'Options For Radio Broadcasting In The UK' by Grant Goddard

OPTIONS FOR RADIO
BROADCASTING IN
THE UK
for PROPELLER TV
GRANT GODDARD
8 January 2014
www.grantgoddard.co.uk

Remit of report
This report was commissioned on 23 December 2013 by Propeller TV to
assist with its plans to create a radio station in the UK:
This report sets out:
Potential UK local commercial FM/AM analogue broadcast radio station
acquisition targets holding ethnic content licences, including:
 Coverage area and licensed format data (from Ofcom)
 Audience data (where available from RAJAR)
 Financial data (where available from Companies House)
 Suggested offer price
 Ownership data
 Chinese population data (from 2011 Census)
Potential routes and costs to establish a digital radio station via:
 UK broadcast platforms
 Online
Commencement of consultations with Ofcom to determine if/how
content can be broadcast in partnership with an Ofcom-licensed
commercial radio station
Suggested strategy to pursue the next steps to secure a UK radio outlet
for Propeller content.
Data quoted within the report was derived from primary sources: Ofcom,
RAJAR, Companies House, 2011 Census and legal filings.
page 2 of 30

Introduction
The options to build a radio station in the UK are:
 Broadcast radio
o Analogue terrestrial platform
 FM / VHF
 AM / Medium Wave
 Long Wave (no licences available)
o DAB digital terrestrial radio platform
 National coverage
 Local coverage
o Satellite TV platform
 Sky (national)
 Freesat (national)
o Digital terrestrial TV platform
 Freeview (national)
 Online/internet radio.
The decision to use a particular platform (or platforms) will be determined by:
 The long-term objectives of the radio station owner
 A cost/benefit analysis of the fulfilment of these objectives
 Take-up amongst the target audience of the platform
 Usage amongst the target audience of the platform
 Technology trends.
Among the total UK adult 15+ population, consumption of broadcast radio is
consistently high:1
 90% of the population (47.7m) listen to broadcast radio each week
 The average listener consumes 21.5 hours per week of broadcast radio
 More than 1bn hours per week of broadcast radio are consumed.
Analogue continues to be the most listened to platform for broadcast radio:2
 60% of broadcast radio listening on AM & FM platforms
 23% of broadcast radio listening on DAB platform
 5% of broadcast radio listening via digital TV platform
 6% of broadcast radio listening via internet.
Consumer take-up of analogue radio receivers is almost universal (i.e. 95 to
100%):3
 Between 101m and 117m radios in use in the UK
 15% to 19% of these radios receive DAB digital radio
 4m analogue radios purchased per annum
 2m DAB radios purchased per annum.
Consumer take-up of equipment receiving digital radio varies greatly:
page 3 of 30

4
It should be noted that:
 DAB radio is not present in any phone/smartphone
 DAB radio is not present in any digital TV
 Internet is present in many smartphones
 Internet is increasingly present in digital TV receivers.
page 4 of 30

Analogue Terrestrial Platform: AM/FM Radio
Commercial radio licences:
 No new AM/FM commercial radio licences are being offered by the
regulator, Ofcom
 300 local commercial radio licences are currently regulated by Ofcom
 Commercial radio licences can be acquired, although there is no active
marketplace for these licences (i.e. no stations are 'for sale' on the open
market)
 The acquisition price of an individual commercial radio licence is
determined more by the willingness of the vendor to sell and the acquirer
to buy, rather than by the intrinsic value of the radio station as a business.
Regulation of commercial radio:
 Commercial radio is an industry highly regulated by Ofcom
 The licence of each commercial radio station specifies:
o The geographical coverage area
o The expiry date of the licence
o The owner of the licence
o The 'format' of the station
o The geographical location where content is produced
o The minimum number of hours to be broadcast of locally-made
content
o The minimum number of local news bulletins to be broadcast.
 The coverage area of the licence and expiry date cannot be amended
 The other characteristics can only be amended by application to Ofcom
 Each application to make a change is considered individually on its merits
 Such applications are considered at monthly Ofcom radio licensing
meetings
 If the proposed change is considered significant, Ofcom may decide to
issue a public consultation, which could last 3 to 6 months
 Ofcom's decision on each application is final and there is no appeal system
 While an application to Ofcom for change is pending, the station is
required to continue broadcasting content according to its existing licence.
Radio station 'format':
 The 'format' describes the programme content required to be broadcast
and/or the station's target audience
 The majority of 'formats' specify the music genre(s) to be broadcast
 Only a small number of licences specify a 'format' for speech/talk
programmes to be broadcast
 Only a small number of licences specify a 'format' directed at 'ethnic'
audiences
 No commercial radio licence presently specifies a format exclusively for
Chinese content.
page 5 of 30

