UTV Media GB- written evidence (BBC0054)

Increasing listener choice and plurality in speech radio
 

Executive Summary

1. In 2016 UTV intends to take a major step towards realising its vision of a competitive speech radio sector.  As a part of the most significant expansion in the UK’s radio line-up in a generation, it will launch brand new speech radio stations with expected mainstream audience appeal.  This forms part of a multi-million pound investment in new national radio services.  UTV aims to increase choice and plurality for listeners whilst creating additional opportunities for advertisers to capitalise on speech radio’s strengths as an advertising medium.

2. Charter Review offers a unique and timely opportunity for both the BBC and policy makers to ensure that UTV and the rest of the commercial sector’s investment in speech radio services can deliver to its fullest potential on behalf of listeners and the wider creative economy.

3. The BBC’s speech radio services enjoy inherent structural advantages which are unavailable to commercial providers.  This results in an unequal competitive playing field and risks locking speech radio listeners into a BBC walled garden.  In total, the BBC accounts for 84% of total speech radio listening.  UTV, as the operator of talkSPORT, has an equivalent share of just 9%, despite being the BBC’s largest commercial competitor in the sector.

4. With effect from the start of the new Charter period we are calling for:

• Policymakers and the BBC to embrace our goal of a more competitive speech radio sector with increased plurality and choice for listeners. 
• Robust and effective regulatory oversight which ensures that each BBC speech radio service fulfils a unique role.  In the case of 5 live, this distinctive remit should be one which is focused on news.
• Greater breadth to the sports coverage on BBC radio, with less emphasis on football, in line with the BBC’s public purpose objectives.
• Rebalanced BBC expenditure and a revised procurement approach in the area of radio sports rights, so as to avoid restricting competition and reducing choice.
• A fresh approach to cross promotion for speech radio services, to avoid locking listeners into a BBC walled garden and skewing audience perceptions of services such as 5 live.
• A BBC platform strategy which takes account of independent speech radio providers
• BBC speech radio to deliver improved efficiency and value for money, with a rebalancing in expenditure resulting in a level financial playing field in genres which support commercial business models such as live sport and personality driven talk.

5. This submission aims to demonstrate that where the BBC places a heightened emphasis on distinctiveness and provides space for the commercial speech radio sector to invest and grow, then the beneficiaries are licence fee payers, who experience an expansion in the availability of varied and high quality speech programming on a free-to-air basis.  Our detailed recommendations under the above headings are summarised at the conclusion of this submission.

6. Our written evidence submission is informed by independent research conducted with a nationally representative sample of the UK adult population, and including weighted samples of speech radio listeners and non-listeners.  A copy of YouGov’s report has been supplied to the Select Committee.

Realising our vision of a competitive speech radio market

7. Of all the sectors in which the BBC operates, audience data demonstrates that it is within speech radio that its market impact has been the greatest.  Boasting an 84% audience share, compared with 49% within music radio and 33% within television, the BBC commands a position of dominance within speech radio that is without parallel in British media.

Figure 1: The BBC’s share of national music and speech radio listening

Television:              Music radio:              Speech radio:             

Source: RAJAR Q2 2015 / UTV analysis; BARB monthly audience viewing share, August 2015
BBC speech radio consists of Radio 4, Radio 4 Extra, 5 live, sports extra and BBC World Service; commercial speech radio consists of City Talk, LBC, LBC News and talkSPORT

8. The BBC structural advantages – strengths which are unavailable to independent speech radio providers resulting in an unequal competitive playing field – include:

• £200m of guaranteed annual funding
• A preferential allocation of national FM and AM frequencies
• Access to world’s best DAB transmission network, which has been funded through the licence fee to reach 97% of the UK population and exclusively carries BBC services
• Access to an unrivalled network of domestic and international news bureaux and journalists
• Regular cross-promotion from the UK’s most-watched and most-listened to TV and radio channels
• A revenue model which does not require the inclusion of advertising within programming

9. Figure 2 demonstrates that the BBC dominates top of mind unprompted associations for speech radio amongst the UK population.  This is taken from research by YouGov.

Figure 2.  “Which brands/stations first come to mind when you think of speech radio (non-music content)?”

