Analysis of threats by DAB radio lobbyists that UK national radio stations' AM/FM broadcasts will be switched off, written by Grant Goddard in April 2011 for Grant Goddard: Radio Blog.

1. SWITCH-OFF OF AM/FM
NATIONAL RADIO STATIONS IN
THE UK? AN EMPTY THREAT
THAT WILL NEVER HAPPEN
by
GRANT GODDARD
www.grantgoddard.co.uk
April 2011

2. Some of Digital Britain’s radio recommendations were unworkable. However, the notion has
remained that FM and AM analogue transmitters of the UK’s national radio stations will be
switched off once digital radio listening passes the 50% threshold. This was never practical. It
was a ‘threat’ propagated by government to the public in the hope of forcing them into buying
more DAB radios, instilling fear that they would otherwise lose their favourite stations. The
threat failed.
The problem with any threat is that, once it has failed, it remains difficult for the protagonist to
climb down. So the threat continues to be propagated. For what reason now? So as not to
make those who issued the threat look completely foolish. The need to save face has locked
the government apparatus into a fiction that BBC and commercial radio will willingly throw
away half their audiences by closing their FM/AM transmitters. This was never true.
THE BBC
‘Universal’ reception of the BBC’s core public services is mandatory. It would prove impossible
to levy the BBC Licence Fee on every UK household if (almost) the entire population could not
receive the BBC services for which they pay.
The BBC Charter & Agreement requires:
“12. Making the UK Public Services widely available
(1) The BBC must do all that is reasonably practicable to ensure that viewers, listeners
and other users (as the case may be) are able to access the UK Public Services that
are intended for them, or elements of their content, in a range of convenient and cost
effective ways which are available or might become available in the future.”
Would the BBC switch off analogue transmissions of its national networks once more than
50% of listening was attributed to digital platforms? Of course not. You would be a complete
fool to slash your radio audience by half, particularly as such an action would contradict the
BBC Charter & Agreement.
Could the government insist that the BBC switched off the analogue transmissions of its
national networks? Only if it wanted a revolution on its hands. It would be difficult to think of a
policy more likely to lose it the next General Election.
Switch-Off Of AM/FM National Radio Stations In The UK? An Empty Threat That Will Never Happen page 2
©2011 Grant Goddard

3. COMMERCIAL RADIO
The revenues of commercial radio are directly related to the sector’s volume of listening. If
commercial radio switched off its analogue transmitters once digital listening had passed the
50% threshold, at a stroke it would risk losing 50% of its volume of listening and, subsequently,
50% of its revenues. Would it do that? No, of course not.
RadioCentre’s self-interested ‘policy’ has been to argue that the BBC national networks should
turn off their analogue transmitters first, years in advance of commercial radio stations. Radio
Chicken, anyone? Naturally, RadioCentre failed to mention that the outcome of this proposal
would be likely to significantly increase its member commercial radio stations’ analogue
audiences and revenues. There is nothing quite like trying to persuade your competitor to
commit joint suicide … first.
Additionally, the value of commercial radio companies is vested in the scarcity of their
analogue FM/AM licences. Because no new analogue licences are awarded by the regulator,
each existing licence has a significant intrinsic value, even if the business using it is not
profitable. The same is not true of DAB licences. Anybody can apply to Ofcom for a DAB
licence by filling in a form and paying a relatively small fee.
An example of the value of analogue licences to commercial radio owners is 'Absolute Radio'.
In 2008, Times of India paid £53.2m for 'Virgin Radio', comprising one national AM licence and
one London FM licence. Having re-launched the station as 'Absolute Radio', the company lost
£4.3m in 2009, but its balance sheet still retains considerable value because of the scarcity of
its two analogue radio licences. If Absolute Radio were put up for sale, someone would be
interested in buying it because of that scarcity.
By contrast, when DAB commercial radio services such as 'Zee Radio', 'Islam Radio', 'Muslim
Radio', 'Flaunt' and 'Eurolatina' no longer wanted their digital radio licences in 2010, there was
no queue of potential buyers. They simply handed their licences back to Ofcom because those
licences were not scarce.
This is why it would prove financially suicidal for commercial radio to switch off its FM/AM
transmitters. It would have to write down the value of those scarce analogue licences to zero in
its balance sheets which, at a stroke, would negate almost the entire value of the licence
owners. Not a good company strategy.
So, when headlines such as ‘Absolute Radio mulls AM switch-off’ appear in the trade press,
they should be read with a bucket of salt. The headline might as well say: ’Absolute Radio
mulls destruction of shareholder value.’
And, when yet another DAB proponent appears on radio or television to persuade you, in all
seriousness, that the UK’s most listened to national radio services – both BBC and commercial
– will imminently be switching off their AM/FM transmitters, please feel justified to laugh in their
face.
Switch-Off Of AM/FM National Radio Stations In The UK? An Empty Threat That Will Never Happen page 3
©2011 Grant Goddard

4. Switch-Off Of AM/FM National Radio Stations In The UK? An Empty Threat That Will Never Happen page 4
©2011 Grant Goddard
This is about as likely to happen as Tesco putting security guards at their store entrances to
tell the public to shop elsewhere because they want fewer customers.
FOOTNOTE:
It emerged last week that, after the Norwegian state classical music station ‘Alltid Klassisk’
abandoned FM transmission on 1 July 2009 for DAB transmission, its audience contracted
from 25,000 to 10,000 per day.
Now, consider that only 20% of listening to 'BBC Radio 2' is via digital platforms (in Q1 2010),
lower than the 24% average for all stations [see Sep 2010 blog]. If that average ever managed
to reach the 50% threshold, it might leave 60% of Radio 2’s audience still listening via
analogue. That’s 8m listeners that Radio 2 would have to turn its back on as a result of FM
switch-off. Time for the BBC to start erecting barricades outside Broadcasting House.
[thanks to Eivind Engberg]
[First published by Grant Goddard: Radio Blog as 'AM/FM Switch-Off Of National Radio Stations: An Empty Threat
Whose Expiry Date Has Long Passed', 4 April 2011.]
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