Suggested strategy:
 Acquire a local commercial radio station whose licence already requires an
'ethnic' format because:
o A station with an ethnic licence will be cheaper to acquire than a
mainstream music radio station
o Ofcom is likely to consider more favourably an application to
amend a licence from one ethnic format to another
 Make the acquisition conditional on successfully securing Ofcom approval
o To change the licence ownership
o To change the format to Chinese content
o To change the studio location (if necessary)
o To change the minimum locally-produced hours (if necessary)
o To change the local news requirements (if necessary)
 Contract the existing licensee to continue broadcasting its existing service
until Ofcom approval of changes is secured
 Prepare and submit documentary evidence to argue the reasons to Ofcom
to:
o Change the licence ownership
o Change the format to Chinese content
o Change the studio location (if necessary)
o Change the minimum locally-produced hours (if necessary)
o Change the local news requirements (if necessary).
Acquisition assets:
 The radio broadcasting licence is assigned by Ofcom to a specific
company, so it is that company that has to be acquired
 It is imperative to determine the assets and liabilities of the company
holding the broadcasting licence
 The vendor of the licence may wish to include in the sale:
o Premises and/or radio studios
o Debtors and creditors
o Existing contracts (employment and leases)
o Transmission and distribution contracts
 The buyer has to decide which of the above assets and liabilities it wishes
to acquire from the vendor
 Negotiations between vendor and buyer can then proceed.
Acquisition price:
 The acquisition price is determined by the willingness of the vendor to sell
and the willingness of the buyer to pay
 The majority of local commercial radio stations record operating losses, so
that acquisition prices are difficult to calculate as a ratio of a business'
operating profits
 Recent large-scale commercial radio transactions (see table below) have
taken place at prices representing a multiple of between 1.5 and 3 times
reported annual operating revenues
 The smaller the commercial radio station, the less likely the transaction
price is to conform to a predictable multiple of revenues or profits.
page 6 of 30

