BBC Radio in a subscription world - an update

Given the recent stories emanating from DCMS about the BBC licence fee being frozen and possibly scrapped, I reposted my old blog post about how radio is always forgotten in these debates, and how moving BBC TV to subscription would destabilise the whole of the UK radio industry.

It got a fair amount of traction - to the point I was invited to talk on BBC Radio 4s Media Show (you can find the link to the show here when it's up).

I thought I'd just revisit some of the numbers and themes as the original post was two years old. I haven't copied you in on the spreadsheet - I'll spare you that - I'll just highlight my conclusions.

I won't revisit all the reasons why this story keeps reappearing but the political phrase "dead cat" rings true here. I'll also avoid going down the rabbit hole of if it's even possible for BBC TV to be subscription based, given 18m homes have Freeview, which is virtually impossible to paywall. If you pull the BBC TV services off Freeview you presumably are putting the whole Freeview business model at risk and destabilising TV as a whole. 

Anyway - back to Radio - which would have to be spun off in some manner if BBC TV was subscription based. No BBC exec is going to spend £500m+ per annum on free radio services out of £2.5bn or so of subscription revenues (£15 per month x 18m households x 12 months (less VAT) if they are lucky) - that money will all have to go on TV.

The three things which jump out at me from reviewing the numbers (and a 300 page BBC annual report doesn't give you too much detail!) are:

A) BBC Local and Nations Radio (Scotland,Wales, NI) just cannot survive in a commercial world. Across these services it costs £3.75 a year to produce an hours worth of listening per week. Commercial Radio as a whole takes in £0.80 a year in advertising for an hours worth of listening each week. Those numbers are simply unbridgeable. Of course from the BBCs perspective this is actually quite handy. There will be a lot of local MPs who rely on one of these services to get their own messages across in interviews and news bulletins. Being told they'll no longer be on the news-desk ring round because the station won't be there might just focus a few politicians minds on the matter.

B) The BBC networks collectively (1, 2, 3, 4, 5 + digital offshoots) could just about survive if forced to carry adverts but 

1. They'd need to reduce their cost base by c 60%
2. That means they won't sound anything like they do now
3. Radios 3, 4, 5 and the digital offshoots are much more vulnerable than Radios 1 & 2 if any disposal involves separating them.

C) The commercial sector would also face a massive revenue squeeze as there simply isn't enough radio revenue to go round with more mouths to feed. A 15% drop in commercial radio revenue would wipe out most profits and be scant reward for the years of investment Global, Bauer, NewsUK and others have made in the sector.

Even on my most optimistic assumptions, the numbers don't even support BBC network radio being worth very much (in Treasury terms) if you put it up for sale as a whole - if the CMA even allowed that. Radios 1 & 2 might fetch something on their own - but that leaves 3, 4, 5 etc with nowhere to go. That's a dilemma.

If instead you closed BBC Radio down (massive redundancy costs and shut down, lease return costs etc) and auctioned off the frequencies you might raise some more cash - but again the existing commercial industry would come under enormous strain, and we've just been busy telling folk FM is on its way out to try and eliminate double payments - so good luck getting a premium price for FM without guaranteeing its survival long past its useful lifespan.

For those of us toiling away in the commercial side of the business we look on at these regular attempts to blow up the BBC with a sense of bemusement. We've managed to get along with the Corporation reasonably well over the past 50 years (not without some rows of course). We've achieved audience parity in radio, despite spending way, way less than the BBC on content. We welcome their cross-industry support on things like Rajar, Radioplayer etc. We can live happily alongside them.

I think we'd just wish:

A) they were consistently held to more rigorous and higher content and programming commitments by OFCOM, commensurate with their income source and funding level, and

B) that there was some constraint on their ability to launch new services whenever they felt like it, or consistently outbid the commercial sector for sports rights etc - and I'm afraid if that constraint is a frozen licence fee (or RPI - X% annual increases) I think we could live with that. 