Source: YouGov, speech radio market research, January 2015
Base: All Nat Rep (1087)

10. YouGov also asked similar questions in relation to music radio and television – producing a much more even spread of response and demonstrating that the BBC enjoys a uniquely dominant position within the speech radio sector.  To illustrate this point, only 7% of respondents failed to mention a non-BBC brand in relation to television, and only 12% failed to do so in relation to music radio.

11. The BBC’s own assessments of its market impact suggest an internal failure to acknowledge its dominance of speech radio and the resulting implications.  For example, the BBC’s initial response to Charter Review characterises the BBC as a comparatively small player whose market share is in decline, arguing that “In the past few years, we have shrunk as the market has grown”, that “Our share of broadcast revenues fell from around 40% to 25%” and “commercial radio is growing — its revenues are up”.[1]  This analysis is incorrect in respect of radio.  Total commercial radio revenues in 2014 were £575m, whereas in 2004 they stood at £641m.  In contrast the BBC’s radio expenditure has continued to rise on an annual basis throughout the last decade.[2]

12. In 2016 UTV will capitalise on the growth in DAB take-up by ushering in the next chapter in the development of UK speech radio.  As one of the successful bidders for a new national digital radio licence awarded by Ofcom, UTV is making a multi-million pound investment to support the launch of three fully distinctive full-time national speech radio stations with collective mass appeal.

13. The willingness of commercial operators to invest in new speech radio services can be seen as a strong vote of confidence in the value of speech content in a digital age.  It also raises important questions about the scale of the BBC intervention in this important sector, and the BBC’s role in ensuring that – whether by accident or design – these new stations are not denied the opportunity to attain a position of audience scale and commercial viability.

14. Broadcasters such as UTV and talk station LBC operate on a free to air basis and in the case of talkSPORT’s sports coverage, live commentary is provided without interruptions in the form of spot advertising.  YouGov’s research reveals strong support for the notion that plurality (i.e.  a diverse mix of content providers) is an important objective.  High levels of plurality support democratic objectives and diversity of viewpoint.  These findings indicate that an overall increase in plurality would be viewed positively by licence fee payers.

• 55% of respondents told YouGov that it is not healthy for the UK speech radio market to be dominated by one company/provider.
• 48% agreed that a diverse range of speech radio providers would be beneficial for UK society.
• 53% agreed that new speech radio providers should be given the opportunity to prove themselves and compete against more established providers.[3]

15. In the context of Charter Review, we suggest that the BBC should take active steps to support increases in plurality and choice in speech radio, if necessary adjusting its output to take account of independent provision including the imminent launch of new national speech stations.  UTV is also calling for a level financial playing field to be established in speech radio genres which support commercial business models such as live sport and personality driven talk, achieved via a reallocation of licence fee resources towards more distinctive public service areas such as international and domestic news.

16. The model of BBC governance and regulation which we would advocate for the next Charter period is one which is capable of supporting our vision of a more competitive speech radio sector, with increased choice and plurality for listeners and additional opportunities for advertisers to capitalise on speech radio’s strengths as an advertising medium.

5 live needs to reembrace a distinctive remit focused on news

17. Surprisingly, given the BBC’s core focus on delivering “the best journalism in the world”, none of the BBC’s speech radio services is primarily associated with news by listeners according to research by YouGov (although Radio 4 comes close to achieving this).

18. The service which is supposed to make the biggest contribution to the BBC’s journalistic objectives is 5 live.  When the station was launched in 1994, it sought to provide something unique: the BBC’s first on-demand news service.  Tony Hall, then MD of News and Current Affairs, enthused at the novelty of licence fee payers being able to access news “whenever you like”.[4]  An early reviewer wrote of “proper news properly presented”,[5] whilst another noted that 5 live afforded “more time for detail and explanation” than Radio 4.[6]

19. 5 live’s key service commitment is for news and current affairs programming to account for 75% of output, with the word “news” appearing 36 times in total within 5 live’s service licence.  The service licence tasks the station’s news coverage with making a “very important contribution” to the BBC’s “Sustaining citizenship and civil society” public purpose.

20. Despite this, YouGov’s research (enclosed with this submission) found that 5 live is associated above all with “sport” and specifically “football” – a term which does not appear in 5 live’s service licence.  Moreover, for both 5 live and 5 live sports extra (and also for talkSPORT) the primary reason given by audiences for listening to each of these stations is that it “provides coverage of football”.  Listeners estimate news to account for just 42% of broadcast time on 5 live, compared with a service licence requirement of 75%.  This estimate falls to 28% amongst non-listeners.