Recent commercial radio group acquisitions:5
date target buyer
revenue
s (£m)
operati
ng
profit
(£m)
operati
ng
margin
(%)
acquisit
ion
price
(£m)
muiltipl
e of
revenue
s
multiple
of
operati
ng
profit
June
2012
Guardian
Media Group
Radio
Global
Radio 47.1 (4.1) -8.7 69.0 1.5
June
2008 Virgin Radio
Times
of India 24.0 4.3 17.9 53.2 2.2 12.4
March
2008 GCap Media
Global
Radio 193.0 13.3 6.9 374.6 1.9 28.2
Decemb
er 2007 EMAP Radio H Bauer 143.0 18.0 12.6 422.0 3.0 23.4
June
2007
Chrysalis
Radio
Global
Radio 65.6 8.7 13.3 170.0 2.6 19.5
Suggested broadcast radio acquisition targets:
Ethnic local commercial radio stations:6
Lice
nce
no. Radio station
Service
area
F
M
/
A
M
Frequ
ency 1
Frequ
ency 2
Measur
ed
Covera
ge Area
(15+
populati
on @
2001) DAB multiplex
Licence
expiry
date
AL0
41 Capital Xtra Brixton
F
M 96.9
1,577,
032
National (112
stereo)
31/12/
2019
AL2
55 Capital Xtra
North
London
F
M 107.1
1,929,
148
National (112
stereo)
02/05/
2023
AL1
56
Sunrise
Radio 1
Greater
London
A
M 1458
8,038,
386
London 1 (128
stereo)
31/12/
2018
AL1
75
Sunrise
Radio 2
Greater
London
A
M 963 972
7,163,
171
02/07/
2015
AL1
60
Sunrise
Radio 3
Greater
London
A
M 1035
6,675,
971
London 3 (80
mono)
31/08/
2019
AL1
83
Asian Sound
Radio
East
Lancashir
e
A
M 1377 963
1,923,
963
Manchester (64
mono)
02/06/
2015
AL0
36
London
Greek Radio
North
London
F
M 103.3
1,012,
200
31/12/
2014
AL1
72
London
Turkish Radio
North
London
A
M 1584
1,915,
684
16/08/
2015
AL1
71 Radio XL
West
Midlands
A
M 1296
3,104,
253
Wolverhampton
(64 mono)
29/05/
2020
AL0
58 Sabras Radio Leicester
A
M 1260
740,66
7
Leicester (64
mono)
06/09/
2020
AL0
50
Spectrum
Radio
Greater
London
A
M 558
10,433
,014
London 2 (64
mono)
21/12/
2019
AL0
37 Sunrise FM Bradford
F
M 103.2
368,97
7
Bradford (64
mono)
31/12/
2019
Detailed data for each of these radio stations follows.
page 7 of 30

CAPITAL XTRA (1 of 2)
Licence no. AL041
Radio station Capital Xtra
Service area Brixton
FM/AM FM
Frequency 96.9
Measured Coverage Area 1,577,032
DAB multiplex National (112 stereo)
Licence expiry 31/12/2019
Licensee Capital Xtra Limited (02421343)
Group owner Global Radio
Address 30 Leicester Square, London WC2H 7LA
Web site choicefm.com
Character of Service A targeted music, news and information service
primarily for listeners of African and Afro-
Caribbean origin in the Brixton area but with
crossover appeal to other listeners who appreciate
urban contemporary black music. The service
includes 21 hours per week of complementary
specialist music.
Studio location Locally-made programming must be produced
within the licensed area.
Locally-made hours At least 10 hours per day during daytime
weekdays (must include breakfast). At least 4
hours daytime Saturdays and Sundays.
Programme sharing All programmes may be shared between the
Brixton licence (AL041) and the North London
licence (AL255), subject to satisfying the character
of service requirements above.
Local news At least hourly during peaktime weekdays and
weekends. At other times UK-wide, nations and
international news should feature.
Weekly reach (% adults) [see next page for combined data of 2 licences]
Weekly reach (no. adults)
Hours listened per week
Estimated revenues
Revenues yr. ended 2013
Revenues yr. ended 2012
Operating profit y/e 2013
Operating profit y/e 2012
Chinese population (%)
Chinese population (no.)
page 8 of 30

CAPITAL XTRA (2 of 2)
Licence no. AL255
Radio station Capital Xtra
Service area North London
FM/AM FM
Frequency 107.1
DAB multiplex National (112 stereo)
Licensee Capital Xtra Limited (02421343)
Group owner Global Radio
Address 30 Leicester Square, London WC2H 7LA
Web site choicefm.com
Character of Service A music, news, community news and information
service primarily for listeners of African and Afro-
Caribbean origin in the north London area but with
crossover appeal to other listeners who appreciate
urban contemporary black music. The service
includes 21 hours per week of complementary
specialist music.
Locally-made hours At least 10 hours per day during daytime
weekdays (must include breakfast). At least 4
hours daytime Saturdays and Sundays.
Programme sharing All programmes may be shared between the North
London licence (AL255) and the Brixton licence
(AL041), subject to satisfying the character of
service requirements above.
Local news At least hourly during peaktime weekdays and
weekends. At other times UK-wide, nations and
Weekly reach (% adults) 5%
Weekly reach (no. adults) 553,000
Hours listened per week 3,264,000
Estimated revenues £4,055,686
Revenues yr. ended 2013 £1,750,000
Operating profit y/e 2013 -£529,000
Chinese population (%) 1.5
Chinese population (no.) 53,297
NOTES:
 Revenues and profits may be understated by group owner
 Acquired for £14.4m in 2001/2003 from founders by Capital Radio plc
page 9 of 30

