Sunday, 27 June 2010

DAB radio: a national platform that no one wanted

In 1998, the Radio Authority advertised a licence for the “first and only national commercial digital [DAB] multiplex licence.” There was no stampede of applicants. By June 1998, the regulator had to issue a press release with the headline “Radio Authority receives one application ….” The sole applicant was ‘Digital One’, 57% of which was owned by commercial radio’s GWR Group plc, whose chief executive Ralph Bernard later admitted:

“GWR was encouraged to apply for the national [DAB multiplex] licence and was under some pressure to invest in the opportunities for a national licence from the then regulator. Had we not done it, there would be no national DAB platform now. Not only that, [the regulator] did not know what they would have done on the question of national radio stations with regard to the opportunities given by the then government to renew their national licences for a further period of time if they were to commit to going digital. But how can you [do that] if there are no opportunities to go digital because there is no national multiplex? When I put that question to the Radio Authority, I was told that the answer was: ‘We don’t know what would happen – there is no Plan B’. It was just an assumption that someone would go for [the national multiplex].”

Bernard had a hard time convincing his own board that the DAB licence was a worthwhile investment for a radio group that, until then, had owned radio stations rather than transmission infrastructure:

“When we were seduced into believing that this was going to be the only [national DAB] licence, we realised that there would be substantial losses, but the payback would be when you have the opportunity to be the only player in the national market for DAB. When it’s the Radio Authority, an agency of government, you tend to believe what you are told. On that basis, the investment was justified and, at the time, getting it through my Board was not easy. Persuading shareholders, particularly the larger ones, was not easy.”

Now, twelve years later, GWR Group no longer exists, Ralph Bernard is out of the commercial radio business, but the ‘Digital One’ national DAB platform is still there. Nobody really wanted it in 1998, and nobody really seems to want it now. Its ownership has changed hands like pass-the-parcel, GWR Group plc having merged into GCap Media plc, which was then sold to Global Radio which, in 2009, sold its majority stake in Digital One to transmission provider Arqiva. How many millions were thrown at Digital One over the years by GWR, GCap and Global Radio will probably never be known.

The only thing cheap about Digital One was the cost of its initial 12-year licence, a mere £10,000 per annum paid to the regulator for the radio spectrum it uses. The business model was that Digital One would lease space on the DAB platform to radio stations that would pay it rent (about £1m per year, dependent upon audio quality). Since opening for business in 1999, many digital-only stations have tried using the platform but, to date, almost none have stuck around. No digital radio station has yet made a profit.


The latest additions to the lengthening list of stations that have failed to make the national DAB platform work for them are NME Radio and Panjab Radio, both of which quit Digital One in June 2010 (see shaded area of table). The reason? Almost no one was listening. Add together the digital-only stations broadcasting on the platform last quarter (and that are measured by RAJAR) and, in total, they accounted for less than 1% of total radio listening.

Yet the radio industry, the receiver manufacturers and their lobby groups are still spending money on campaigns to convince the public that DAB radio is a raging success. Digital One says its radio platform reaches “more than 90%” of the [UK] population,” equivalent to 46m adults. RAJAR tells us that 35% of those adults have a DAB radio. Yet only 226,000 adults per week listened to NME Radio, after nearly two years on-air. If you were in any way persuaded to believe the hype surrounding DAB, your business plan to start a digital radio station might look dangerously over-optimistic.



When NME Radio launched in June 2008, it had forecast that its audience would reach 396,000 adults per week by its second year. For most of its life, the station was broadcast on local DAB multiplexes (and online). Then, from 21 December 2009, NME Radio was made available nationally on DAB for an eight-month trial. Broadcasting to a much bigger potential audience, there should have been a positive uplift to the station’s performance in Q1 2010. However, there was no noticeable impact upon adult reach (226,000) or hours listened.

