So finally, on Friday, came the news that Channel 4 was pulling the plug on its radio operation.
Let’s revisit a little history. Commercial Radio has been broadcast nationally in UK on Digital One since 2002. But of late, the platform has struggled to be filled with the ten or so services it needs to fully utilise the bandwidth it has available. At the time of writing, it just has digital simulcasts of the three national commercial analogue stations, as well as Planet Rock. Several test channels and a Birdsong channel make up the rest of the multiplex.
The other national DAB multiplex is that belonging to the BBC, carrying simulcasts of its five core services as well as the World Service, BBC Asian Network and several digital only services including 1Xtra, 6Music and BBC Radio 7.
It was into this world that Ofcom decided to offer a second national commercial multiplex. It must be said that Digital One did have more services on it at the time, but there was enormous disapproval from GCap who believed that Digital One had been guaranteed the sole national DAB slot.
Ofcom put the slot out for tender and two groups responded: NGW and Channel 4 Radio. From the outset, Channel 4 looked the likelier winner, with the company itself offering three services: the flagship Channel 4 Radio, which was popularly called C4’s competitor to BBC Radio 4; the youth E4 Radio; and the more adult Pure 4 Radio. It’s safe to assume that the latter two of these were music driven.
Other suppliers would make up the rest of the multiplex, with UTV offering Talk Radio, SMG offering Virgin Radio Viva, and other operators providing Sky News Radio, Original, Disney, Sunrise and Closer. Beyond that, a selection of podcasts from a diverse list would be made available.
When the licence was awarded in July 2007, the multiplex was supposed to be on air within a year – or at least one of the channels should be. But there was the small matter of building an entire network of transmitters. Channel 4 was keen that the network should largely be in place by launch, but this was at the same time as the two main UK tranmission companies were merging, and DTT switchover was occcuring.
As it became obvious that no contract had been awarded, conditions were getting tougher. On a corporate level, Channel 4 was keen to get its hands on a top-slice of BBC licence funding. Indeed, Ofcom has readily admitted recently that Channel 4 has a significant funding shortfall. Meanwhile over at GCap, as the group struggled to avoid an inevitable takeover by Global, Fru Hazlitt announced a massive pullout from DAB. The costs were too high, and the rewards weren’t there.
That meant the closure of services like theJazz, which had only been on-air for a little over a year, as well as other national DAB services like Core and Life.
So now we were in a position where Channel 4 was short of cash, and still hadn’t launched its new radio service despite time having run out. The country (and indeed the world) was heading into a recession, with the resultant bleak advertising outlook. Finally, current incumbant, Digital One was half empty. Anyone who wanted to get on DAB nationally could – if they could afford it.
Fairly early on, it was obvious that things were never going to be quite how they’d first been described. Radio 4 costs £100m a year. No service – however it’s funded can afford that. No service could even get close. Indeed that figure is low because things like news is at a lower than true cost because resources are shared across the BBC.
The reality of Channel 4 Radio was that it’d have been closer to Five Live without the sport. An upmarket talk station with a flagship breakfast show perhaps.
Then there were the problems of other partners falling out including the loss of Sky News Radio and Virgin Radio Viva.
The likeliest solution seemed to be some kind of agreement between Global (with its shareholding in Digital One following its takeover of GCap) and Channel 4. With a multiplex half empty, there seemed to surely be a case for the two sitting down. Channel 4 might have perhaps launched E4 Radio (perhaps branding it T4?), and maybe one other, while the other spaces would be filled with Global brands.
The difficulty with that plan is that Channel 4 wanted to be the gatekeeper of a multiplex as the formula would mean that their services would be funded by fees received from other suppliers. This plan would leave Channel 4 as perhaps a partner in Digital One (and some attendant costs in becoming that), and only partially receiving fees from services the multiplex carried. Even these would be limited as the majority of new services would surely come from the shareholders themselves. Then we have to examine Global’s plans. With the Heart brand being rolled out across the country, it perhaps no longer makes sense having Heart carried nationally on DAB.
Every local service that will become Heart in the next 12 to 18 months is also carried on a local multiplex. This is a result of incentives put in place to get stations to adopt DAB. By going onto local or regional multiplexes, their analogue licences were extended by 12 years. The alternative was having to rebid for your licence at the end of its period. Most stations took the decision to stump up the cash for DAB in return for that guaranteed additional period.
It was only later that owners began to complain about this cost. And it’s the reason that GCap, for all its harrumphing about DAB earlier this year, didn’t pull out of local DAB. If they had, many licences would have been up for auction.
So Global doesn’t want to put Heart on Digital One. What about Choice or Galaxy? Well they also exist in various guises around the country on local multiplexes. And it’s not always worth pulling them off those services because they’re probably contracted to keep there, and in any case Global has interests in many of those local DAB multiplexes.
So now we’re in a position where Channel 4 has decided at a board level not to pursue DAB. That’s a tragedy for all those who’ve recently joined the company as it began ramping up its staff in advance of a launch. But the big question is what does it mean for the future of DAB?
Against this background, we’ve also had the Digital Radio Working Group sitting all this year. They’re due to report in November or December.
DAB is not dead, as there are a significant number of stations on other multiplexes. In London, where there are three multiplexes, all are jammed full with more stations wanting to get on. It’s certainly true that minorities are being especially well-served with stations targeting many religious and ethnic groups.
Local and regional services have to stay on DAB for the time being, because of their licences. But it would be better if they wanted to be there.
The costs are not to be knocked; where once you just had to pay for your AM and FM transmission, you now have to find cash for DAB, the internet, and perhaps Sky, Freeview and Cable as well.
I think the big question must surely be with Digital One. There are services that I’m sure would love to gain carriage on the multiplex, but the costs are astronomical. Recent launches like NME Radio and the new Jazz FM have not found places on the multiplex, and one would imagine that it’s because of cost. Planet Rock has just signed a three year deal, but it’s still not clear whether the new owner Malcolm Bluemel is treating this as a plaything or a real standalone business. The costs that they must be paying for their DAB carriage alone are horrendous, and it’s those that mean new entrants can’t make their spreadsheets balance. They’re staying off the platform.
Now if I was running an airline, and my planes were half empty because the costs are too high, it’d make sense for me to cut those costs to get my fill levels up. That’s exactly what happens in that and other industries. But Arqiva has traditionally maintained its high prices and seems not to care whether or not the multiplex is filled. Perhaps that’s just my perception.
That’s despite the fact that the entire industry will be stronger with a vibrant range of services available to consumers. They’ll buy more sets and there’ll be more demand.
The Freeview model has been interesting, but for that to work, we need a strong range of services to be carried on Digital One. We’re now entering the critical fourth quarter of the year, when more DAB sets are sold than at any other time.
There are national brands on DAB, but they’re still largely transmitted via a network of local DAB multiplexes. The reason for it happening that way is not logic, but the needs of local analogue services to have the licences extended. Perhaps now’s the time for rethinking and replanning the whole of DAB. As localness deserts ILR, very few stations are truly local any more – certainly not the ten or so that fill a local digital multiplex.
In the end, I don’t have an overall solution, but I do know that we’re going to have to behave with flexibility if we’re going to come out of this with a strong proposition going forward. What’s clear is that this isn’t a technology issue; nobody really cares whether we use DAB, DAB+, DRM or some new standard. But we do need a strong digital radio. New services trying innovative things is what’s going to keep the industry strong. Up until now, listening has held up across most demographics. However there are worrying trends among younger audiences. And while they shouldn’t be the be all and end all, new developments in the technology are what’s going to be most important in years to come.
The opportunity’s still there.
As always, everything here represents my own opinions on not those of my employer.