Monday 22 October 2018

Spotlight on radio licence landscape

This week's €200m sale of Emap's Irish interests has the airwaves buzzing

Listen up . . . the radio market was transformed by Ray Burke's introduction of competition in 1989, providing a diverse and profitable platform for business. Pictured are 2FM DJs Colm Hayes and Jim Jim Nugent.
Listen up . . . the radio market was transformed by Ray Burke's introduction of competition in 1989, providing a diverse and profitable platform for business. Pictured are 2FM DJs Colm Hayes and Jim Jim Nugent.

AT the beginning there was one. RTE was Ireland's sole radio owner, standing supreme at the top of a pile that included only itself.

Then in 1989 some bright spark (Ray Burke) happened on the idea of competition, saying it would be in the best interests of the listening public.

And so the scene was set for this week's €200m sell-off of Today FM, FM 104 and Highland Radio.

"I don't think it was ever envisaged that licences would be in the stratosphere that they're in at present," says Michael O'Keeffe, head of the Broadcasting Commission (BCI) which awards the licences.

"It's only ten years since Radio Ireland almost followed Century's collapse. It was only in the late 1990s and early 2000s that you saw that there was activity that was going on."

Red hot

Unexpected though it may have been, there's no denying the fact that radio licences have become red hot bid commodities.

In 2005 the BCI laid out a programme to licence eight new radio stations, citing better competition and more diversity as their goal.

Big business quickly stood up to the plate, with Doughty Hansen, UTV and i-radio among the heavy hitters bringing millions to the table.

The calibre of applicants soon set the bar for applications. The BCI asks for research on the viability of the station the licence is proposed for, as well as an oral presentation. What it gets is a beauty parade of major proportions.

Dan Healy, who heads up i-radio, admits his group has spent "upwards of €300,000" on its licence application, and he's by no means alone in a field of bidders trying to outdo each other with a host of tricks and gimmicks.

It's an approach the BCI tries to discourage. "We're against the all-singing, all-dancing approach and we do tell people that," says O'Keeffe.

But still it persists. "It would take a brave group to break the mould," says Healy, "We'd be happy to spend less but only if we knew the others would too."

With licences in such heavy demand, why not simply create a few more of them? "It's a bandwidth issue really," says O'Keeffe.

"There simply isn't room on the bandwidth for many more stations. We said we'd do eight stations, and after that we'll have to look at it again, but I doubt there'll be much bandwidth left by then."

'There simply isn't room on the bandwidth for many more stations'

That problem may ultimately be solved by the advent of Digital Audio Broadcasting (DAB), which would make much more efficient use of the bandwidth available.

O'Keeffe says creating more stations is something that "could be looked at" in the DAB context, but stresses DAB is still several years away.

DAB is also entirely unchartered territory which throws up a whole plethora of other regulatory issues, so the current imbalance between supply and demand is likely to endure for a while yet.

Smaller players, meanwhile, are feeling increasingly left out in the cold.

"Deep pockets and access to long term funding sources (not borrowings) would appear to be favoured by the Commission, and there would be a view that corporate shareholders and/or plcs are likely to be better positioned to provide investment in services," says Sean Ashmore, chief executive of Dublin's Country Mix, who has been involved with a number of licence bids.

Another industry complaint is the belief that radio stations are being pursued as "trophy assets", changing hands for unrealistic prices. "For some people, it's just an ego trip," as one source put it.

The BCI has also been criticised for the results its licensing spree has delivered. "There's a big difference between diversity and choice," says one observer. "The BCI seems to think that diversity is simply about creating a long list of stations."

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