But beyond that, pulling the plug on their funding completely seems crazy to most of us ad-funded folk. Some of the big commercial operators might spy an opportunity in all the disruption - but not everyone on our side can benefit, and the risks of collateral damage are high. Subscription is an idea that is already past its sell-by date in my view.

Well, this is still fun

David Lloyd and I set off on an adventure last July, to build a radio station for us - Baby Boomers - as our gut feel suggested there was a gap in the market for such a thing. We are each 40 year radio veterans, so this is no ego trip - we’ve both done our bit, paid our dues, and have the gongs on the mantelpiece to prove it. Instead, we both feel this is our one shot, maybe our last, best chance to seize an opportunity (thanks Eminem) to do the thing we both know we are great at - launching and running radio stations.

I had to laugh at some nay sayer on social media yesterday who said we were one of many Baby Boomer stations out there:) If you can point to another station broadcasting properly across the U.K. which sounds musically anything like Boom Radio and has a line-up one tenth as good I’d love to hear it. We think we identified a huge lack of provision in U.K. radio almost as soon as we started discussing Boom last July, and the station sounds almost identical in real life to how I imagined it in my head seven months ago.

We’ve both written and talked a lot during the journey from emailed idea last Summer to our launch this week, including my launch blog which our Boom Radio site hosted and which you can find here

https://www.boomradiouk.com/blogs/getting-ready/post/well-this-is-fun/

I thought a more industry focussed blog might be of interest now we’ve launched, hence this appearing on my RadioRiley site. So here goes.

First - this simply couldn’t have been achieved without David. To begin with it was his, long nurtured, idea in the first place, which he had to nudge/bludgeon me into seriously contemplating (although I claim dibs on creating the name). Sorting out research is not my strong point; I’ve little knowledge of, or interest in, playout systems; I couldn’t “load a track” to save my life and can’t claim to be completely objective in my music choices; and the prospect of having to deal with daily calls from presenters fills me with dread (I love you guys really:)); and - despite my degree in computer studies (Loughborough, 1980, lots of stats!) - I can now hardly use a mouse without crashing my MacBook, so sorting out a remote technical operations system would have been stretching for me. David just took charge of all of that and made it happen. And it’s mostly his vision (and that of his husband Paul (thanks Paul)) that you hear on air. Thanks David.

Equally though, I’d hope he would acknowledge the flip side - I built the plan which allowed us both to believe the venture was a possibility, I figured out how much money we’d need, picked up the fund raising and raised it, dealt with the lawyers and the accountants and the banks, sorted out the commercial side of the business, and created the company, did most of the deals and sorted out most of the paperwork. 

We just naturally fell into our respective roles across the business, and little has fallen through the cracks. The one area where we’ve worked most closely has been on marketing. Selling any product (even a creative venture such as this) is both science and art - so getting the “feel” of any public messaging is critical, but so too is getting that messaging made and placed in front of the public efficiently. I think our logo (thanks Kris), TV Ad (thanks Daniel and James), and poster/social campaign (we mainly created those ourselves) really capture the essence of our brand. Our static work is scattered across social media by now - and our TV work is here if you haven’t seen the ad yet.

And I’m very pleased with our coverage. Here is not the place to go into detail on the arrangements we made, but to get our TV ad on Talking Pictures TV, the Local TV network, London Live and Now 70s TV; our outdoor across the Ocean OOH estate in London (thanks Tim)  and the Alight estate nationwide (thanks Ged); and our press ads into Metro, Evening Standard, Mail and MoS (thanks Ken) is quite an achievement given the budget we had. 40 years of marketing nous needed there! David and I are now grappling with online and social media ad buying too, where a lot of our remaining cash will be spent over the coming months. It’s quite weird - you get rewarded if your ads are good, and penalised if they’re bad - that doesn’t happen on radio or TV for sure! And our PR has been fantastic (thanks Sophie). Wow, we’ve had some column inches - in hindsight not surprisingly - a Baby Boomer station, backed, launched and staffed by Baby Boomers, being created in the middle of a pandemic, in what an outsider might feel is a slightly ossified, monopolistic, mature industry, is a story worth writing about. I think there’s more to come too. The sheer size of R2, and its claim to serve everyone from 35 upwards, just invites a Sampson vs Goliath narrative. The fact our annual budget is around 1% of their £45m p.a. further cements that story. Watch this space.

