Media Bill - Impact Assessments – Commercial radio reforms
As part five of our seven-part series on the draft Media Bill (which can be found here), we covered the de-regulation of analogue commercial radio. In this article, we will cover the Government’s impact assessment of such. For the full overarching impact assessment, please click here.
High-level summary of reform
As further described in our first article on this topic, the key changes to the regulatory landscape of the commercial radio sector will be the following:
- a relaxing of the content and format requirements on commercial radio stations, which will allow them a larger degree of flexibility to update and adapt their services without requiring Ofcom consent;
- replacing requirements on stations that were based on licence applications dating back (in some cases) 20 or 30 years, such as requirements to broadcast specific genres of music, as well as ensuring stations target particular age groups. The draft Media Bill seeks to remove these requirements and instead impose a requirement on local radio services to include local news and information; and
- additional provisions to manage a switchover of analogue radio to digital and to enable Ofcom to licence overseas radio stations.
Rationale for reform
The Government is of the view that its reforms will: (i) be crucial in removing and replacing outdated and burdensome legislation; and (ii) encourage commercial organisations to invest in new content and services, while simultaneously ensuring that the radio sector is protected in the future.
Impact of de-regulation – costs
Overall, the proposed intervention by the Government is largely de-regulatory and therefore, according to the Government, the impact in terms of monetary costs will likely be minimal. However, the Government does acknowledge that there will be some monetary costs associated with its changes (largely from services familiarising themselves with the new rules). However, the impact assessment fails to address the monetary cost associated with the requirement that local radio services should consist of locally gathered news.
The Government notes that some non-monetary costs include:
- the removal of requirements on local commercial radio stations to play specific genres of music could result in indirect costs associated with a narrowing of consumer choices for listeners; and
- there is a possibility of indirect costs in delivering a competitive advantage to the largest commercial groups. The Government noted that a few businesses flagged that the de-regulation could enhance the market positions of large commercial groups and/or weaken the competitive dynamics within radio markets, for example, through influencing advertising prices or altering the market for inputs such as on-air talent and commercial sales staff.
Impact of de-regulation – benefits
According to the Government, removing the remaining Ofcom regulation of music formats and of multiplex line-ups would have the direct benefit of enabling commercial radio operators to freely make changes to their music content, and multiplex operators to freely make changes to their line-up, without needing to go through the process of securing approval from Ofcom. Further, another cost reduction that the Government predicts is the direct cost saving to both stations and Ofcom from not having to maintain compliance with the format and localness rules (however, as noted above, the impact assessment fails to address the monetary cost for local services broadcasting locally gathered news) along with associated costs of investigating potential non-compliance and complaints.
In addition to monetised benefits, the Government expects a large number of non-monetised benefits. For example, removing the regulation of music formats will not only result in cost savings from not having to apply for format changes, but will also mean that stations are now free to experiment and explore with a variety of different music offerings, thereby bringing a wider choice to consumers.
Conclusion
According to data collected by RAJAR and referenced in the Government’s impact assessment, every week 88% of the population tunes in to one of around 750 stations across the country. Radio evidently plays a vital role in society by providing news and disseminating information. It is therefore important that the regulatory framework keeps up to date with the rapid changes that this sector is seeing, and the Government’s proposed de-regulation of the radio sector is aiming to address this.