 Owner re-branded and re-marketed station in 2013 as a national service,
so is likely to be reluctant to sell
 Ofcom may be reluctant to allow a change of 'format' to Chinese content
 Still the most recent standalone London FM station to have changed hands
 Suggested offer price: £6m to £12m
page 10 of 30

SUNRISE RADIO 1
Licence no. AL156
Radio station Sunrise Radio 1
Service area Greater London
FM/AM AM
Frequency 1458
DAB multiplex London 1 (128 stereo)
Licensee Sunrise Radio Limited (02337575)
Group owner Litt Corporation
Address Radio House, Bridge Road, Southall UB2 4AT
Web site sunriseradio.com
Character of Service A full service music and information mix for Asians
in London, featuring an appropriate variety of
cultures and styles, with news bulletins in English
and/or Hindustani.
Locally-made hours At least 4 hours per day during daytime weekday
and weekends. (In all, at least 10 hours of
weekday daytime programming should be
broadcast from within the station's nation).
Programme sharing No arrangements.
Local news At least hourly at peak-times. Outside peak-time
and at weekends, UK-wide, nations and
Hours listened per week 2,799,000
Estimated revenues £3,477,900
Operating profit y/e 2012 -£196,180 [estimated]
Operating profit y/e 2011 -£6,195,729
Chinese population (%) 1.5%
NOTES:
 Station still owned by founder, launched in 1989
 Station is key property in group portfolio
 In Sep 2013, HMRC served Sunrise Radio with a winding-up order
 In Oct 2013, HMRC dropped its winding-up order (£390,000 paid)
page 11 of 30

 In Oct 2013, Digital Radio Group (London) Limited was substituted as the
petitioning creditor
 On 16 Dec 2013, Sunrise Radio remained on the Companies Court
winding-up list
 Suggested offer price: £1
 Forensic examination of company accounts, assets and liabilities
imperative
 Possibility of paying off debt to Digital Radio Group (and others?) in return
for acquiring the company
 Conversation with Ofcom essential to ensure change of format will be
permitted
page 12 of 30

SUNRISE RADIO 2
Licence no. AL175
FM/AM AM
Frequency 963 + 972
DAB multiplex
Licensee Buzz Asia Limited (07009138)
Character of Service A music-led service for London Asians primarily
targeting those aged 15 to 34 with a mix of Asian
music and other more mainstream music where
appropriate.
Local news No requirement for local news, but UK-wide,
nations and international news should feature.
Hours listened per week 606,000
Estimated revenues £752,986
Revenues yr. ended 2011 £631,720
Operating profit y/e 2011 £10,509
NOTES:
 Station acquired from founders in 'fire sale' (company in administration) in
2009 for undisclosed amount
 Licence expiry in 2015
 In Oct 2013, HMRC dropped its winding-up order
page 13 of 30