There have been two other people crucial to getting us to air. 

One is Quentin Howard. I’d approached Q simply as an investor last Autumn - but his enthusiasm for the idea shone through, and it was an easy call for us to ask him to take on the technical challenge of getting us on air with a bunch of technophobic 60 and 70 year old DJs, and with no money. This was a challenge he overcame with honour. We really, really couldn’t have done it without him. Thanks Q. And I got some money off him too:)

The other key helper was my old Commercial Director from Chrysalis days, Don Thomson. For almost 30 years we’ve been mates as well as colleagues. I’ve spent some of the happiest moments of my life with him too (thanks Teddy and Ole). He was top of my list to call for a few quid to invest - but as the days and weeks went by, even though he calls himself an ex-media bod, I knew we needed his expert guidance to help pull the commercial side together. He’s been a rock. Thanks Don.

I guess this in microcosm is what we’ve done - pulled together people we have known from our days stretching right back to West Midlands radio in my case and East Midlands radio in David’s, then Chrysalis (from which so many good things have sprung) together with David, through Orion, again together with David, ending up here, at Boom, together again (it’s the radio equivalent of “old married couple” syndrome - it’s simply too late to look elsewhere:))

There’s something special about the team behind Boom Radio. One of my golden rules of management is to try and lay the foundations that make people truly want to work with you - it’s not always possible for everyone, everywhere - but when it does come off it’s magical. I had it just over 30 years ago at Xtra; caught it again at Chrysalis; and at Orion too - and reckon once again, a little late in the day, we’ve captured some magic in a bottle here at Boom. And that magic will work miracles if you let it. 

In case you are wondering what those foundations are, they begin with a good strategic vision and plan, well communicated; hiring the right people (easier said than done of course), lots of delegation and empowerment; fairness and the absence of petty politics in the treatment of folk; no paperwork (well, as little as possible); some laughter every day; saying thank you a lot; not nickel & dimeing every last thing; and setting some pace from the top, knowing people will keep up if encouraged. Although David and I are dissimilar in many ways, we both share many of these fundamental beliefs, which is why we’ve been lucky enough to cajole so many people into working with us time and again (thanks Les, Ali, Sarah, Jules, Don, Roger, Andy, GT and so many others). You only ever need to ask one question in a staff survey to know if you are world-class, and if we asked it today of the Boom team we’d easily score top marks (and if you want to know what that question is, my consulting day rate is quite reasonable:))

We’ve also been blown away by the listener response. One industry chief I was sharing our streaming data with said he’d never seen launch figures as good as ours. Our digital guru is simply amazed at the click through rates to our ad campaign - again, numbers he’s never seen before. And the anecdotal response via email and social media is phenomenal. We’ve never seen anything like it either. Maybe older people are more demonstrative now online - though I doubt it - more likely we’ve just hit a nerve, a disaffected generation feeling a bit unloved, undervalued, taken for granted, who just wanted to be told “you’re still here - and so are we - so let’s have some fun, all of us “Still Busy Living””.

And “Still Busy Living” is our mantra - both for the brand and for the business - and it’s a collective call to action which already many, many tens of thousands of people seem to have taken to their hearts.

Still, it’s early days though, and as I said to an old friend yesterday “don’t judge us on day 1, judge us on day 1,000”. According to my spreadsheet,  that’s Saturday November 11th 2023. I’ll do another blog then - see how we are going.