21. Analysis by the BBC Trust reinforces these findings.  In its August 2015 speech radio review, the Trust reported that “our research shows that listeners are more likely to come to the station for live sport (73%) than regular news programmes (53%), and our Audience Councils found that listeners and non-listeners believe that 5 live is primarily a sports station”.[7]

22. Data presented in DCMS’s consultation document points to one reason for these skewed perceptions.  The data reveals that the volume of sports coverage on BBC radio has actually increased during the current Charter period has actually increased by 9% from 4,731 hours per annum in 2006 to 5,166 hours in 2014.  At the same time, there has been a significant 23% decrease in news, weather and current affairs from 16,112 hours in 2006 to 13,059 hours in 2014.  No explanation has been provided for these shifts in allocation of editorial time by BBC Radio.[8]

23. The BBC Trust’s 2012 service review of 5 live sought to reverse the drift in 5 live’s remit by re-establishing it as a news-focused station.  With research clearly showing that audiences saw it as a sports station, the BBC Trust concluded that:

• 5 live needed “clearer commitments” in relation to news.
• All 5 live news programmes should clearly reflect the BBC’s mission to provide the “best journalism in the world”
• 5 live should initiate a reduction in “‘non-news’ features”
• 5 live “should be better known for its news output”
• News should represent the “core of the service”.
• The balance of content expenditure, which had become skewed towards sport, would be rebalanced towards news.[9]

24. The above research findings reveal that to the extent that these actions have been implemented, they have failed to cut through with audiences.

25. We suggest that BBC management returns to first principles in reimagining its speech radio offering for the next BBC Charter period.  Fresh service remits should be developed which are distinctive, deliverable and aligned with the public purposes.  In the case of 5 live, we propose a fresh embrace of its original mission to be a unique home for news on the radio.

26. In making this recommendation, we note remarks by BBC management and the BBC Trust hinting at a possible dilution in the BBC’s commitment to news coverage – the reverse of the new direction of travel which we advocate.  For instance the BBC Trust’s August 2015 speech radio service review report suggested that increased online availability of news provided justification for 5 live in “changing the way it positions itself as more than an outlet for breaking news”.  Separately, the BBC’s initial Charter Review response states “with an eye both to financial reality and future need, we believe it is time to … change the provision of live and continuous news”.  The BBC adds “While TV and radio will remain enduring platforms, mobile is rapidly catching them up”.[10]

27. We would challenge any inference that changes in technology or user behaviour support a dilution in 5 live’s commitment to news coverage.  Broadcast radio remains a powerful media platform despite the increases in audio choice presented by the digital age.  In view of the BBC’s advantageous market position and resources the Corporation has a unique opportunity as well as responsibility to reinvigorate its radio news provision in response to these changes – rather than to take steps which could undermine it.

The BBC has a responsibility to provide broader sports coverage

28. Our call for 5 live to rediscover its core mission as a unique home of news on the radio does not require it to cease providing sports coverage.  However we do consider that the BBC should accelerate work to realign 5 live’s sport output with the public purposes as required by the BBC Trust in 2012.  In particular, a reduction in 5 live’s focus on football – a genre which clearly supports commercial business models – will reduce duplication in the speech radio sector, supporting increased choice, quality, distinctiveness, competition and plurality on behalf of licence fee payers.

29. In 2012, 5 live was directed to “develop its provision of a range of sports, including those of a minority interest”, on the basis that “other sports should receive more representation” and “there is scope for 5 live to provide more coverage of other sports and sometimes focus less on football in its discussion programming and sports news”.  The service licence was amended to stipulate that coverage of minority interest sports should feature at “peak listening times”.  The Trust also directed BBC management to “signpost and increase the awareness of the wide variety of sports that [5 live] covers”.[11]

30. To assess the BBC’s progress in implementing these changes, YouGov asked listeners to estimate what percentage of 5 live’s total sports content consists of football.  In 2011, listeners responding to an identical research question had estimated the proportion to be 67%.[12]  Despite the BBC’s claim to have diversified 5 live’s sports offering, in 2015 listeners’ estimate of the proportion of output which consists of football is unchanged at 67%.

31. YouGov also asked respondents who were familiar with 5 live a separate question about whether its sports output is dominated by football news and coverage.  52% agreed with this perception, compared with just 11% who disagreed.  In total, only 27% of respondents agreed that coverage of niche sports had increased on 5 live.  Significantly, only 16% agreed that coverage of niche sports is broadcast during peak listening times.