winding-up list
imperative
permitted
page 14 of 30

SUNRISE RADIO 3
Licence no. AL160
FM/AM AM
Frequency 1035
DAB multiplex London 3 (80 mono)
Licensee Kismat Radio Limited (05318991)
Character of Service An interactive speech-based station targeted at
over-35s in the various Asian communities around
London, accompanied by a mix of popular formas
of music appealing to the target audience. Speech
(expected to comprise at least half of daytime, and
maybe less out of daytime) may be in English but
should encourage a multi-lingual environment.
Local news No requirement for local news, but UK-wide,
nations and international news should feature.
Hours listened per week 384,000
Estimated revenues £477,140
NOTES:
 Station acquired from Mean Fiddler Music Group in 2003 for undisclosed
amount
 In Oct 2013, HMRC dropped its winding-up order
page 15 of 30

winding-up list
imperative
permitted
page 16 of 30

ASIAN SOUND RADIO
Licence no. AL183
Radio station Asian Sound Radio
Service area East Lancashire
FM/AM AM
Frequency 1377 + 963
DAB multiplex Manchester (64 mono)
Licensee Asian Sound Radio Limited (03107568)
Group owner
Address 42 Southall Street, Manchester M3 1LG
Web site asiansoundradio.co.uk
Character of Service A locally-oriented music and information service for
Asian listeners in East Lancashire, with a mix of
music. At least a third of the output will be in Urdu
and Hindi, and the Gujerati and Bengali speaking
communities will be catered for. On the 1377 kHz
transmitter only, a music-based service targeting
the Asian and Arabic Muslim community may be
broadcast.
and weekends.
Local news At least hourly during daytime weekdays and peak-
time weekends. At other times, UK-wide, nations
and international news should feature.
Weekly reach (% adults) [no RAJAR data]
Estimated revenues
NOTES:
 Ofcom might be reluctant to approve a format change as this is the only
local commercial analogue radio station serving the Asian community
 Licence expires in 2015
 28 hours per week of programmes have to be produced in Manchester
 Local news bulletins have to be broadcast hourly
 The potential Chinese audience is relatively small
 Suggested offer price: [insufficient financial data]
page 17 of 30

LONDON GREEK RADIO
Licence no. AL036
Radio station London Greek Radio
FM/AM FM
Frequency 103.3
DAB multiplex
Licensee London Greek Radio Limited (02147539)
Group owner
Address 437 High Road, London N12 0AP
Web site lgr.co.uk
Character of Service A targeted news, information and broad Greek
music service for London's Greek and Greek
Cypriot community.
Studio location
Locally-made hours At least 10 hours a day during daytime weekdays
(must include breakfast). At least 4 hours daytime
Saturdays and Sundays.
Local news At least hourly at peaktime weekdays and
weekends. Outside peak, UK-wide, nations and
Estimated revenues
NOTES:
local commercial analogue radio station serving the Greek community
 10 hours per day of programmes have to be produced locally
page 18 of 30

LONDON TURKISH RADIO
Licence no. AL172
Radio station London Turkish Radio
FM/AM AM
Frequency 1584
DAB multiplex
Licensee Kirmizi Beyaz Kibris Limited (07817726)
Group owner
Address 14 Inverclyde Gardens, Romford RM6 5SJ
Web site londonturkishradio.com
Character of Service A targeted news, information and broad Turkish
music service for London's Turkish and Turkish
Cypriot community
Studio location
Locally-made hours At least 4 hours a day during daytime weekday
and weekends. (In all, at least ten hours of
broadcast from within England)
weekends. Outside peak, UK-wide, nations and
Estimated revenues
Operating profit y/e 2012 [no filed accounts]
NOTES:
local commercial analogue radio station serving the Turkish community
 Acquired from previous owner in 2011
page 19 of 30

RADIO XL
Licence no. AL171
Radio station Radio XL
Service area West Midlands
FM/AM AM
Frequency 1296
DAB multiplex Wolverhampton (64 mono)
Licensee Central Air Radio Limited (03018278)
Group owner
Address KMS House, Bradford Street, Birmingham B12
0JD
Web site radioxl.net
Character of Service A music and information service for the Asian
communities * of the West Midlands in varied and
appropriate languages (* programmes for the
Chinese community may be broadcast as
appropriate)
Studio location
broadcast from within the station's nation)
Local news Asian news at least hourly at peaktime weekdays
and weekends.
Estimated revenues
Operating profit y/e 2012 £17,654 [estimated]
NOTES:
page 20 of 30