The Arias 2021 - A special set of awards

Guest Blog Post for The Radio Academy – Phil Riley, Chair of Judges

 ARIAS 2021 categories

This morning, we published the award categories and rubrics for the 2021 Audio and Radio Industry Awards.  Every year we look at these rubrics and check that they are still fit for purpose, and make sure we learn each year to make them as good and as relevant as they can be.  This year was no exception (and has been quite an exceptional year), so there have been some changes.  I thought it might be useful to outline some of the thinking behind the main changes, so you know where we’re coming from.

Breakfast Shows

For years, the Radio Academy’s awards (and the Sonys before them) have recognised breakfast shows by asking all entrants to provide audio from a specific date in the calendar. This method has allowed our judges to compare coverage of the same day’s events fairly and equally.  In recent years, we’ve had feedback from colleagues that it’s quite difficult to demonstrate you have the “best breakfast show of the year” if you’re only allowed to feature material from one day – so, we’ve made a compromise.  

In most categories, you’re allowed to submit 15mins of audio, but in the two Breakfast Show categories you’re now allowed to include 20 minutes – half of which must be from the selected date, and the other half of which can be content from across the whole year.  We think this gives the best of both worlds; an opportunity to showcase your breakfast show’s incredible year of creative and engaging audio, but also to allow judges to compare how the same day’s events have been discussed, played with or covered.

The 2020 Special Award

To reflect the extraordinary circumstances of 2020, we’ve introduced a special award for audio content that supported audiences during Coronavirus.  To make room for that, we’ve removed the Best Event Coverage category for one year only – we feared it might have been slim pickings this year for obvious reasons.  

Best Music Entertainment Show

We’ve struggled in previous years to find a category that best covers what a lot of radio stations provide – a brilliant playlist of tracks, with DJs providing fun, entertaining content in between songs.  The Best Music Presenter category was always supposed to provide this, but we felt it was a little too close to Best Specialist Music Show, so we’ve made a change to reflect that.  The new Best Music Entertainment Show is designed to recognise that perfect balance of songs and great presenting, without the emphasis on niche or in-depth musical knowledge.  In turn, we’ve made some changes to Funniest Show, renaming it The Comedy Award to recognise that category’s emphasis on the craft of making people laugh.

The Grassroots Award

This category was previously known as Best Community Programming, and we’ve seen some incredible winners over the years.  The change in title re-emphasises our intention that this award should recognise community-driven, grassroots audio and radio.  We want a place where our colleagues in smaller-scale local radio, community radio, charity radio, hospital radio, and grassroots podcasting can shine and demonstrate how they’ve inspired their listeners on a local scale.

The Impact Award

The changes to the Grassroots Award have created an opportunity for a new award that allows the chance to demonstrate how radio and audio have made a big difference in society.  We are passionate about the potential for radio to be a force for good in the world, and The Impact Award will be the category that showcases that.  We are hoping to hear audio from big social action campaigns, major charity partnerships, huge fundraising initiatives and significant awareness-raising schemes, and look forward to hearing powerful content.

The Creative Innovation Award

Our final new category this year is designed simply to recognise brilliant ideas. We felt there was a need for a category that wasn’t defined by genre or platform, but provided a space to share incredible creative executions, formats, programme structures and convention-breaking approaches to the medium.  It’s the category that will reward people who tried something different, and made the judges jealous they hadn’t thought of that idea first.  Not merely technical wizardry, but the application of brilliant ideas that engage listeners with something they’ve never heard before.

A total of 25 categories

We think there’s something for everyone in our list of categories – some new, some established, some slightly tweaked and updated.  Do take the time to read the Category Rubrics, which are on the Radio Academy website now.  The awards themselves will open for entries on 4th January, and you’ll have five weeks to enter.  We’re working toward an award ceremony (of some shape or form!) in early May this year, and it should be the best one yet.  

Phil Riley

Podcasting Will Kill the Radio Star

This was the title of a session last Friday at the virtual Advertising Week conference. Steve Ackerman from Somethin Else and Susie Warhurst from Acast were supporting the motion, with me and the brilliant Angie Greaves from Smooth arguing against.

