Analysis of the impact of Channel 4 Television's decision to close its digital radio division and drop its plans to launch new national radio stations, written by Grant Goddard in October 2008 for Broadcast magazine.

1. THE CLOSURE OF CHANNEL 4
RADIO
by
GRANT GODDARD
www.grantgoddard.co.uk
October 2008

2. Channel 4’s decision to abandon its radio plans has sent shockwaves
reverberating through an industry already fragile from declining audiences and
an advertising downturn. For the majority of DAB evangelists, the promised
eight new national stations heralded precisely the ‘shot in the arm’ that the
platform needed. Now that these stations are dead, as if to rub salt into the
wound, Channel 4 Chief Executive Andy Duncan has shrugged off the aborted
radio venture as “less than 1%” of his company’s turnover. To the commercial
radio sector, the probable £9 million spent on Channel 4’s ‘non-launch’ seems
like a lot of money – ironically, enough to keep a clutch of national digital radio
stations on the air for a year.
Channel 4’s exit from radio leaves a gaping hole in the radio industry’s
masterplan to create a ‘Freeview’ growth moment on the DAB platform. A
significant consumer marketing campaign starts in November to encourage
DAB hardware sales in the critical run-up to Christmas. The one element that
would seem to be missing from this promotion is ‘new, exciting content’
because, as Duncan pointed out, it is “highly unlikely” that anyone, other than
Channel 4, had been making plans to launch new national digital radio stations
in the next two years. This will make the winter DAB marketing campaign more
challenging than last year’s, as the breadth of available DAB content has
reduced since then. Surely it must be time to knock some heads together.
If you were to seat all the radio stakeholders in a boardroom and ask them
what they are doing about new DAB content to excite the consumer, you could
hear a pin drop. With Channel 4 having made a hasty exit, everyone else is left
staring expectantly at each other. Despite their regulatory roles, both Ofcom
and the Department for Culture, Media & Sport have avowed that they cannot
intervene in the DAB content market. The BBC argues that it already launched
five national digital stations in 2002 and has cross-promoted them like crazy,
so it has no plans for new DAB channels within the current Licence Fee period.
That leaves the commercial radio companies who, having withdrawn content
from DAB during 2008, now have neither the stomach nor the cashflow to
throw even more money at the platform.
Cannot the commercial radio sector simply cut its losses, turn off DAB and
hand the whole problem over to Ofcom? Unfortunately it cannot, because the
regulator holds the majority of local commercial radio owners over a barrel.
During the last decade, they had been tempted by the regulator’s offer of an
automatic eight-year licence extension in return for simulcasting their station
on the fledgling DAB platform. Having failed then to grasp that there is no such
thing as a ‘free lunch’, station owners are now paying the price, with Ofcom
threatening to immediately revoke the analogue licence of any such station
giving up on DAB. What had once seemed like a ‘carrot and stick’ approach to
digital regulation is now looking much more like a hostage situation.
The commercial radio sector has a stark choice. It can grin and bear the
present impasse, accepting that the continuing £26m annual cost of DAB could
merely hasten its own demise. Or it can lobby Parliament to amend primary
legislation so as to ‘de-couple’ the issue of analogue licence extensions from
the requirement to simulcast on DAB. Or it can take concerted action and call
The Closure Of Channel 4 Radio
©2008 Grant Goddard
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3. the regulator’s bluff, by collectively threatening to remove all its local stations
from DAB unless it is offered some kind of moratorium. Would Ofcom really
shut down most local commercial radio stations on a single day? What is
needed now is for large and small radio owners to work together and agree
upon a common approach to finding a solution. Only then can an unfettered
discussion about the economics of the DAB platform begin in earnest.
[First published as 'Talking Radio: Grant Goddard' in Broadcast magazine, 29 October 2008]
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
The Closure Of Channel 4 Radio
©2008 Grant Goddard
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