In its forecasts, NME Radio had projected that DAB would be “53%” by 2010. Maybe this referred to Ofcom’s forecast that, by year-end 2010, digital platforms (not DAB alone) would account for 50% of all radio listening. In fact, in Q1 2010, only 15% of listening to all radio was via DAB, and 24% was via all digital platforms (worse for commercial radio at 12% and 23% respectively). Ofcom’s forecast of how digital radio usage would grow was disastrously inaccurate. NME Radio did not stand a chance of commercial success using DAB.

The other digital radio station that quit the national DAB platform in June 2010 was Panjab Radio. Like NME Radio, it had broadcast via local DAB multiplexes (and online), but was then made available nationally on DAB for a six-month trial from 1 December 2009.


There was no lift to Panjab Radio’s audience in Q4 2009, but the following quarter saw a noticeable increase to 172,000 adult reach and 913,000 hours listened per week. This was almost twice the amount of listening that NME Radio recorded on the national DAB platform, a real achievement for an ethnic radio station.

The day Panjab Radio had joined the national DAB platform, Digital One operations director Glyn Jones said:

“Like Premier Christian Radio and UCB UK, Panjab Radio relied on a fund-raising appeal to pay for the launch of the station. It’s interesting to see the growth of listener-supported stations, and the way they’re extending the range and choice of stations on air via digital radio. These are stations that neither a traditional commercial model nor the BBC have chosen to provide, but which listeners value so much that they’re prepared to help pay for them out of their own pockets.”

The sub-text was that the Digital One national DAB platform cannot support a commercial digital-only radio station because the financial returns are simply insufficient to cover the expense for it to lease space on the platform. If Panjab Radio had managed to sell advertising at the average commercial radio sector rate, it should have generated £1m per annum of revenue. However, an industry study in 2009 found that the average digital radio station generated only £130,000 revenue per annum (and Panjab Radio attracted less listening than others).

When Panjab Radio quit the national DAB platform in June 2010, Digital One’s Glyn Jones issued a press release that seemed over-eager to deflect the blame:

“Panjab Radio's revenues come from a mix of traditional radio advertising plus fund raising among Britain's Panjabi and Sikh communities. Following a strategic and financial review the station opted to end its national transmissions but to continue to broadcast on DAB digital radio in three parts of the country with significant concentrations of the target audience - the West Midlands, West Yorkshire and London.”

As the table above demonstrates, the national DAB platform’s history is littered with commercial digital radio stations that failed to make it work for them. Most of the stations currently on the national DAB platform are non-commercial and so do not need to meet their costs from advertising revenues. But religious stations, army radio and unsigned artists do not come close to the mass market purpose for which the platform was originally envisaged. Did GWR Group make its substantial investment in national DAB in the expectation that, after a decade, the platform would be filled with subsidised radio stations attracting tiny audiences?

Two years ago, I had written:

“This sudden flowering of ethnic, religious and publicly-funded radio stations on the DAB platform echoes the fate of the ‘AM’ waveband in the 1990s … The ‘DAB’ platform of 2008, particularly in London, is already starting to resemble the ‘AM’ platform of 1998, suggesting that ‘DAB’ might have already been written off by the sector as a means to reach the ‘mass market’ audiences that national advertisers desire from the medium.”

Since then, this desperate filling of DAB multiplex capacity with non-commercial stations has spread from London to the national platform. Bizarrely, given the overwhelming empirical evidence that this “first and only national commercial” DAB platform is not working, even after a decade of operation, Ofcom is keen to create a second quasi-national DAB platform. Its rationale is that:

“This could help to facilitate the creation of national commercial radio stations to create a consumer proposition analogous to that of Freeview: a wide range of popular and niche services, delivered digitally” because “we believe DAB still offers the best solution for the future growth of radio in the UK.”

This nonsense was written in an Ofcom report less than a year ago, when the writing on the wall could not have been larger that the national DAB platform’s future for commercial radio was doomed. Surely, a regulator that refuses to deal with the reality of the here and now could be a regulator that will eventually find it has no future. For years, Ofcom (and its predecessor) have led the commercial radio sector a merry dance down a DAB blind alley that has proven almost fatal to the industry’s economic health.