32. A review of 5 live’s schedule helps to illustrate the predominance of football coverage.  As well as broadcasting significant live football commentary across weekends and weekday evenings (including pre-match build-up and post-match analysis), 5 live devotes significant broadcast time to football at times when it does not hold rights.  This includes dedicated football chat shows such as The Monday Night Club (7-9pm on Mondays) and the Friday evening edition of 5 live Sport (Fridays 7-10pm).

33. In addition, evidence suggests that BBC management have sought to fulfil aspects of 5 live’s commitments to less familiar sports via DAB-only sister station 5 live sports extra.  This strategy is evident in the BBC’s initial Charter Review response, which refers to the combined number of sports covered by 5 live and 5 live sports extra in combination (examples cited include “women’s football” and “cycling”).[13]  It is also evident in acquisitions of additional sports rights seemingly made on behalf of 5 live sports extra for sports such as rugby league[14] and women’s football.[15]

34. Seeking to dispatch its minority sports commitments via 5 live sports extra rather than via 5 live places the BBC in conflict with 5 live sports extra’s service licence, which requires it to act as an overflow service for rights already held by 5 live and Radio 4.  It also contradicts the position taken by the BBC Trust, who in 2012 rejected a proposal from BBC management to make sports extra “another outlet for sports of minority interest”.  The Trust required that 5 live’s commitments to minority sports coverage should be met by 5 live, rather than by 5 live and 5 live sports extra in combination.[16]

35. These examples also raise questions of mission creep on the part of 5 live sports extra, whose service licence restricts it to utilising “sports rights already owned by the BBC”.[17]  In each case, the BBC appears to have acquired additional sports rights directly for exploitation by 5 live sports extra, with the design of the acquired rights package being shaped around the part-time digital station.

36. The possibility of the launch of new stations such as our proposed talkSPORT 2 which itself seeks to provide broad coverage of underexposed sports should give the BBC major pause for thought in this area, given the BBC’s already significant listening share and market impact, as well as the stipulation for 5 live sports extra to provide “alternative coverage to that provided on other UK-wide BBC services”.[18]

37. At times, 5 live’s preoccupation with football and reluctance to embrace minority sports during key sports programming strands appears to be part of a calculated strategy to keep football fans within a BBC walled garden, to the extent that 5 live will often compete directly with smaller independent providers such as talkSPORT by covering identical fixtures as opposed to providing distinctive coverage of a different sporting event.  This is despite these independent channels being available on a universal free-to-air basis to licence fee payers, with access offered to live commentary without the need for a subscription.

38. Interestingly, YouGov’s research as enclosed with this submission reveals that the balance of support amongst the UK population is in favour of a reduction in the resources allocated by BBC radio to football (including Premier League), with a corresponding redistribution towards other sporting events, including women’s and niche sports.  Whilst men would like to see more or the same amount of resource put towards football, women would like to see more allocated to women’s sporting events.

39. We call for significantly increased distinctiveness on the part of BBC radio’s sports coverage, in order to differentiate its offering from that of smaller speech radio providers and to enable increased choice and plurality on behalf of licence fee payers.

The BBC’s radio sports rights procurement approach restricts competition and reduces choice

40. As the operator of talkSPORT, UTV frequently finds itself in an unequal contest with BBC Radio in seeking to acquire commentary rights for premium sporting events.  Unlike equivalent music radio production inputs, sports rights are in finite supply and the level of competitive demand has a material impact on the cost of acquisition.  The availability of similar coverage on another channel also affects achievable audience levels – with many listeners preferring ad-free coverage on the BBC where this is available.

41. Historically, the principal area of competition for radio sports rights between the BBC and smaller providers has related to football (for example men’s Premier League, Champions League and England International football), however with the launch by UTV of talkSPORT 2 in 2016, this is now being extended to other sports such as cricket, rugby, tennis, motorsport, golf and horseracing.

42. 5 live’s radio sports rights budget is larger than talkSPORT’s entire programming budget.  In 2011, a previous Controller of 5 live described its sports rights budget as “extremely large”.  The BBC Trust reported 5 live’s sports rights budget in that year as totalling £13m and it has since grown to around £16m.[19]  We recommend that this budget is reduced, with a view to creating a level financial playing field between the BBC and independent speech providers, and also making additional resources available for distinctive news output.

