Written evidence submitted by Global Radio [FBB0091]

Introduction

Global is a media and entertainment company comprising Global Radio, Global TV, Global Publishing (music publishing) and Global Talent (artist management). Our brands include Heart, Capital, Classic FM, Smooth, LBC, Gold, XFM and Capital XTRA broadcasting from 21 broadcast centres across the country to over 22 million listeners on every week.

Aside from our award winning talk station LBC, we are known for our music stations. We combine our passion for great music with impartial national and local news, weather, traffic and travel and local information. We compete for listeners with the BBC’s national stations, Radio1, Radio2 and Radio3, other commercial stations and increasingly with online music and entertainment services.

Our submission focuses on the areas where the BBC has the most significant impact on the services we provide; national radio, local radio, digital innovation and patronage of classical music. We address the questions posed by the committee where they cover these areas.

The Commercial Radio Industry

The commercial radio sector generated revenue of £472m in 2012, equivalent to about 3% of the UK advertising market. Industry revenue grew by nearly 4% in 2012, after many years of structural decline.

Although it is a small part of the UK media industry commercial radio is a much-loved medium and goes from strength to strength. It has 35 million listeners, reaching 66% of the population. Listeners spend an average 12.8 hours listening to commercial radio per week.

The revolution in digital technology and services in the past decade has transformed how commercial radio attracts listeners and advertising income. Our competitive pressures have been irreversibly altered by the arrival of the smartphone and internet; advertisers increasingly invest in online marketing and listeners, especially younger people, are inundated with free online music services and ways to personalise their listening.

The widening access to technology has led to the launch of many internet music-streaming services, dramatically changing the way consumers can listen to music. 

Equally important for the radio industry was the launch of the TuneIn in 2002. TuneIn Radio is available through a range of apps for iphones, ipads, Android, BlackBerry, Samsung, Windows Phone and has transformed smartphones into a gateway to radio across the world. TuneIn offers access to over 100,000 live worldwide radio stations. It has 40 million active listeners a month.

New digital innovation is transforming the way people consume music and entertainment. Consumers have never had such a varied choice of radio stations and music nor has it ever been so readily available.  The future of the BBC has to be evaluated with this in mind; the BBC is no longer necessary to increase choice for consumes as it was decades ago.

The future of the BBC in a digital age

Global believes that the BBC makes a valuable contribution to British radio and offers listeners many unique services that are not available on commercial radio. We want to see a successful and efficient BBC in the media sector and support the principle of funding by the licence fee.

Our concerns and recommendations regarding the future of the BBC stem from our belief that far too often the BBC strays into areas where the private sector is already operating and serving consumers. This is unwelcome because it places the BBC in competition with the private sector and uses public funding to duplicate services that are already available free at the point of use. 

The BBC does not appear to have a coherent strategy to deliver public service through its radio stations, particularly Radio1 and Radio2. In the absence of such a strategy the stations are run like commercial stations, pursuing mass-market appeal and ever-higher listener ratings. There is evidence to suggest that current leading BBC stations seek to maximise listener numbers and hours spent listening. These metrics are not appropriate for a public service broadcaster. The BBC should instead focus on high quality, distinctive content and underserved audiences, not on content with wide appeal for mainstream audiences that is, or would be absent the BBC’s market intervention, provided by commercial operators at no cost to the licence-fee payer.

The BBC is neglecting its public service remit. The BBC’s most popular radio stations broadcast negligible amounts of public service content, mostly in off-peak hours. Peak listening hours are reserved for popular music programmes which compete directly with commercial services. A lack of public service content represents poor value for money for licence fee payers; public subsidy should be used exclusively to deliver services above and beyond those provided by the market.

A lack of effective checks and balances in BBC governance, which would compel stations to articulate and implement a strategy embedded in public service, has led to the failure of BBC radio stations to deliver sufficient public service content. Appropriate governance measures must be put in place post 2016 so that Government, licence fee payers and the private sector can have confidence that the BBC will not continue to use public funds to run populist, mainstream services already provided by the market.

Our submission focuses on four recommendations* for the future of the BBC:

▪         The purpose of public service broadcasting should be more tightly defined beyond 2016. BBC content should be distinctive, not provided by the market, focus on audiences otherwise underserved and it should not encroach on commercial provision. Each BBC service should be accountable for meeting a clearly-defined public service remit.

▪         BBC investment in technology and digital services must be more effectively evaluated before and during development. Once complete, projects should be evaluated for their impact on the market on an ongoing basis and consideration given to whether they are sold or made available to the private sector. There should be a role for peer review involving figures from the private sector.  

▪         A ten-year royal charter and agreement is too long in a rapidly changing media market. There should be scope for intermediate reviews and evaluation while ensuring stability at the BBC.