If Ofcom publishes one more policy document proclaiming (as if it were still 1998) that ‘the future of radio’ is DAB, rather than it working to bang industry heads together to find a practical route out of the present mess, all it will succeed in doing is writing its own epitaph.

Saturday, 12 June 2010

Choice FM R.I.P.: the birth and near death of licensed black music radio in London

31 March 1990 was the memorable day when London‘s first licensed black music station, Choice 96.9 FM, arrived on-air. Until then, the availability of black music on legal radio had been limited to a handful of specialist music shows, even though about half of the singles sales chart was filled with black music. The decision by then regulator the Independent Broadcasting Authority [IBA] to license a London black music station was part of a huge government ‘carrot and stick’ campaign to rid the country of pirate radio. On the one hand, new draconian laws had been introduced that made it a criminal offence even to wear a pirate radio T-shirt or display a pirate radio car sticker. On the other hand, the establishment knew that some kind of olive branch had to be offered to the pirate stations and their large, loyal listenership.

Many pirate stations, having voluntarily closed down in the hope of becoming legitimate, were incensed when the IBA instead selected Choice FM for the new South London FM license. Its backers had no previous experience in the London pirate radio business, but had previously published ‘Root’ magazine for the black community in the 1970s. Although it was impossible for one station to fill the gap left by the many pirates, Choice FM tried very hard to create a format that combined soul and reggae music with news for South London’s black community, which was precisely what its licence required. The station attracted a growing listenership and it brought a significant new audience to commercial radio that had hitherto been ignored by established stations. With Choice FM, the regulator succeeded in fulfilling two aspects of public broadcasting policy: widening the choice of stations available to the public; and filling gaps in the market for content that only pirate radio had supplied until then.

In 2000, Choice FM won a further licence to cover North London with an additional transmitter. For the first time, the station was now properly audible across the whole capital and had access to more listeners and more potential advertising revenues. Its listening doubled and, at its peak in 2006, Choice FM achieved a 2.8% share, placing it ahead of TalkSport and BBC London in the capital. Choice FM had no direct competitor in London, although indirectly some of its music had always overlapped Kiss FM. The station’s future looked rosy.

However, the Choice FM shareholders must have realised just how much their little South London station was worth, at a time when commercial radio licences were being acquired at inflated prices. Already, in 1995, Choice FM shareholders had won a second licence in Birmingham, but had then sold the station in 1998 for £6m to the Chrysalis Radio group, who turned it into another local outlet for its network dance music station Galaxy FM. At a stroke, the black community in Birmingham had lost a station that the regulator had awarded to serve them. Black radio in Birmingham was dead. The die was cast.

The then regulator, the Radio Authority, had rubber-stamped this acquisition, stating that it would not operate against the public interest. The Authority requested some token assurances: at least one Afro-Caribbean member on the station’s board; an academy for training young people, especially from the black community, in radio skills; and market research about the impact of the format change on the black community. None of these made any difference to what came out the loudspeaker. Birmingham’s black community was sold down the river.

Changes in UK media ownership rules were on the horizon that would soon allow commercial radio groups to own many more stations within a local market. As a result, in 2001, the UK’s then largest radio group, Capital Radio plc, acquired 19% of Choice FM’s London station for £3.3m with an option to acquire the rest. In 2003, it bought the remaining 81% for £11.7m in shares, valuing the London station at £14.4m. The Choice FM shareholders had cashed in their chips over a five-year period and had generated £21m from three radio licences. What would happen to Choice FM London now?

Graham Bryce, managing director of Capital Radio’s London rock station Xfm (which Capital had acquired in 1998 for £12.6m), said then:

"Our vision is to build Choice into London's leading urban music station, becoming the number one choice for young urban Londoners. Longer term, we intend to fully exploit the use of digital technology to build Choice nationally into the UK's leading urban music station and the number one urban music brand."