43. Research by YouGov also suggest that the public recognises a strong public purpose justification for the BBC to adopt a more distinctive approach when it comes to radio sports rights.

• Only 17% of people agree that using the licence fee to buy exclusive sports rights at premium cost is a good investment for the BBC.
• 39% of people agree that the BBC has a duty to represent women’s sports on the radio and should allocate additional budget on radio sports rights for women’s sporting events.  This increases to 52% amongst those who listen to both BBC and commercial speech radio stations.
• The number of people disagreeing that the BBC should broadcast niche sporting events that appeal to a more niche audience is also outnumbered by those who agree that such activity forms part of the public service role of the BBC.
• Respondents support the notion that commercial radio stations should be spending their money on sports rights for sports that appeal to a large proportion of the population.

44. In relation to rights exclusivity, we recommend that the BBC is required to waive exclusivity provisions if these are inserted into rights contracts during relevant negotiations.  This simple step which will go a significant way towards arresting historic inflation in radio sports rights costs and increasing access to live sports coverage by independent providers.

45. In addition, the BBC should not assume that acquiring rights on a non-exclusive basis mitigates any negative market impact.  This activity still has a significant impact on the market, limiting the audience levels achievable for non-BBC stations for these events and potentially setting sports governing bodies’ fees expectations at unrealistic levels.

BBC cross promotion locks speech radio listeners into a BBC walled garden and skews audience perceptions of 5 live

46. In addition to advantages such as superior financial resources and national distribution, one of the key structural benefits enjoyed by the BBC’s speech radio stations is access to significant cross-promotion from other BBC services.  In particular, 5 live receives major cross-promotional for its football commentary.  Aside from reinforcing skewed audience perceptions of the station, this activity also extends the BBC’s dominance by locking speech radio listeners into a BBC walled garden.

47. Types of cross-promotional support received by 5 live include promotions via BBC television (e.g.  news bulletins, weather bulletins and sports programming such as Match of the Day), BBC radio (e.g.  sports news and features on network and BBC local radio) and BBC online (e.g.  the BBC Sport website).  Often sporting fixtures will be promoted which are also available on talkSPORT under separate official rights arrangements with the likes of the FA or FIFA.

48. We have also identified contradictions between the preferential cross-promotion reserved for the BBC’s own services in radio, and its willingness to provide relevant cross-promotion for third party television channels.  For example, the BBC’s website will often signpost the availability of live sporting coverage on competing free-to-air television channels (such as ITV, STV and UTV), but references to radio coverage exclusively mention 5 live.

49. Given the significant negative impact of BBC cross-promotion for its live sports radio coverage on independent providers, as well as the need to address skewed audience perceptions of the station, we advocate a shift in cross-promotional emphasis towards 5 live’s news coverage.  This is also consistent with the following conclusions from the BBC Trust’s August 2015 speech radio service review:

“In order for listeners and stakeholders to have greater clarity about the role and remit of 5 live, which is primarily as a news service, we ask the BBC to consider the positioning of the station, both in cross-promotion from other services and within the station itself, in order to challenge the perception that its role is primarily as a sports broadcaster.”

“Whilst sport is clearly an essential part of 5 live’s proposition and is highly valued by its listeners, we feel that regular on-air promotion of the station as ‘the home of football’ might help to weaken the perception of the station as a news outlet amongst listeners.”[20]

The BBC’s platform strategy needs to take account of independent speech radio providers

50. Given its significant share of the speech radio market, the BBC’s distribution decisions can have significant implications for the wider market, in terms of extending the BBC’s competitive advantage or conditioning listener behaviour.  It is crucial that in making such decisions, the BBC takes account of the likely impact on smaller speech providers.

51. To directly quote from the BBC Trust, “Medium wave is still an important platform for 5 live”.[21]  This is supported by listening data, with AM accounting for 47% of 5 live listening and 56% of talkSPORT listening.[22]  These robust listening levels offer clear evidence that the technology is viewed as providing an acceptable balance of sound quality and reception – and without the signal strength and data cost issues that can affect mobile internet delivery.

52. With independent providers such as talkSPORT deriving significant listening from AM, prematurely shutting down the BBC’s AM transmissions could have significant negative economic consequences for the UK’s speech radio sector, since it would indicate to listeners that they should stop accessing the platform.  AM also plays a particularly important role amongst audience groups where digital radio penetration is lower than average, such as C2DEs and those living in regions such as Scotland, Wales and Northern Ireland.

