Analysis of the failure of the DAB digital radio national platform to be economically viable in the UK for commercial radio broadcasting, written by Grant Goddard in June 2010 for Grant Goddard: Radio Blog.

1. DAB DIGITAL RADIO: A
NATIONAL BROADCAST
PLATFORM THAT NO ONE EVER
WANTED
by
GRANT GODDARD
www.grantgoddard.co.uk
June 2010

2. In 1998, the Radio Authority advertised a licence for the “first and only national commercial
digital [DAB] multiplex licence.” There was no stampede of applicants. By June 1998, the
regulator had to issue a press release with the headline “Radio Authority receives one
application ….” The sole applicant was ‘Digital One’, 57% of which was owned by commercial
radio’s GWR Group plc, whose chief executive Ralph Bernard later admitted:
“GWR was encouraged to apply for the national [DAB multiplex] licence and was
under some pressure to invest in the opportunities for a national licence from the then
regulator. Had we not done it, there would be no national DAB platform now. Not only
that, [the regulator] did not know what they would have done on the question of
national radio stations with regard to the opportunities given by the then government to
renew their national licences for a further period of time if they were to commit to going
digital. But how can you [do that] if there are no opportunities to go digital because
there is no national multiplex? When I put that question to the Radio Authority, I was
told that the answer was: ‘We don’t know what would happen – there is no Plan B’. It
was just an assumption that someone would go for [the national multiplex].”
Bernard had a hard time convincing his own board that the DAB licence was a worthwhile
investment for a radio group that, until then, had owned radio stations rather than transmission
infrastructure:
“When we were seduced into believing that this was going to be the only [national
DAB] licence, we realised that there would be substantial losses, but the payback
would be when you have the opportunity to be the only player in the national market
for DAB. When it’s the Radio Authority, an agency of government, you tend to believe
what you are told. On that basis, the investment was justified and, at the time, getting it
through my Board was not easy. Persuading shareholders, particularly the larger ones,
was not easy.”
Now, twelve years later, GWR Group no longer exists, Ralph Bernard is out of the commercial
radio business, but the ‘Digital One’ national DAB platform is still there. Nobody really wanted
it in 1998, and nobody really seems to want it now. Its ownership has changed hands like
pass-the-parcel, GWR Group plc having merged into GCap Media plc, which was then sold to
Global Radio which, in 2009, sold its majority stake in Digital One to transmission provider
Arqiva. How many millions were thrown at Digital One over the years by GWR, GCap and
Global Radio will probably never be known.
The only thing cheap about Digital One was the cost of its initial 12-year licence, a mere
£10,000 per annum paid to the regulator for the radio spectrum it uses. The business model
was that Digital One would lease space on the DAB platform to radio stations that would pay it
rent (about £1m per year, dependent upon audio quality). Since opening for business in 1999,
many digital-only stations have tried using the platform but, to date, almost none have stuck
around. No digital radio station has yet made a profit.
DAB Digital Radio: A National Broadcast Platform That No One Ever Wanted page 2
©2010 Grant Goddard