Capital Radio and subsequent owners seemed to want to turn Choice FM into a station that competed directly with Kiss FM (owned by rival EMAP). But they never seemed to understand that Kiss FM was now a ‘dance/pop’ station, whereas Choice FM had always been firmly rooted in the black music tradition of soul, reggae and R&B. Such semantics seemed to be lost on Choice FM's new owners and on the regulator, but certainly not on Choice FM’s listeners, who had no interest in Kylie Minogue songs.

In 2004, Capital Radio moved Choice FM out of its South London base and into its London headquarters in Leicester Square. The station’s final link with the black community of South London it had been licensed to serve was discarded. In 2005, Capital Radio merged with another radio group, GWR plc, to form GCap Media plc. In March 2008, Global Radio bought GCap Media for £375m. In July 2008, Choice FM managing director Ivor Etienne was suddenly made redundant. One of the station’s former founder shareholders commented:

“I’m disappointed that the new management decided to relieve Ivor Etienne so quickly. My concern is that I hope they will be able to keep the station to serve the community that it was originally licensed for.”

However, from this point forwards, it was obvious that new owner Global Radio had no interest in developing Choice FM as one of its key radio brands. In the most recent quarter, the station’s share of listening fell to an all-time low of 1.1% (since its audience has been measured Londonwide). Sadly, the station is now a shadow of its former self, even though it holds the only black music commercial radio licence in London (BBC digital black music station 1Xtra has failed to dent the London market, with only a 0.3% share).


This week, news emerged from Choice FM that its reggae programmes, which have been broadcast during weekday evenings since the station opened, will be rescheduled to the middle of the night (literally). One of the UK’s foremost reggae DJs, Daddy Ernie, who has presented on Choice FM since its first day, will be relegated to the graveyard hours when nobody is listening. From 2003, after the Capital Radio takeover, reggae songs have been banished from the 0700 to 1900 daytime shows on Choice FM. Now the specialist shows will be removed from evenings, despite London being a world centre for reggae and having more reggae music shops than Jamaica.

Station owner Global Radio responded to criticism of these changes in The Voice newspaper: “Choice [FM] has introduced a summer schedule which sees various changes to the station including the movement of some of our specialist shows.”

Once again, the regulator will roll over obligingly and rubber-stamp these changes. For Global Radio, the endgame must be to transform the standalone Choice FM station into a London outlet for its Galaxy FM network. At present, London-based advertisers and agencies can only listen to Galaxy on DAB or via the internet. A London Galaxy station on FM would bring in more revenue for the brand as a result of more listening hours and its higher profile in the advertising community. It would also provide a direct competitor to Kiss FM London (ironic, because Galaxy FM had been launched in 1990 by an established commercial radio group as an out-of-London imitation of successful, London-only Kiss FM). Global Radio’s argument to persuade the regulator will probably be that Choice FM’s audience has fallen to uneconomic levels. And whose fault was that?

Already, Global Radio’s website tells us that “Choice FM is also included as part of the Galaxy network” which “consists of evolving mainstream music supported by entertaining and relatable presenters.” And yet, according to Ofcom, Choice FM’s licence is still for “a targeted music, news and information service primarily for listeners of African and Afro-Caribbean origin in the Brixton area but with cross-over appeal to other listeners who appreciate urban contemporary black music.” How can both these assertions be true of a single station?

For the black community in London, and for fans of black music, this will be the final straw. Just as happened in Birmingham, the new owner and the regulator will have collectively sold Choice FM’s listeners down the river. Another station that used to broadcast unique content for a unique audience will have been wilfully destroyed in order to make it almost the same as an existing station, playing almost the same content. We have many commercial radio stations, but less and less diversity in the music they play. Radio regulation has failed us.

For Choice FM, the writing was on the wall in 2003 when Capital Radio bought the station and one (unidentified) former DJ commented:

“Choice [FM] was there for a reason [to be a black music station for black people], but that reason changed [since] 13 years ago. That’s why you’ve got over 30 pirate stations in London. If Choice FM kept to the reason why they started, you wouldn’t need all them stations. But Choice has become a commercial marketplace. They’ve sold the station out and they should just say they’ve sold the station out. What’s wrong with that? They have sold the station that was set up for the black community and they know they’ve done the black community wrong. But they’ve made some money and they’ve sold it. Why not let your listeners know?”