53. As the BBC notes in its initial Charter Review submission, consumers are experiencing a rapid expansion in the availability of audio content delivered through streaming and download services.  Nevertheless 93% of listening which attributed to a specific platform by RAJAR respondents continues to occur via broadcast platforms rather than via the internet, and broadcast radio continues to dominate “share of ear” amongst competing sources of audio.[23]

54. Against this backdrop, the BBC needs to consider the potential negative market impact of disaggregating its linear radio broadcasts and distributing speech audio content on a live or on-demand basis via connected platforms.  Given the BBC’s already considerable market share, the availability of online platforms should not prompt the BBC to commission additional speech content.

55. Moreover the BBC should ensure that it does not flood commercial audio aggregation platforms with free content since this will inhibit the commercial sector’s ability to monetise these platforms via commercial agreements.

56. The BBC’s initial response to Charter Review contains a proposal to develop new personalised radio services for online platforms.  By accident or design, this proposal appears designed to lock listeners into a walled garden of BBC audio content, rather than providing opportunities for discovery of independent British speech radio programming.  The proposal also misses an opportunity to build on the foundation provided by the UK Radioplayer project, which on its launch in 2011 was described as “a pan-industry world first by bringing radio together online in one place”.[24]

57. Whilst the technology and user behaviour insights that have given rise to this initiative may be well founded, the proposal exhibits an inadequate awareness of the BBC’s existing market impact as well as its responsibility – in the words of the BBC Online service licence – to aid discovery of “content from other providers”.[25]

58. The BBC argues that as a result of its proposal, “listeners will get access to all their favourite audio content in one place”, however this objective will not be realised without the availability of independent speech content.  We suggest that the proposal does not proceed and that the development work and resources currently earmarked for it are transferred to UK Radioplayer so that they can benefit the entire UK radio sector.

There is substantial scope to improve the efficiency and value for money delivered by BBC speech radio

59. Financial data reveals significant disparities in the levels of value for money delivered by UK national speech radio services.  Notably, BBC Radio 5 live delivers the poorest value for money of any BBC speech radio service, measured on a content cost per listener hour basis.  It also costs significantly more on this basis than talkSPORT, despite boasting higher levels of listening.  This is shown in Figure 3, which shows the cost in pence of an hour of output on each station, divided by the total audience.

Figure 3.  Content costs per listener hour for BBC speech radio services and talkSPORT

Source: BBC Annual Report and Accounts 2014/15; talkSPORT management accounts; RAJAR Q2 2014-Q1 2015
 

60. A direct comparison of the sums available to the BBC’s speech radio stations compared with the sums available to talkSPORT highlights the scale of the publicly-funded intervention in speech radio, and goes a significant way towards explaining the BBC’s overall listening share.[26]

61. Historically, a major reason for 5 live’s inferior value for money to other speech radio stations has been its expenditure on sport programming.  In 2010/11, despite a requirement for 75% of 5 live’s programming to consist of news, news received just 46% of attributable programming spend, compared with 54% for sport.  As a result in 2012 the BBC Trust recommended that BBC Radio 5 live rebalance expenditure away from sport and towards news.[27]

62. Since then, the BBC has made negligible progress, with sport expenditure reducing to 52% of attributable programming spend in 2014/15, against 48% for news.  The failure to achieve a more significant realignment has been caused by an increase in 5 live’s sports rights budget from 29% to 32% of total programming spend, amounting to an estimated £16million per annum in 2015 compared with £13m in 2011.[28]

63. Given the high cost of 5 live’s content, and the resulting unequal financial playing field created, UTV has made a number of offers to BBC management to participate in a speech radio production costs benchmarking exercise.  talkSPORT’s programming budget is perhaps the biggest in commercial radio, funding nationally renowned presenter talent as well as a number of expensive sports rights properties.  It ought to therefore offer a useful reference point in assessing the efficiency and value for money delivered by the BBC.

64. UTV advocates restructuring 5 live’s content expenditure to reflect the allocation of programming minutage, with sport costs reduced to 25% of attributable content spend.  Production expenditure which is inefficient or not aligned with delivering service licence objectives should be eliminated.  To help achieve this, we encourage the BBC to embrace our offer of participation in a cost benchmarking exercise similar to those conducted for most other BBC radio services and which covers 5 live.