3. nationalDAB
localDAB
Freeview
FreeSat
internet
trial period
(expired)
% share of
total radio
listening
(adults)
weekly
reach
(adults)
1999 - Planet Rock commercial 0.58 694,000
2010 TIML Absolute 80s commercial 0.14 264,000
2009 - Premier Christian Radio donations
2009 - UCB UK donations
2009 - Amazing Radio unsigned music 6 months
2008 - BFBS Radio government 3 months
2009 IPC NME Radio commercial 8 months 0.05 226,000
2009 - Panjab Radio commercial 6 months 0.09 172,000
2009 Folder Media Fun Kids commercial 4 months
2006 GCap Media TheJazz commercial
2000 GCap Media Capital Life commercial
2000 C4 + UBC Oneword Radio commercial
1999 GCap Media Core commercial
2000 Saga PrimeTime Radio commercial
2000 Bloomberg Talkmoney commercial
2000 ITN ITN News commercial
0.87
3.62
5.75
% SHARE OF LISTENING VIA DIGITAL PLATFORMS
% SHARE OF LISTENING VIA DAB PLATFORM
station business model
% SHARE OF ALL RADIO LISTENING
closed 2006
closed 2003
closed 2002
DIGITAL RADIO STATIONS ON DIGITAL ONE NATIONAL DAB PLATFORM
digital platforms RAJAR Q1 2010
closed 2008
closed 2008
closed 2008
closed 2008
closed 2010
launched on
national DAB owner
The latest additions to the lengthening list of stations that have failed to make the national DAB
platform work for them are 'NME Radio' and 'Panjab Radio', both of which quit Digital One in
June 2010 (see shaded area of table). The reason? Almost no one was listening. Add together
the digital-only stations broadcasting on the platform last quarter (and that are measured by
RAJAR) and, in total, they accounted for less than 1% of total radio listening.
Yet the radio industry, the receiver manufacturers and their lobby groups are still spending
money on campaigns to convince the public that DAB radio is a raging success. Digital One
says its radio platform reaches “more than 90%” of the [UK] population,” equivalent to 46m
adults. RAJAR tells us that 35% of those adults have a DAB radio. Yet only 226,000 adults per
week listened to 'NME Radio', after nearly two years on-air. If you were in any way persuaded
to believe the hype surrounding DAB, your business plan to start a digital radio station might
look dangerously over-optimistic.
NME RADIO: ADULT REACH ('000/wk)
215
152
194
215
218
177
226
295
396
511
633
755
0
100
200
300
400
500
600
700
800
2008
Q4
2009
Q2
2009
Q4
2010
Q2
2010
Q4
2011
Q2
2011
Q4
2012
Q2
2012
Q4
2013
Q2
actual reach (RAJAR) forecast reach (DX Media)
DAB Digital Radio: A National Broadcast Platform That No One Ever Wanted page 3
©2010 Grant Goddard

4. NME RADIO: HOURS LISTENED ('000/wk)
606
356
465
493
472
597
555
1,180
1,758
2,252
2,816
3,429
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2008
Q4
2009
Q2
2009
Q4
2010
Q2
2010
Q4
2011
Q2
2011
Q4
2012
Q2
2012
Q4
2013
Q2
actual hrs listened (RAJAR) forecast hrs listened (DX Media)
When 'NME Radio' launched in June 2008, it had forecast that its audience would reach
396,000 adults per week by its second year. For most of its life, the station was broadcast on
local DAB multiplexes (and online). Then, from 21 December 2009, NME Radio was made
available nationally on DAB for an eight-month trial. Broadcasting to a much bigger potential
audience, there should have been a positive uplift to the station’s performance in Q1 2010.
However, there was no noticeable impact upon adult reach (226,000) or hours listened.
In its forecasts, 'NME Radio' had projected that DAB would be "53%" by 2010. Maybe this
referred to Ofcom’s forecast that, by year-end 2010, digital platforms (not DAB alone) would
account for 50% of all radio listening. In fact, in Q1 2010, only 15% of listening to all radio was
via DAB, and 24% was via all digital platforms (worse for commercial radio at 12% and 23%
respectively). Ofcom’s forecast of how digital radio usage would grow was disastrously
inaccurate. 'NME Radio' did not stand a chance of commercial success using DAB.
The other digital radio station that quit the national DAB platform in June 2010 was 'Panjab
Radio'. Like 'NME Radio', it had broadcast via local DAB multiplexes (and online), but was then
made available nationally on DAB for a six-month trial from 1 December 2009.
PANJAB RADIO: REACH + HOURS LISTENED
49
44
61 56
44
172
261
298
487
410
235
913
0
20
40
60
80
100
120
140
160
180
200
Q4
2008
Q1
2009
Q2
2009
Q3
2009
Q4
2009
Q1
2010
0
100
200
300
400
500
600
700
800
900
1,000
weekly adult reach ('000) hours listened ('000 per week)
DAB Digital Radio: A National Broadcast Platform That No One Ever Wanted page 4
©2010 Grant Goddard

