I know I keep returning to this having written about it back in February when Peter Bazalgette raised the idea, and again following the Radio 3.0 conference a couple of weeks ago when GCap’s outgoing chairman Richard Eyre also raised the issue in a personal capacity.
So it was interesting yesterday that Enders Analysis who report on all things media and technological, released a paper entitled “Privatising Radios One and Two: how to kill commercial radio with kindness.” No prizes for guessing that Enders share my opinions on the issue.
I’d love to link to the full paper, but Enders is a subscription service, so I’ll just report their summary finding from their website:
The privatisation of the BBC’s two national music radio networks – Radio One and Radio Two – is in the news again and is being proposed by certain commentators as a potential solution to the current problems facing the UK commercial radio industry. This report argues that, far from being a solution, unleashing these two highly successful BBC stations on the commercial sector will imperil the existence of many stations. This would dramatically increase the volume of advertising time available, at a time of glut, and draw advertising spend away from many stations.
Enders note that if the two services were to be privatised the volume of commercial radio inventory would at a stroke increase by 66%. Even though such massive players would undoubtedly introduce new advertising money to the radio market, there’s no chance that they’d make up that colossal shortfall, particularly at a time where there’s already plenty of space available. However money would flow to the two new giants, from both national commercial radio, and also from the national commercial stations (disclosure: that’d obviously affect my employer) as well as national revenue from local commercial stations.
It’s important to explain what that means. When you listen to local commercial radio, you’re sometimes put off by the local ads for garden centres, tile centres and car dealerships. But in fact, there’s more advertising for national brands which comes via a central sales team for that group.
Here’s a chart showing just how important this cash is to a local commercial station:
Source: RAB
Losing a large chunk of that cash would be devastating to the industry. And that’s not even the whole picture. On top of that is money for promotions and sponsorship. It’s an important part of a commercial station’s revenue stream, and becoming more so.
Source: RAB
The Enders report makes some other valid points including the fact that no current radio player is probably in a position to spend the £1 billion that these stations would make. But interestingly, they see another hidden aspect to this: that perhaps Channel 4 would get ownership of them. Richard Eyre is quoted as saying ““Radio One and Radio Two should certainly not be awarded to the highest commercial bidder.” So what does that mean?
We’re back to top-slicing the licence fee. And let’s throw into the frying pan the news yesterday that the EU is minded to block the BBC’s support on C4’s switch to digital as potentially falling foul of state aid, then suddenly things don’t look quite as simple.
But returning, finally I hope, to the subject of Radio 1 and Radio 2’s proposed privatisation, I suppose the most disturbing factor is the number of people in UK commercial radio who do think it’s a good idea.
[UPDATE – I’ve removed a quote from a select committee report, which although accurately reported, might seem to imply that RadioCentre is in favour of privatising the two services.]
[UPDATE 2 – Richard Eyre’s comments are spelt out in a comment piece he wrote for this week’s Media Week. He’s still wrong.]