SABRAS RADIO
Licence no. AL058
Radio station Sabras Radio
Service area Leicester
FM/AM AM
Frequency 1260
Measured Coverage Area 740,667
DAB multiplex Leicester (64 mono)
Licensee Sabras Sound Limited (02872741)
Group owner
Address 63 Melton Road, Leicester LE4 6PN
Web site sabrasradio.com
Character of Service A music and information station for Asian listeners
in and around Leicester, broadcasting a variety of
languages and Asian musical genres
Studio location
weekends. Outside peak, UK-wide, national and
Estimated revenues
NOTES:
 The potential Chinese audience is very small
 Suggested offer price: unsuitable to make bid
page 21 of 30

SPECTRUM RADIO
Licence no. AL050
Radio station Spectrum Radio
FM/AM AM
Frequency 558
DAB multiplex London 2 (64 mono)
Licensee Spectrum Radio Limited (02388187)
Group owner
Address 4 Ingate Place, London SW8 3NS
Web site spectrumradio.net
Character of Service A special speech, news and music station aimed at
a minimum of six different *, varied ethnic minority
communities in London, whose family origins lie
outside Britain [* no more than 10 out of any 24
hours should be Asian-based programming (and
two of those should be a special out-of-daytime
programme for Sikhs). for the purposes of format
regulation, Asian-based programming is defined as
programming for communities from the Indian sub-
continent]
Studio location
Local news As appropriate.
Estimated revenues
NOTES:
 Licensed as a multi-ethnic station required to target diverse communities
 Not suitable for a singular ethnic radio service
 Sizeable potential Chinese audience in London market
 Broadcasts 1 hour/day of China Radio International content 5-6pm Mon-Fri
page 22 of 30

SUNRISE FM
Licence no. AL037
Radio station Sunrise FM
Service area Bradford
FM/AM FM
Frequency 103.2
Measured Coverage Area 368,977
DAB multiplex Bradford (64 mono)
Licensee Bradford City Radio Limited (02355348)
Group owner
Address 55 Leeds Road, Bradford BD1 5AF
Web site sunriseradio.fm
Character of Service A broad Asian music, entertainment and
information service for Asians in the Bradford area,
in appropriate languages.
Studio location
Locally-made hours At least 10 hours a day during daytime weekdays
(must include breakfast). At least 4 hours daytime
Saturdays and Sundays.
Local news At least hourly at peaktime weekdays. Outside
peak, UK-wide, nations and international news
should feature.
Estimated revenues
NOTES:
 The potential Chinese audience is very small
page 23 of 30

Digital Platforms
The digital broadcast radio platforms in the UK are:
 DAB digital terrestrial radio platform
o National coverage
o Local coverage
 Satellite TV platform
o Sky (national)
o Freesat (national)
 Digital terrestrial TV platform
o Freeview (national)
DAB digital radio
 No scarcity of spectrum
 Cost of platform carriage negotiated directly with DAB multiplex owner
 No fixed price list
 Cost related to spectrum usage (i.e. 128kbps stereo costs more than
twice 64kbps mono)
 Cost related to geographical coverage
 National coverage @ 128kbps stereo could cost £500,000 per annum
 Local coverage costs vary considerably
 Additional ongoing cost of wired link to multiplex owner ingest
 DAB receiver take-up below 50%
 DAB platform share of total radio consumption less than 25%
 DAB radio reception poor in built-up urban areas
 No DAB radio station has yet proven profitable (DAB launched in 1999)
DAB radio multiplexes in UK7
service area
population
(15+) licensee
National Arqiva
Aberdeen 345,745 Switchdigital/UTV
Ayr 299,882 Arqiva
Birmingham 1,837,793 CE Digital/Bauer
Bournemouth 464,085 CE Digital/Bauer
Bradford & Huddersfield 843,378 UTV
Bristol & Bath 827,079 Arqiva
Cambridge 345,939 Arqiva
Cardiff & Newport 843,602 Arqiva
Central Lancashire 1,328,578 Bauer
Central Scotland 2,820,552 Switchdigital/UTV
Cornwall 675,507 Arqiva
Coventry 621,835 Arqiva
Dundee & Perth 449,483 Bauer
Edinburgh 1,167,267 Bauer
Exeter Torbay & North Devon 496,468 Arqiva
Glasgow 1,800,930 Bauer
Gloucestershire 460,042 MuxCo
Greater London 1 9,812,248 CE Digital/Bauer
page 24 of 30

