THE CLOSURE OF CHANNEL 4 RADIO

by GRANT GODDARD

www.grantgoddard.co.uk October 2008

Channel 4’s decision to abandon its radio plans has sent shockwaves reverberating through an industry already fragile from declining audiences and an advertising downturn. For the majority of DAB evangelists, the promised eight new national stations heralded precisely the ‘shot in the arm’ that the platform needed. Now that these stations are dead, as if to rub salt into the wound, Channel 4 Chief Executive Andy Duncan has shrugged off the aborted radio venture as “less than 1%” of his company’s turnover. To the commercial radio sector, the probable £9 million spent on Channel 4’s ‘non-launch’ seems like a lot of money – ironically, enough to keep a clutch of national digital radio stations on the air for a year. Channel 4’s exit from radio leaves a gaping hole in the radio industry’s masterplan to create a ‘Freeview’ growth moment on the DAB platform. A significant consumer marketing campaign starts in November to encourage DAB hardware sales in the critical run-up to Christmas. The one element that would seem to be missing from this promotion is ‘new, exciting content’ because, as Duncan pointed out, it is “highly unlikely” that anyone, other than Channel 4, had been making plans to launch new national digital radio stations in the next two years. This will make the winter DAB marketing campaign more challenging than last year’s, as the breadth of available DAB content has reduced since then. Surely it must be time to knock some heads together. If you were to seat all the radio stakeholders in a boardroom and ask them what they are doing about new DAB content to excite the consumer, you could hear a pin drop. With Channel 4 having made a hasty exit, everyone else is left staring expectantly at each other. Despite their regulatory roles, both Ofcom and the Department for Culture, Media & Sport have avowed that they cannot intervene in the DAB content market. The BBC argues that it already launched five national digital stations in 2002 and has cross-promoted them like crazy, so it has no plans for new DAB channels within the current Licence Fee period. That leaves the commercial radio companies who, having withdrawn content from DAB during 2008, now have neither the stomach nor the cashflow to throw even more money at the platform. Cannot the commercial radio sector simply cut its losses, turn off DAB and hand the whole problem over to Ofcom? Unfortunately it cannot, because the regulator holds the majority of local commercial radio owners over a barrel. During the last decade, they had been tempted by the regulator’s offer of an automatic eight-year licence extension in return for simulcasting their station on the fledgling DAB platform. Having failed then to grasp that there is no such thing as a ‘free lunch’, station owners are now paying the price, with Ofcom threatening to immediately revoke the analogue licence of any such station giving up on DAB. What had once seemed like a ‘carrot and stick’ approach to digital regulation is now looking much more like a hostage situation. The commercial radio sector has a stark choice. It can grin and bear the present impasse, accepting that the continuing £26m annual cost of DAB could merely hasten its own demise. Or it can lobby Parliament to amend primary legislation so as to ‘de-couple’ the issue of analogue licence extensions from the requirement to simulcast on DAB. Or it can take concerted action and call
The Closure Of Channel 4 Radio ©2008 Grant Goddard page 2

the regulator’s bluff, by collectively threatening to remove all its local stations from DAB unless it is offered some kind of moratorium. Would Ofcom really shut down most local commercial radio stations on a single day? What is needed now is for large and small radio owners to work together and agree upon a common approach to finding a solution. Only then can an unfettered discussion about the economics of the DAB platform begin in earnest.

[First published as 'Talking Radio: Grant Goddard' in Broadcast magazine, 29 October 2008]

Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of experience in the broadcasting industry, having held senior management and consultancy roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at http://www.grantgoddard.co.uk

The Closure Of Channel 4 Radio ©2008 Grant Goddard

page 3