65. We also call for increased transparency by the BBC as to its radio sports rights expenditure, including a willingness to break out expenditure on key events such as Premier League football.  This will ensure a consistent approach with television.  For example the £179.7m spent to renew the BBC’s Premier League highlights agreement for Match of the Day was disclosed in a news article on the BBC’s own website.[29]

Summary of detailed recommendations

66. Below is comprehensive summary of UTV’s recommendations in response to Charter Review and addressing the themes set out in this submission.  If fully implemented, these changes would benefit listeners with increased choice, competition, quality and plurality in speech radio:

a.       A level financial playing field should be established in speech radio genres which support commercial business models such as live sport and personality driven talk, achieved via a reallocation of licence fee resources towards more distinctive public service areas such as international and domestic news

b.      The BBC should actively support increases in plurality and choice in speech radio, if necessary adjusting its output to take account of independent provision including the imminent launch of new national speech stations

c.       BBC expenditure on radio sports rights expenditure should be brought into line with equivalent expenditure by independent speech radio providers

d.      The BBC should be required to waive exclusivity provisions if these are inserted into radio sports rights contracts

e.       The BBC should be required to demonstrate overwhelming public service justification if it elects to acquire non-exclusive rights, when equivalent rights are already held (or likely to be held) by independent speech radio providers

f.        The BBC should look for opportunities to provide relevant cross-promotion for independent speech radio content

g.       Cross-promotion for BBC speech radio services should be aligned with core public service objectives and must not be allowed skew audience perceptions of BBC services

h.      BBC should proceed with caution in considering whether to cease AM transmissions given the potential negative impact on listener access to BBC and independent speech radio services

i.         Given its dominant market position, the BBC needs to consider the potential negative market impact of distributing BBC speech audio content on a live or on-demand basis via connected platforms

j.         The BBC’s  personalised radio project should not proceed and the development work and resources currently earmarked for this project should be transferred to UK Radioplayer so that they can benefit the entire UK radio sector

k.       Work should be accelerated to bring audience appeal of the BBC’s speech radio services into line with the demographic make-up of the UK population

l.         Specific actions should be taken to achieve measureable increases in 5 live’s appeal to female and BAME listeners

m.    The BBC should reimagine its speech radio offering for the next Charter period – with 5 live reembracing its original mission to be a unique home of news on the radio

n.      Sports coverage on 5 live should be significantly broadened such that current perceptions of the station as football-dominated are addressed

o.      The BBC should take immediate steps to increase the originality of 5 live’s news coverage, and the station should become defined by the strength of this provision

p.      The BBC’s mission of providing minority sports coverage should be fulfilled by 5 live, with a corresponding tightening of 5 live sports extra’s remit to enable independent provision to flourish

q.      5 live’s content expenditure should be restructured to reflect the allocation of programming minutage, with sport costs reduced to 25% of attributable content spend

r.        All BBC radio services should be subject to regular cost benchmarking against independent services in order to support improved cost efficiency (q13)

s.       Annual expenditure on key content areas including sports rights should be published in service licences

t.        The fees paid for key sporting events should be individually published once relevant agreements have been concluded

u.      The BBC’s assessments of its market impact should not be restricted to its domestic operations

v.       The BBC should pay close attention to the potential market impact of its engagement with acquirers of speech radio content, such as international radio stations, audio aggregation platforms, mobile telecom networks and global sponsors

w.     The model of BBC governance and regulation for the next Charter period should be capable of supporting a more competitive speech radio sector, with increased choice and plurality for listeners and additional opportunities for advertisers to capitalise on speech radio’s strengths as an advertising medium

x.       Examples of amendments which should be made to the BBC's speech radio service licences under a reformed public value test and service licence regime are as follows:

1. Annual published breakdowns of key areas of expenditure including on sports rights and major sporting and news events
2. Strengthened commitments to the delivery of high quality journalism
3. Clarity on the appropriate content, scope and volume of men's football coverage
4. Specific quotas relating to minority sports coverage - with a focus on such coverage being carried on 5 live in peak time
5. Elimination of studio-based personality-led "chat" from speech radio schedules
6. 5 live sports extra to revert to an overflow service which principally operates during major sporting events (such as the upcoming 2016 Olympic Games)

November 2015