Digital radio in France: cold feet, no funding, sue the regulator

On 10 September, the French secretary of state responsible for the digital economy, Nathalie Kosciusko-Morzet, organised a seminar “Digital: investing now for tomorrow’s growth”. The objective was to lay out to the 1000 attendees the costs and opportunities necessary to create an integrated digital economy.

On 16 September, Jean-Luc Hees, head of state broadcaster Radio France, addressed the National Assembly’s Committee on Finance & Cultural Affairs. He told them that the broadcaster’s advertising revenues were forecast to decline in 2009 by 20 to 30% year-on-year (advertising comprises 8% of revenue, the remainder from the state). He said that the rollout of digital radio in 2010 would require adding 2m to 3m Euros to the budget.

Hees told the National Assembly: “We now know fairly well the timing of the introduction of digital terrestrial radio, with launches in the coming months in three areas – Paris, Marseille and Nice. …. Our goal is to achieve 95% coverage of France by the end of 2013, according to the CSA’s [France’s media regulator] schedule. …. We must understand that everything has a cost, and the impact on Radio France’s finances means that this house will have to fund dual transmission [analogue and digital] for some time. Analogue transmission presently costs Radio France 80m Euros per annum. The rollout of digital radio will entail additional costs and this is one of the things that require funding in our next budget. I want to emphasise this.”

Amongst commercial radio operators, opinions on digital radio appear increasingly ambivalent. Franck Lanoux, deputy director of NextRadioTV said that digital radio “will not affect 95% of radio listening. It’s hard to identify how digital radio will develop – the receivers do not exist, yet the broadcasters are being asked to make significant investments. Consumers have nothing to listen with.”

The publication mediasactu commented this week that digital radio in France has become ensnared in a quagmire and that reservations amongst commercial broadcasters are becoming stronger:

“After putting all their weight behind persuading the government to adopt the T-DMB standard for digital terrestrial radio in December 2007, which is now nearly two years ago, radio broadcasters, particularly those that are members of GRN [France’s Digital Radio Group] and the Bureau de la Radio [France’s newly created radio trade body comprising the four largest commercial owners], are much more dubious about the real chance of succeeding with the transition to digital radio. Although they were unwavering only a few months ago, now major national radio groups, along with SIRTI [the French broadcasting trade union] and the regional stations, seem determined to thwart digital radio, or at least seriously slow down its development. Angered by the CSA’s decision to only select a handful of new markets to launch digital radio, as well as the costs that will be inherent with dual transmission for several years, not to mention the CSA’s cancellation of applications for 16 of the first 19 areas designated for digital radio, the broadcasters are now showing real reluctance.”

“The [radio] sector, already suffering from its current lack of revenues, is still waiting for the financial aid promised by the government to fund the migration to digital radio. Now, it seems clear that the total cost of the implementation of digital radio will be made greater by the choice of the T-DMB standard by the Ministry of Culture, at the request of GRN, and that the rollout will be much more expensive than it would be for the DAB+ standard. Moreover, according to our sources, the major radio groups are now putting all their weight behind challenging the decision of the CSA about the channel composition of the first multiplexes in order to delay their launch and buy extra time. According to our sources, some have already initiated legal action against the CSA.”

At the government seminar on 10 September, CSA president Michel Boyon reportedly took the opportunity to try to ‘save’ digital radio, suggesting that part of a new significant loan raised by the French government should be allocated to the rollout of digital radio. But, as mediasactu commented:

“The problem is whether public funds can be used to finance the construction of radio networks intended to broadcast commercial stations. Will the public agree to fund not only a digital transmitter network for commercial radio, but also the purchase, at great expense, of receiver hardware that offers a range of stations almost identical to what is already offered on FM?”

Interviewed in Le Figaro, RTL president Christopher Baldelli said:
“The timetable [for digital radio] will be respected if the CSA believes it is right, but migration to digital terrestrial radio is not a matter of principle. It involves a different economic issue than digital television. One impact is higher transmission costs, at approximately 3m Euros per channel, costing us 12m Euros for the whole [RTL] network (RTL, RTL2, Fun Radio, RTL-L'Équipe). The economic difficulty must be taken into account. It is a matter for the radio groups, the CSA and the government. It will take a lot of consultation.”

As mediasactu concludes in its article:
“Overtaken by the internet, mobile phones and MP3 players, does digital terrestrial radio still stand any chance of seducing the general public?”