Greater London 2 9,812,248 Switchdigital/UTV
Greater London 3 8,990,511 Digital Radio Group/Global Radio
Herefordshire & Worcestershire 586,300 MuxCo
Herts Beds & Bucks 1,829,329 Arqiva
Humberside 674,772 Bauer
Inverness 238,129 Bauer
Kent 1,147,861 Arqiva
Leeds 1,071,045 Bauer
Leicester 722,711 Arqiva
Liverpool 1,819,227 Bauer
Manchester 2,465,786 CE Digital/Bauer
Mid & West Wales 400,065 MuxCo
NE Wales & West Cheshire 646,638 MuxCo
Northamptonshire 504,775 Arqiva
Northern Ireland 1,314,520 Bauer
Norwich 593,301 Arqiva
Nottingham 1,061,060 Arqiva
Oxfordshire 494,390 Arqiva
Peterborough 385,743 Arqiva
Plymouth Arqiva
Reading & Basingstoke 636,144 Arqiva
South Hampshire 1,088,560 Arqiva
South Yorkshire 1,253,127 Bauer
Southend & Chelmsford 1,290,796 Arqiva
Stoke 880,440 UTV
Surrey & North Sussex 1,411,122 MuxCo
Sussex coast 877,567 Arqiva
Swansea 551,262 UTV
Swindon 563,881 Arqiva
Teesside 673,138 Bauer
Tyne & Wear 1,388,795 Bauer
West Wiltshire Arqiva
Wolverhampton Shrewsbury & Telford 1,086,632 Arqiva
Yorkshire 4,380,443 MXR
Satellite & Terrestial TV
 Sky: cost of EPG from Sky, wired link to Sky ingest and satellite slot
 Freesat: no available space currently for new radio clients
 Freeview: no available space currently for radio clients
 Digital TV take-up almost universal
 Digital TV platform share of total radio consumption only 5%
NOTES:
 Digital platforms useful as an incremental distribution route, but not as a
primary system where the objective is to maximise audiences and
revenues
 Some analogue broadcast radio stations also broadcast on digital
platforms, the contracts for which will be included in their acquisition
price
page 25 of 30

 UK government decision in December 2013 not to fix a DAB radio
switchover date likely not to stimulate DAB platform usage
page 26 of 30

Online/Internet Radio
Significant differences exist between the business model for broadcast radio
and online radio. Most notably:8
 No distribution/broadcast licence is required for internet radio
 No regulation of the content broadcast
 No regulation of advertising and sponsorship announcements
 Internet radio is scaleable to the size of the audience
 Internet radio is dominated by variable costs, whereas broadcast radio is
largely a fixed-cost business9
 Audio server costs are falling
 Necessary bandwidth is decreasing with more efficient audio codecs.
An internet radio station can be set up very cheaply without the need for
specialist hardware.
There are no reliable statistics regarding internet radio usage in the UK,
although:
 Smartphone ownership and mobile broadband take-up is high
 Internet usage and online transactions are some of the highest in Europe.
NOTES:
 Costs of establishing a basic internet radio station can be very low
 Majority of set-up costs comprise hardware and software
 As the station attracts more consumer usage, audio streaming costs
increase in absolute terms and as a proportion of total costs
 The audience for an internet radio station is global, rather than limited to
the UK
 Audiences for internet radio tend to be spread thinly, so the station's
impact on London or the UK may not be particularly significant
 Online radio can be useful to reach specialist audiences, but is not as
useful as broadcast radio to reach a general audience
 Usage of internet radio in the UK is skewed towards younger people
 Additional costs of marketing a brand online to get it noticed amongst the
glut of content.
page 27 of 30