For me personally, as a black music fan and having listened to Daddy Ernie for twenty years, I am much saddened. In the 1970s and 80s, I had found little on the radio that interested me musically, so I listened to pirate stations and my own records. During those two decades, I actively campaigned for a wider range of radio stations to be licensed in the UK and, by the 1990s, I had played a direct role in making that expansion of new radio services happen successfully. Where did it get us? Now, years later, I have gone back to listening mostly to pirate radio and my own records (and internet radio). I am sure I am not the only one.

The radio industry and the regulator seem not to understand one important reason why radio listening and revenues have been declining for most of the last decade. They need to examine how, through their decisions, they have consistently sold down the river their station audiences and the very citizens whom their radio licenses were specifically meant to serve. Listeners vote with their ‘off’ buttons when station owners renege on their licence promises and the regulator lets them. Choice FM is sadly just one example.

In 2006, a lone enlightened Ofcom officer, Robert Thelen-Bartholomew, had asked at a radio conference:

“Is there room to bring the content of illegal stations into the fold? One way or another, whether we like it or not, we have a large population out there listening to illegal radio. Why do they listen? We are trying to find out. But, if you listen to the stations, they are producing slightly different content and output [from licensed stations]. Some of it is very high quality. Some of it is very interesting. So, what options are there for bringing some of that content into mainstream radio?”

Seemingly, none. The last FM commercial radio licence the regulator offered in London was more than a decade ago. Last year, when two small South London FM stations (one licensed for a black music format) were closed by their owner, the regulator unilaterally decided not to re-advertise their commercial radio licences (see the story here). A pirate radio station has not been awarded a commercial radio licence by the regulator for two decades.

Why do pirate radio stations still exist? Because, just as in the 1970s and 1980s, there are huge gaps in the market for radio content that – in spite of BBC radio, commercial radio and their regulators – remain unfilled. It is no coincidence that the share of listening to ‘other’ radio stations (i.e. not BBC radio and not commercial radio) in London is near its all-time high at 3.1%.

Farewell, Choice FM. I knew you well for twenty years.

And, irony of ironies, we are in Black Music Month.


[thanks to Sharleen Anderson]

Sunday, 6 June 2010

The cost of upgrading DAB radio: why it will never happen

The current DAB radio transmission system in the UK is presently not robust enough to rival old fashioned, but more reliable, FM. All parties are agreed on that point. To get DAB up to FM standard, a huge amount of work needs to be done, which would cost a lot of money. How much money? Nobody seems to agree upon that point. Sums have been suggested in Parliamentary debates and in reports that vary wildly.

What information is in the public domain about the costs of DAB transmission? In the UK, not a lot. The BBC owns one of the two national DAB radio multiplexes, for which only a small amount of data about costs has been published.


By 2011, the BBC national DAB multiplex will cover 90% of the population at an estimated transmission cost of £11m per annum. The technical challenge of DAB is that you need more additional transmitters than FM (because of DAB’s characteristics) to improve coverage. To achieve 95% population coverage increases the cost of DAB to £38m per annum (the BBC said in 2008). To achieve 99% coverage increases the cost to £40m per annum (the BBC said in 2007).


Compared to the existing FM transmission system (which the BBC said in 2007 offered around 99% population coverage), DAB will be more expensive. Not at present, because DAB is only covering 86% of the population, but increasing that percentage to the same as FM will be costly for DAB. Very costly. By comparison, the existing national FM transmission network had cost the BBC £12m in 2007. This should have reduced to £10m in 2009 after transmission contractor Arqiva agreed to discount its existing contracts (following its acquisition of rival NGW). The same discount may have lowered the cost of existing DAB transmission agreements, but not of future contracts for build-out to 99% coverage.