▪         The BBC should be more transparent about accounting and spending. The NAO should be given full access to the BBC accounts.

* Classic FM will be making a separate submission to the Committee recommending that parts of the licence fee used to support the arts should be open to competition to ensure that the widest possible audience can access content.

The purpose of public service broadcasting

The purpose of public service broadcasting should be to create distinctive content of public value and to serve audiences otherwise underserved. Although the six public purposes of the BBC have merit, they are vague, too broad and do not give the corporation a clear mission or set of objectives.

These purposes need to be superseded by a new set of more specific duties. These should take precedence over public purposes. 

We therefore believe that the BBC’s duties in the Charter should include: 

1.   A duty to create content and undertake activities of public value with wider benefits for society

2.   A duty to have regard to the market impact of its activities

3.   A duty to evaluate the market impact of new products and projects before and after launch

4.   A duty to serve audiences and minorities that are underserved by other media

5.   A duty where possible to create distinct and original content from other media, where possible

6.   A duty to provide value for money for the license fee payer by avoiding duplication of content already provided by the market

7.   A duty to have its accounts audited by the National Audit Office

This new framework, when applied to radio will result in more efficient BBC radio stations, delivering unique public service content and distinctive content to underserved audiences. It will also mean that when the BBC invests in new technology, it is technology that would not otherwise come to market or that brings BBC content to audiences when it would not otherwise be available.

BBC radio in a digital age

As the owners of Capital and Heart, two of the UKs largest commercial radio networks, playing contemporary and chart music, we are well placed to comment on the appeal and programming of Radio1 and Radio2. It is these stations that are the furthest from delivering on their remit and most closely emulate commercial stations.

Radio1 and Radio2 date back to an era of limited consumer choice, before the launch of commercial radio, and long before music became so widely available through online and mobile services such as Youtube, Spotify and others. Radio1 and Radio2 can no longer justifiably claim to be providing a unique service, or one which would not be provided by the commercial sector.   As already described, the market now gives consumers access to a wide choice of music, free at the point of use.

In future, the role of BBC radio stations should be dictated by the public duties we have outlined above. Rather than playing popular music for a mass audience they should primarily broadcast distinctive, original content aimed at underserved audiences.  To do this effectively, the culture at BBC radio stations must be radically changed and remits must be overhauled: they need to be much more specific and rooted in the duties we have set out. Managers must be held accountable for running services in line with remits. At present, station managers appear to pay little attention to station remits and are not held accountable if they are not implemented. 

CASE STUDY: RADIO 1

The remit of Radio1, set by the BBC Trust, is “to entertain and engage a broad range of young listeners with a distinctive mix of contemporary music and speech. It should reflect the lives and interests of 15–29 year olds but also embrace others who share similar tastes.

“It should offer a range of new music, support emerging artists – especially those from the UK – and provide a platform for live music. News, documentaries and advice campaigns should cover areas of relevance to young adults.”

If Radio1 were a new publicly funder service it would not be approved for launch because the remit is vague and does not place an emphasis on public service content or serving an audience not effectively reached by commercial radio, teenagers for example.

As it stands, this remit has allowed the BBC to build the Radio1 schedule around high profile presenters and popular music shows to chase ratings. New music shows, documentaries or high value informative speech are rare and invariably buried in off-peak hours.

•         For many years Radio1 was building very large audiences for popular shows that ignored its remit to serve younger audiences. The average age of Radio1’s listeners is 34 yet despite changes to the schedule (presenters) it has not made drastic changes to the content to attract a younger audience.

• Data clearly showed that Chris Moyles attracted an audience with an average age of 33 and 34 yet was kept on the breakfast show for many years. If Radio1 made every effort to adhere to its remit Chris Moyles’ programme would have been changed or he would have been taken off air.
• Despite having employed a younger breakfast presenter in Nick Grimshaw, the content still appeals to an older audience e.g. this week Grimshaw is appearing in all the major soaps including Eastenders and Coronation Street. The average age of his audience is still 34.

•         The Radio1 schedule does not place sufficient emphasis on ‘distinctive’ contemporary or ‘new’ music. The daytime schedule playlist is dominated by music in the charts and widely played on commercial radio. New music and specialist music shows are broadcast off peak or during the night. In addition, the weekly schedule does not feature a suitable number of documentaries or campaign-focused programmes as set out in the remit.

• A comparison of the daytime playlists of Radio1 and Capital on http://comparemyradio.com shows in the last week 43% of the Capital playlist appeared on Radio1 (sampled on Monday 2nd December)
• This week’s Radio1 schedule plays specialist or new music shows between 7 and 9pm and midnight and 4am. The daytime schedule does not include a specialist programme or programme focused on new music. Daytime shows play chart and contemporary music just as Capital FM and other well-known commercial stations.
• The schedule for week commencing 25th November 2013 features one documentary at 9pm on Tuesday evening about 50 years of Doctor Who (thereby cross promoting BBC One programming) and a one hour phone in Sunday evening at 9pm on AIDS.