Suggested Strategies
There are a number of issues that require consideration and decisions in
order to proceed. These include:
Determine objectives for radio station:
 Maximise audience
 Maximise revenues
 Maximise profitability.
Determine business model:
 Define target audience
 Revenues from programme makers
 Revenues from spot advertising sales
 Revenues from programme sponsorship
 Revenues from public funds
 Revenues from listeners.
Determine content:
 Speech or music or both
 Live or pre-recorded or both
 Programme schedule: stripped or by-appointment
 Repeat cycle.
Determine budget:
 Acquisition costs
 Ongoing overheads
 Capital costs.
The outcomes of these strategic decisions will then determine which platforms
prove the most appropriate to pursue for distribution of radio content.
At present, it would appear the most appropriate courses of action are:
Analogue radio station as the primary distribution platform:
 Approach radio stations for acquisition, initially:
o Sunrise Radio 1
o Sunrise Radio 2
o Sunrise Radio 3
 Approach radio stations for airtime leasing:
o Seek regulatory advice from Ofcom initially
Digital radio as the secondary distribution platform:
 DAB radio:
o Determine multiplex carriage costs
o DAB may be included in acquisition of analogue station
 Online radio:
page 28 of 30

o Determine suitability and costs
It would be possible to establish an internet radio station relatively quickly.
However, it may be more productive to focus efforts on negotiations for an
analogue radio station that would generate considerably greater impact, even
if it takes longer to conclude.
page 29 of 30

of 30
Appendix: Letter Sent To Ofcom Radio Division
Dear Sirs
I have been charged by a client to ask Ofcom a question concerning the
regulation of local commercial radio licensees.
The client wishes to lease editorial time from an existing analogue local
commercial radio licensee to broadcast its content, either for a substantial part
or for the whole of the station's output.
The client is familiar with the operation of 'Local Marketing Agreement' radio
stations in the US (wiki here) and wishes to understand if such arrangements
are a regulatory possibility in the UK. I cautioned the client that, before
approaching potential UK radio station partners, it would be advisable first to
seek clarification from Ofcom because I am not aware of an existing
arrangement in the UK (except for Spectrum Radio's quite particular licence).
Additionally, the content my client intends to broadcast will target an ethnic
audience that is presently unserved by analogue radio stations in the UK. As a
result, if the client came to an agreement with an existing Ofcom local radio
licensee, an amendment to that station's Character of Service would be
necessary.
My client has operated a satellite-delivered television station in the UK on the
Sky EPG for several years and is aware of Ofcom rules concerning content
and commercial messages. The client now wishes to extend its existing UK
brand by expanding into the broadcast radio market, addressing an audience
that has been unserved to date.
I would be grateful if you could respond in writing, at the earliest opportunity,
in order that I can assure the client that a formal regulatory opinion has been
solicited.
Many thanks.
Yours,
Grant Goddard
6 January 2014
1
RAJAR, Q3 2013
2
ibid. (the remaining 6% of listening is unspecified by respondents)
3
Ofcom, Digital Radio Report 2013, 25 September 2013, pp.8-10
4
Ofcom, Communications Market Report 2013, 1 August 2013, Figure 3.20, p.228
5
source: Grant Goddard
6
ibid.
7
ibid.
8
Detailed analysis at http://www.scribd.com/doc/77647159
9
Detailed analysis at http://www.scribd.com/doc/107099932

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