The BBC broadcasts only four national stations on FM whereas, on DAB, it broadcasts more channels. How many more? The number of BBC stations on DAB varies because one station is part-time and because two full-time stations are proposed for closure next year. To take an example of a music station using 128kbps of DAB bandwidth, it would cost £1.6m per annum to cover 90% of the population, £5.6m to cover 95% and £5.9m to cover 99%. Compare that to a national FM station that currently costs the BBC £2.6m per annum. It seems that DAB may be cheaper at present, but is certainly not cheaper once it is required to achieve equivalent FM coverage.

The second national DAB multiplex in the UK is owned by Arqiva (formerly ‘Digital One’) and covers 90% of the population. Does it publish a price list for commercial customers wanting DAB carriage? Seemingly not. However, in September 2009, Premier Christian Radio had said it was paying £650,000 per annum for national DAB carriage, using 64kbps of spectrum. The pro rata cost for a 128kbps music station would be £1.3m per annum, close to the previously estimated BBC cost for population coverage of 90%. Arqiva says it "is working on a transmitter roll out plan to further extend coverage," having added four new transmitter sites in 2009.

In Germany, the transmission provider, Media Broadcast, has published a price list for commercial stations interested in broadcasting on its planned DAB platform. It anticipates that German stations will use the more spectrum efficient DAB+ system, whereas the UK is wedded to the older DAB system. The prices quoted below (in Euros) require a radio station to take a minimum 10-year contract and are based on two multiplexes operating at each transmitter location (if that were not to happen, the costs would be higher).


By 2015, Media Broadcast anticipates that its 110 DAB transmitters will provide coverage to 78% of the population indoors and 92% of the population outdoors. There seems to be no commitment in Germany for DAB to achieve the 95% to 99% population coverage that is planned in the UK. Nevertheless, the transmission cost of a (hypothetical) DAB station using 128kbps would be as high as E3.4m (£2.8m) per annum by 2021. As in the UK, the cost escalates rapidly as the DAB network is built out to reach more of the German population. Whereas, in 2011, the initial E0.6m (£0.5m) per annum might not seem prohibitive to cover a country that has a third larger population than the UK, that annual cost is multiplied six-fold by the end of the 10-year contract.

In both the UK and Germany, the cost of DAB roll-out to ensure that reception is as robust as FM will add significantly to the platform’s costs. Without this roll-out, DAB can never replace FM, and the burdensome cost of simulcasting on both DAB and FM will continue. With this roll-out, DAB seems to end up costing more than FM to achieve similar coverage. So what is the point?

In the UK, neither Ofcom nor the government’s DCMS department have published analyses of the costs of DAB roll-out. Their pursuit of the DAB platform has had absolutely nothing to do with the real world economics of the UK radio industry. Their numerous published reports and consultations deal with a virtual reality of the radio industry that exists solely in their minds, perhaps a reflection of the fact that none of them have ever worked in the radio sector they try to regulate.

Ofcom’s plans for upgrading DAB, to be published imminently, merely prolong the regulator's fantasy that the DAB platform is ‘the future of radio’. Ofcom’s apparent determination to run the radio industry into the ground economically through its insistence upon implementing a misguided ‘digital strategy’ for the sector has already proven a disaster, helping reduce the commercial sector's profitability to nil. Even more disastrous is the radio industry’s seeming inability to confront Ofcom collectively, to insist that ‘enough is enough’, and to demand that Ofcom goes back to the drawing board in its whole strategy for radio’s future.

How can Ofcom retain an ounce of credibility when it had forecasted publicly (as recently as November 2006) that digital platforms would account for 42% of all radio listening by year-end 2009? The actual figure was 21%. As a result, all those radio operators who had based their business plans for digital radio upon Ofcom’s ‘professional’ forecast have faced financial ruin. Instead of reaching for the tissue box, these businesses should be reaching for their lawyer.

Practical action is what is needed now, not yet another Ofcom fantasy plan for radio’s DAB future.