•         The Radio1 schedule duplicates content already available on commercial radio. It features popular celebrities and events that are widely covered on commercial radio, therefore it is not distinctive or catering for underserved audiences.

• Radio1 produces a chart show on Sunday afternoons between 4 and 7pm. Commercial radio produces the Big Top 40 Chart show at the same time. Many different commercial operators subscribe to Big Top 40, made by Global. Both the BBC and commercial versions both feature interviews with artists featured in the chart.
• Radio1 went backstage at the Brit Awards this year, as did Capital FM. The Brit Awards themselves were televised on ITV. Both Radio1 and Capital interviewed the award winners. The awards reached a very wide audience through commercial television and radio therefore it is a waste of the licence fee for Radio1 to send a crew and presenter backstage to the event.
• Radio1 daytime schedule carries interviews that are replicated on commercial radio and television. For example, the Xfactor judges have been interviewed on the Radio1 breakfast show. The Xfactor has an audience of over 7million and the judges have appeared on ITV daytime shows and commercial radio therefore it cannot be argued that this is distinctive content. 
• Indeed, Global radio often finds itself competing with Radio1 for artists as guests with records companies and agents often stuck in the middle trying not to upset anyone.

•         Radio1 is overly commercial in its approach to attracting audiences, directly targeting commercial radio listeners in its marketing despite being publicly funded.

• Radio1 Xtra bought Google and Twitter search terms for Choice FM and Capital Xtra, both commercial stations playing a similar genre of music to the BBC station. This meant that the BBC paid search engines to ensure that when people searched for our commercial brands Radio1Xtra was the first search result.  Although the BBC did stop this when asked, BBC services should not be pursuing consumers in a commercial space. 
• The cross promotion of Radio1 on BBC television and online is using a resource only available due to licence fee funding to entrench a market dominant position. Marketing during peak hours on a national television station is not attracting an underserved audience. Nor do the adverts promote specialist programming but the more populist parts of the schedule. This is market interference, as commercial radio does not have access to cross promotion on TV. 

•         Radio1 is inefficient. It outspends Capital by £8 to £1 on content.

• Public service content such as documentaries and specialist music programmes are more expensive to make than popular music programmes therefore Radio1’s running costs should be higher than many commercial stations in the future. However, the current level of public service content does not justify the current costs of £41million

The fact that Radio1 is still able to adhere to its remit despite its lack of distinctiveness or public service content is proof in itself that current oversight of the service is inadequate.   Commercial radio is subject to regulation by Ofcom, an independent regulator.  The BBC is not.   There must be a system of independent peer review between Charter reviews for each BBC service to ensure that it is being run according to the remit. The findings of such reviews should be published and handed to BBC management to respond to – also publicly.

CASE STUDY: RADIO 2

The remit of Radio 2 is “to be a distinctive, mixed music and speech service, targeted at a broad audience, appealing to all age groups over 35.

It should offer entertaining popular music programmes and speech-based content including news, current affairs, documentaries, religion, arts, comedy, readings and social action output.”

If Radio2 were a new publicly funded service this format would not be approved for launch because this remit is vague and does not place an emphasis on public service content. It emulates much of what is available on commercial stations. Its remit to appeal to a ‘broad audience’ is counterproductive for a public service broadcaster because the focus should be on underserved audiences and content not provided elsewhere. 

As it stands, this remit has allowed the BBC to build the Radio2 schedule around high profile presenters and guests and popular music shows to chase ratings. ‘Mixed’ music shows and documentaries or high value informative speech are rare and often buried in off-peak hours.

•         Radio2 is programmed to have wide appeal and attract a large audience. As we have already explained, high audience numbers are not the right measure of success for BBC stations; they should cater for audiences that are underserved.

• Radio2 employs popular and established television presenters such as Dermot O’Leary, Graham Norton and Zoe Ball who broadcast to audiences of millions on prime time television. They appeal to an age demographic that is well served by commercial radio.
• Radio2 remit says they should serve an audience over 35. The hiring of Chris Evans following Terry Wogan demonstrates a desire to attract a younger audience. The average age of Radio 2 listeners is 51. 

•         Radio2 is populist and duplicates content on commercial radio. As a consequence Radio2 does not broadcast distinct public service content

• The Radio2 daytime schedule consists of popular music shows and light entertainment speech content. With the exception of the Jeremy Vine’s current affairs programme, this is the same formula deployed on Heart.
• Daytime guests are high profile and very popular, regularly appearing on commercial stations. For example on December 11th the station will have ‘Gary Barlow day’ and guests on 4th and 5th December guest included Jennifer Saunders, Boyzone, Miranda Hart and James Blunt. All of these guests have enjoyed considerable success and appeal to mainstream audiences. They are all promoting new books and albums, which they have been doing on commercial television and radio; therefore their appearances on Radio2 do not constitute distinctive content not available elsewhere.

