissions from Virgin, which asked for reception reports to be sent to the former TV-am studio address)....???
In Grant's blog (as I understand it) he refers to the current INR1, 2 and 3 stations where Ofcom reduced the analogue licence fee from what was bid (£1M PA plus 14% revenue) to a lower annual figure (£50k plus 6% revenue) as the analogue transmission would not be worth as much as they predicted digital would be by now the predominant system (this would include DAB, digital TV and the internet), but total digital listening has not reached the predicted figures, therefore Global may have to bid high to retain the FM licence which will be open to highest bids worldwide.
Global might hope Ofcom return to a "beauty contest" which favours Global in return for supporting Digital One, new national digital stations and a migration from FM to digital only after 2016.
I think that is still the definition. From Classic FM's format:
http://www.ofcom.org.uk/static/radiolicensing/formats/an001-2.doc
Which limits the national commercial FM licence to classical music and, erm... jazz? If they were careful?
They wanted a classical music station.
Yes you could, I found in a GWR submission to Ofcom the original bids:
"It is instructive to recall the process which led to Classic FM going on air in 1992. Following the 1990 Broadcasting Act, the Radio Authority advertised the national FM licence in a sealed-bid auction. There were three bidders, proposing three different programme styles and offering very different sums for the licence - in a ratio of 4:2:1.
The highest bidder proposed a service of music from stage shows and musicals, and offered £l.2 million per annum for the licence. Classic FM was the second bidder at £600,000, and a service offering melodic, easy listening music was third at £300,000. The highest bidder could not confirm its finance and the licence was offered to Classic FM."
That format would have been viable 20 years ago, when someone born in 1930 and who grew up with the music of the 40's and 50s would still have been around 60 years old.
That generation is too old now, surely?