The vote beforehand went 55% in favour of the motion, and the vote at the end was 65% in favour, so Angie and I were comprehensively robbed beaten, but anyway I thought I’d share with you my speech - You can judge for yourself if my argument carried any weight.

I should say I love podcasting, and in the real world of course, radio and podcasting feed off each other in a generally mutually beneficial way. But, when you’ve got to defend your corner, you need to put your gloves on and come out fighting....

———

Radio in the UK today is a billion hour a week industry -  50m people listening for around 20 hours each. In contrast, both OFCOM and rajar suggest podcasting only has around a 9m adult weekly reach - listening to around 7 or 8 hours worth of podcasts each. Let’s be generous and round all of that up to 100m hours a week of podcasting consumption - so even being generous, right now podcasting is at most only 1/10th the size of radio.

But the growth is in podcasting - and I’d expect podcasting to grow to be something enjoyed by around half of the population within 5-10 years. So a tripling in reach. I doubt it’ll get beyond that - complex apps, multiple play out options, difficulty in discovery, and unreliability of output, is just a bit too much faffing about for universality - but 50% reach feels doable. 

Let’s be generous again and assume a tripling of reach means a tripling of total hours listened (it won’t be more - the keen early adopters are already there). So, that current generous 100m hours might get to 300m hours. And maybe half of that growth - 100m hours of it  -  might come from substituting radio listening with podcast consumption, with the other 100m hours growth coming from these new podcast consumers listening to pods in new locations where radio traditionally couldn’t get to you - out walking, on public transport etc.

So in this scenario it will still be 900m hours for radio each week vs 300m hours for podcasting. So radio will still rule for audiences with a 75% share.

Onto revenue. Commercial radio in the UK is a £600m a year ad-funded business. BBC radio takes £600m from the licence fee - so total funding for radio in the UK is c £1.2bn p.a.

The current best estimate for total podcast revenues in the UK is £10m-£20m p.a. So podcasting revenues are at most around 2% of radio. The US is similar. There’ll be growth there - both in terms of bigger audiences attracting new advertisers etc - but although cpts are higher for podcasts, ad loads are much lower, and given your ability to skip ads, that isn’t likely to change.

I won’t bore you with the calculations, but my best estimates for revenues in a mature podcast industry in the UK  leads me to estimate £150m per annum in five years - so as with listening, podcasting can’t win the revenue war.

Finally, let me give you the killer reason why radio will always dominate commercially - immediacy and impact.

To pick just one commercial category as an example, let’s say I’m a movie distributor, and I have a new film out this weekend, I can buy an ad on Friday morning’s Newslink, then a spot in every break on Heart, Capital, Smooth, Magic, Absolute, Kiss and Classic - and know tens and tens of millions of people will have heard my film being mentioned multiple times on the very morning of its release.

That level of instant, live mass communication, delivered in a timely manner and designed to elicit a mass response, is way beyond anything podcasting will ever be able to do - even with dynamic ad-insertion. The key benefit of podcasting - the fact that  I can listen when I want and am not time-constrained by the content - is its very downfall as an ad-funded medium. That’s not to say podcasting can’t be useful to some advertisers, or that it can’t find other sources of funding, and I’m sure it will, just not at the expense of radio.

Breakfast TV didn’t kill off radio, neither did the internet, nor did Channel 4, Channel 5, Sky, or MTV or youtube or a 101 other lazy buggles headlines. 

I think we’re safe too from being killed off by podcasting.

Read all about it

Well,

Some good news today - a formal line-up for Times Radio to whet our appetite.

Overall I'd say it was a pretty good schedule.

Stig Abell, who is masterminding the station is also co-hosting breakfast - and in straitened times that's probably not a bad idea - leading from the front and saving money. Stig's been in front of microphones a lot so nothing to worry about there, although I'm pretty sure he hasn't done a daily strip show before. But he'll cope fine, and he has as co-host Aasmah Mir, from R4, and before then R5. Aasmah has, to my ears at least, one of the most attractive voices on radio - a hint of Scottish burr, but with intelligence, warmth and humour. That's a pretty good breakfast show team.