•         Radio2 broadcast very little content consistent with the remit to feature ‘documentaries, religion, arts, comedy, readings and social action output’.

• Specialist music programmes, documentaries or other unique programmes are broadcast off-peak.
• In a typical week Radio2 broadcasts one programme about the arts ‘The Radio2 Arts Show’ at 10pm on a Friday evening. There are no regular scheduled shows about religion or readings.
• In the week commencing 2nd December the two documentaries broadcast were music focused, on the Beatles and Bob Dylan.

•         Radio2 also enjoys cross promotion on BBC television stations to drive audience when free access to this television audience is not available to the commercial sector.

Classic FM will be making a separate submission raising points about Radio 3 and BBC support for classical music.

BBC investment in technology and digital services

The BBC has a mixed record on technology. BBC investment has had a positive impact on new technology and platforms but it has wanted money products that are already available. 

The evolution of the internet services market had matured in the past decade and the need for a public funded intervention from the BBC has been reduced. For example, iplayer was the BBC’s largest intervention in this area and at the time it was the first of its kind. Now there are many versions of catch-up television and the BBC no longer needs to keep financing such innovation.

Now the market is more developed the BBC needs a new approach to its investment. Its spending should be should be driven by content, for example, only investing in technology if it facilitates access to BBC content that would not otherwise be available.

Any activity should have a clearly articulated benefit to the license fee payer. Where possible, the BBC's activity should take place at the earlier stages of technological development where the BBC involvement could help seed a market for further innovation by third parties.

Any activity should seek to minimise negative market impact and the crowding out of commercial operators. Activity should not interfere with a pre-existing commercial market. BBC innovation must not crowd out start-ups who cannot hope to compete with the levels of funding available to the BBC.

Case studies

Playlister is a service that means whenever the BBC plays a song consumers can tag it and it will appear in one of three commercial music streaming services of which they are users (Deezer, Spotify and YouTube are the chosen private partners).

Playlister fails on all three principles: it is not an innovation around BBC content (the BBC does not create or own the music that the service links to); its benefit is not clearly articulated to the license fee payer and the service is already sufficiently provided by the market (e.g Last.fm, Shazam, SoundHound, Facebook to name only a few); and, the small list of partners chosen to link from the service discriminates against other players in the market place. The service is nothing more than a marketing channel for the three commercial services with whom the BBC has chosen to partner.

iPlayer Radio app has been released into a market already well supplied with radio station aggregator products (commercial e.g. TuneIn and non-Commercial e.g. RadioPlayer). In this instance the BBC has used the licence fee to crowd out these other services for no discernible benefit to licence fee payers, and to the detriment of commercial operators.

•         Radio 1's use of video content online has not been clearly articulated to licence fee payers and Radio 1's service licence does not cover the creation of video content that has no direct connection or benefit back to Radio 1 and UK licence fee payers (e.g. Wrecking ball spoof videos). This is yet another example of Radio1 building a populist service which is already available at no cost to licence fee payers.

A new safeguard of peer review should be instigated to scrutinise plans for new technology projects and launch of such projects. Industry experts should be recruited as an expert panel to reviews plans and report to BBC management about the potential pitfalls and impact. The BBCs response should then be published.

The same peer review panels should continue to regularly review the market impact of BBC products and these reviews should be made public.

Transparency, scrutiny and accountability

In the last ten years the media landscape has changed dramatically. Technology and new products have transformed consumer choice. The pace of change means that it is not sensible for the BBC to be set up with a ten-year charter that may prevent it from responding to change or lock in behaviour that hampers the proper functioning of the market.

Therefore, a five-year review point for BBC services should be introduced. We understand that the BBC needs stability to plan so would suggest that the review does not impact on funding or the Charter but instead examines if each service is delivering on its remit. Each service should be peer reviewed by panels including figures from the private sector and management held accountable for the delivery of a service’s remit.

In order to ensure that the BBC is spending the licence fee prudently and effectively the BBC should be more transparent. To increase accountability the BBC should have its accounts audited by the independent NAO each year. 

Increasing transparency coupled with project evaluations and peer review will help avoid wasting money and drive efficiency in the BBC. 

Conclusion

Global supports a successful and efficient BBC delivering distinctive and original content of public value. The BBC governance and public duties need reform if the BBC is going to deliver more public service content and value for money for licence fee payers. BBC services must have detailed remits for which managers are accountable to limit duplication of content offered by commercial providers and encroachment into commercial territory. 

December 2013