5. There was no lift to 'Panjab Radio’s audience in Q4 2009, but the following quarter saw a
noticeable increase to 172,000 adult reach and 913,000 hours listened per week. This was
almost twice the amount of listening that 'NME Radio' recorded on the national DAB platform,
a real achievement for an ethnic radio station.
The day 'Panjab Radio' had joined the national DAB platform, Digital One operations director
Glyn Jones said:
“Like Premier Christian Radio and UCB UK, Panjab Radio relied on a fund-raising
appeal to pay for the launch of the station. It’s interesting to see the growth of listener-
supported stations, and the way they’re extending the range and choice of stations on
air via digital radio. These are stations that neither a traditional commercial model nor
the BBC have chosen to provide, but which listeners value so much that they’re
prepared to help pay for them out of their own pockets.”
The sub-text was that the Digital One national DAB platform cannot support a commercial
digital-only radio station because the financial returns are simply insufficient to cover the
expense for it to lease space on the platform. If 'Panjab Radio' had managed to sell advertising
at the average commercial radio sector rate, it should have generated £1m per annum of
revenue. However, an industry study in 2009 found that the average digital radio station
generated only £130,000 revenue per annum (and 'Panjab Radio' attracted less listening than
others).
When 'Panjab Radio' quit the national DAB platform in June 2010, Digital One’s Glyn Jones
issued a press release that seemed over-eager to deflect the blame:
“Panjab Radio's revenues come from a mix of traditional radio advertising plus fund
raising among Britain's Panjabi and Sikh communities. Following a strategic and
financial review the station opted to end its national transmissions but to continue to
broadcast on DAB digital radio in three parts of the country with significant
concentrations of the target audience - the West Midlands, West Yorkshire and
London.”
As the table above demonstrates, the national DAB platform’s history is littered with
commercial digital radio stations that failed to make it work for them. Most of the stations
currently on the national DAB platform are non-commercial and so do not need to meet their
costs from advertising revenues. But religious stations, army radio and unsigned artists do not
come close to the mass market purpose for which the platform was originally envisaged. Did
GWR Group make its substantial investment in national DAB in the expectation that, after a
decade, the platform would be filled with subsidised radio stations attracting tiny audiences?
Two years ago, I had written:
“This sudden flowering of ethnic, religious and publicly-funded radio stations on the
DAB platform echoes the fate of the ‘AM’ waveband in the 1990s … The ‘DAB’
platform of 2008, particularly in London, is already starting to resemble the ‘AM’
platform of 1998, suggesting that ‘DAB’ might have already been written off by the
sector as a means to reach the ‘mass market’ audiences that national advertisers
desire from the medium.”
Since then, this desperate filling of DAB multiplex capacity with non-commercial stations has
spread from London to the national platform. Bizarrely, given the overwhelming empirical
evidence that this “first and only national commercial” DAB platform is not working, even after
a decade of operation, Ofcom is keen to create a second quasi-national DAB platform. Its
rationale is that:
“This could help to facilitate the creation of national commercial radio stations to create
a consumer proposition analogous to that of Freeview: a wide range of popular and
niche services, delivered digitally” because “we believe DAB still offers the best
solution for the future growth of radio in the UK.”
DAB Digital Radio: A National Broadcast Platform That No One Ever Wanted page 5
©2010 Grant Goddard

6. DAB Digital Radio: A National Broadcast Platform That No One Ever Wanted page 6
©2010 Grant Goddard
This nonsense was written in an Ofcom report less than a year ago, when the writing on the
wall could not have been larger that the national DAB platform’s future for commercial radio
was doomed. Surely, a regulator that refuses to deal with the reality of the here and now could
be a regulator that will eventually find it has no future. For years, Ofcom (and its predecessor)
have led the commercial radio sector a merry dance down a DAB blind alley that has proven
almost fatal to the industry’s economic health.
If Ofcom publishes one more policy document proclaiming (as if it were still 1998) that ‘the
future of radio’ is DAB, rather than it working to bang industry heads together to find a practical
route out of the present mess, all it will succeed in doing is writing its own epitaph.
[First published by Grant Goddard: Radio Blog as 'DAB Radio: A National Platform That No One Wanted', 27 June
2010.]
Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of
experience in the broadcasting industry, having held senior management and consultancy
roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at
http://www.grantgoddard.co.uk