FEN RADIO: A STORM IN A PEAT BOG?

by GRANT GODDARD

www.grantgoddard.co.uk August 2008

The decision of radio group UKRD to hand back to Ofcom its licence for ‘Fen Radio’ and to voluntarily close the Wisbech station on 31 July 2008 has focused attention on the harsh economics facing small commercial radio stations. “Fen Radio blames Ofcom for closure”, said The Guardian’s headline, with UKRD chief executive William Rogers criticising the regulator and its masters for a “complete lack of common sense”. It would be tempting to characterise this affair as a ‘David and Goliath’ tale, but the issues are more complex. Firstly, the problem is that there are too many commercial radio stations in the UK, too many of which are too small, and too many of which offer similar content aimed at similar audiences. Who are to blame? The regulator, because it offered progressively smaller and smaller local radio licences during the 1990s without prior economic analyses as to whether local economies could support them. And the radio groups, because they applied for these licences promising they could make every station break even by its third year on-air. Secondly, niche radio formats such as Fen Radio’s rock music cannot work in small markets, particularly in rural areas, where there are simply not enough people. Fen Radio attracted 13,200 listeners per week in a market of only 80,900 adults. Who are to blame? The regulator, because it often awards licences to applicants whose business plans make no commercial sense (viz talk radio in Edinburgh, adult alternative music in Solent, rock music in Plymouth). And the licence applicants, because they wrote those business plans. Thirdly, rock music radio stations have a dismal track record, despite the UK being a global hub for the genre. Who are to blame? The radio groups, who (with the honourable exception of Bauer’s Kerrang!) have made a pig’s ear out of rock music radio. Fifteen-year old Virgin Radio is about to be put down, GCap has sold off Planet Rock and almost sold Xfm, Global Radio has demoted The Arrow to a mere rock jukebox, and Macquarie never launched its Plymouth rock station. Fourthly, many small stations are only sustained through cross-subsidisation from their owners’ larger stations. In the case of UKRD, its lucrative Cornwall and Norfolk stations subsidised the rest of the portfolio whilst its monopoly over local radio advertising in those areas was maintained … until Ofcom arrived and introduced competition in those markets. Who is to blame? The regulator, because it had perpetuated some radio groups by protecting their monopoly power in key local markets. Fifthly, some radio groups seem to have short memories. When UKRD purchased the Fens station in 2001, it was a larger operation serving 110,000 adults in two towns, Wisbech and Ely, from two transmitters. In 2003, UKRD asked the regulator’s permission to make the station smaller, because it wanted to annex the Ely transmitter to its existing Cambridge station. UKRD argued that a more locally focused product for Wisbech alone would be more

Fen Radio: A Storm In A Peat Bog? ©2008 Grant Goddard

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likely to secure the station’s long-term success. The regulator agreed, effectively sealing the station’s fate. Now the Wisbech station has closed, and UKRD’s Rogers has commented that “the market is simply too small to sustain a service” and that “there’s absolutely no evidence that this marketplace can sustain a radio station of this type”. However, it was UKRD itself that precipitated Fen Radio’s smaller service area. What we are witnessing is ‘theatre’, in which a regulated industry finds it easy and convenient to blame the regulator for its woes. Whereas Ofcom’s predecessor, The Radio Authority, could have been relied upon to forge a solution to save itself the embarrassment of a station closure, UKRD is finding Ofcom to be more hard-nosed. These events are symptomatic that, for more than thirty years, both the regulator and the industry conspired to manipulate and distort the UK radio market. Solving that legacy is now proving almost impossible.

[First published as 'Talking Radio: Grant Goddard' in Broadcast magazine, 10 September 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

Fen Radio: A Storm In A Peat Bog? ©2008 Grant Goddard

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