Aside from the publication of new RAJAR figures, the big news in radio today was the sale of seven stations by Global, which was forced on them by the Competition Commission.
Since Global finally gave up their legal challenges against the Commission’s ruling, this day was always coming, and it’s got to be of some consolation to the staff working at these services that it’s finally here.
Matt’s written a pretty good summary of what’s going to happen, and which stations will be run by Communicorp, the Irish group that’s taking ownership of the services. John Myers’ piece is also well worth a read.
I do have a few further thoughts though:
Firstly, do we really know that Global has sold these stations for as much as £35m? It’d be excellent business if they have, since that’d be pro-rata what they paid the Guardian Media Group for them. I suspect that we’ll have to wait another twelve months or so to see their books for this financial year. It was only in their recently published figures that we learnt that they paid £69m in the first place for the whole group.
The reason I question the value is that although I think there’s good business to be had, a franchise arrangement does leave Communicorp having to dance to someone else’s tune. While they get to enjoy the value of Global’s marketing, they also have little freedom in how they programme the stations. In the same way that a McDonald’s franchisee has to accept that they can’t adjust the menu.
Global will continue to sell all the brands nationally, leaving Communicorp with local sales, and perhaps a share of national sales.
Global certainly has a whip hand in all of this.
On the other hand, the costs and overheads for Communicorp are potentially reduced since they really just need local presenters as required under their Ofcom format in regard to localness, and a local sales team. Global is able to provide many other services including playlists and production.
I suspect that Denis O’Brien is a shrewd operator and that the numbers add up somehow. Those Global books will be worth checking out at the end of the year though.
The other major issue that I’ve heard nobody talk about, is any potential regulatory hurdles that Global (and Communicorp) will need to overcome to rebrand the services. In particular, I’m thinking of the rebranding of Real Radio stations to Heart.
This is a contentious issue in the radio industry, with many thinking that Ofcom meddle too much with formats. As it stands, FM formats are reasonably heavily regulated, Ofcom arguing that public spectrum is scarce. So while you can essentially call your station what you like, you still have to abide by the format restrictions that the licence was offered under.
A great case in point is a recent ruling against Heart Cornwall. At the start of the year, Ofcom found that Heart Cornwall was in breach of its licence. You can read the full ruling here (P63 of a PDF document).
Heart Cornwall was established when Global bought the previous licensee, Atlantic FM. However in doing so, Global has to abide to the previous licence. A licensee can request changes to the licence, but Ofcom often consults on major changes. In this instance, Global had previously requested a format change, but that was rejected.
This might all sound a bit arcane, but the reason that Heart Cornwall was later found in breach was because, in Ofcom’s eyes, the service had strayed too far from its licence requirements, and in particular the local speech element of the licence wasn’t being upheld. Although there was significant speech during the local breakfast show, Ofcom felt that speech had to be broadcast throughout the day.
And there’s the problem – the Heart brand is primarily a music proposition. Adding speech into the mix – especially outside breakfast – can dilute that. And this becomes harder when you have networked shows such as Toby Anstis’s morning show. How do you reconcile Cornwall needing speech when London doesn’t?
What you may or may not be aware of is that even today, not all Hearts are the same. And the easiest way to show that is to look at their licence formats.
Look first at the format for Heart London:
A MELODIC ADULT CONTEMPORARY MUSIC-LED SERVICE FOR 25 to 44 YEAR-OLD LONDONERS, SUPPLEMENTED WITH NEWS, INFORMATION AND ENTERTAINMENT. THE SERVICE SHOULD HAVE PARTICULAR APPEAL TO PEOPLE IN THEIR 30s.
Now compare that with Heart Swindon/West Wiltshire:
A LOCALLY ORIENTED CONTEMPORARY AND CHART MUSIC AND INFORMATION STATION FOR UNDER 44s IN THE SWINDON AND WEST WILTSHIRE AREA.
The reason for the difference is that the latter service was actually one of the earlier commercial services, and under its former guise of GWR, it was essentially a pop station – a commercial competitor to Radio 1. Heart London, on the other hand, was the original Heart, and came along 13 years later when a whole bunch of new FM licences were launched. There was already a pop station in London of course – Capital. So Heart’s licence had to be distinct and different from Capital.
Somehow Global has to reconcile a AC station with a hit music station. And in reality, that does mean that depending which Heart you listen to, you might hear a slightly different music mix. Of course music doesn’t come clearly defined – so most of the music you hear on most Hearts is probably quite close. But there is always that constraint.
What does that have to do with Real Radio? Well check out some of the Real Radio licences.
A FULL SERVICE ADULT CONTEMPORARY MUSIC STATION FOR YORKSHIRE, TARGETING PRIMARILY 25-54 YEAR OLDS, TREATING NEWS, SPEECH, REGIONAL INFORMATION AND LISTENER INTERACTIVITY AS IMPORTANT INGREDIENTS, AND RUNNING 24-HOUR NEWS.
A FULL SERVICE ADULT CONTEMPORARY MUSIC STATION FOR SOUTH WALES, TARGETING PRIMARILY 25-54 YEAR-OLDS, TREATING NEWS, SPEECH, INFORMATION ABOUT WALES, SPORT AND LISTENER INTERACTIVITY AS IMPORTANT INGREDIENTS, AND RUNNING 24-HOUR NEWS.
Now it’s fair to point out that Real had previously asked for and had approved some very specific additions to its news provision in late 2012 and early 2013.
I imagine the gamble is that by agreeing to better news provision in some parts of the schedule, Ofcom might in due course allow more music to be played in daytime.
But the Cornish findings doesn’t make that a certainty. Global, and others in the industry, are likely to continue the fight to free up licences further. But at the moment, I forsee some tensions when Reals are rebranded Heart.
In the end, the Heart a listener hears is the Heart they know. Heart listeners in London don’t expect, and don’t get, a 20 minute news programme in the evening. On the other hand those in Scotland do. And if there’s a bit more chat during the day, then it’s only radio anoraks who notice that it has a different style to other Hearts. And advertisers of course, are just buying the entire network.
In other news, RadioCentre has a new CEO. Siobhan Kenny has previously worked in DCMS at the time Ofcom was being setup. That might be handy if the industry wants to ramp up efforts to pursue greater freedom in formats…