Matt Chorley is on mid-mornings. I'm a regular listener to his weekly "Times Red Box" podcasts and have said publicly he has what it takes to be a top radio performer. He is very very bright, witty and personable, and will do very well in a slightly more relaxed slot.

John Pienaar on Drive is obviously a very safe pair of hands. I don't think John is naturally a "personality", so Drive, which is fast paced and news-intensive, probably suits his style best.

There are a host of other names, most of whom have more than enough experience to make the overall sound of the station quite polished. I like the plan to have a Monday-Thursday schedule, and then a Friday-Sunday schedule - that regularity feels right for radio (Today on R4 always baffles me with its rotation policy) and Fridays is different so that 4/3 split seems sensible.

Times Radio has three things going for it I think:

First, there is an appetite for informed news and comment that shows no sign of diminishing. Brexit, Trump, Coronavirus, the EU - the list of topics to discuss is long and deep - so no shortage of things to fill the schedule, and no shortage of very clever people already on The Times payroll to be regular contributors and "names". I've no doubt it will become a good "product" very quickly - and if it can a) avoid too much sport, b) avoid being too highbrow, and c) avoid too many phone-ins it can carve out a niche alongside 5Live, TalkSport, R4 and LBC

Second, NewsUK have deep pockets, and a commitment to build on what is a fine brand in The Times. The Murdochs have always played a long game, and this is undoubtedly what will be needed here.

Third, technology is on their side. The costs of UK wide transmission via DAB+ on D2 will not blow a hole in the budget, and as we've seen increasingly over the past few months, we can now get contributors in really excellent quality from virtually anywhere, so lining up guests to participate will not be a problem, and might avoid the need for phone-ins, where competition is fierce.

There are three downsides of course!

First, they are up against the might of the BBC and LBC/Global for audiences - and prising enough folk away to listen and make this new station economically viable on its own will take a lot of time. I wouldn't expect big numbers for quite a few rajar books.

Second, there are no "stars" on that line-up - a John Humphreys for example, to drag people in by the force if his own personality. That means marketing, and it can't just be ads in The Times - it has to be more widespread than that to attract new listeners. But how and where do you market this type of radio station? Radio itself is a no-no, newspapers similarly not an option, and on TV only Sky News really has the right audience profile - so a tough one for the ad agency to figure out. Social media might work - but again that's pretty fierce right now, with LBC in particular dominant.

Third, they are launching against a backdrop of ruinous drops in advertising across the media, affecting Press, TV and Radio. Good job they aren't planning to sell any ads - just sponsorship!

I'd worry about the ongoing relationship with Talk Radio though - how will these two stations dovetail? I'm not sure it's as easy to differentiate talk stations as it is music networks, and given Talk is still new itself, having two mouths to feed will be challenging. Phone-ins might be one differentiator I suspect, and I might actively make the absence of phone-ins a feature of Times Radio to differentiate itself.

I've no idea how NewsUK view this - a simple brand extension that they hope will wash its face; the first part of a bigger media expansion; a new significant revenue stream? It's difficult to say at this point and I suspect inside the News Building this is being viewed as an exciting journey, but unknowable in terms of final destination - and sometimes those are the very best things to be involved with. If I was starting out on a production career right now I suspect my CV would already be on Stig's desk.

Can BBC Radio survive subscription?

First up, a declaration of interest. Some very good friends of mine work, or have worked, for the BBC. I have sat, amicably, on numerous industry boards alongside senior BBC executives. I am currently chair of judges for the radio industry awards scheme, The ARIAs, which relies on BBC support, and is a set of awards they normally do well in. I’m sure in the future I’ll be involved in other projects which affect, or connect to, the BBC. It’s impossible, in the UK, to have played any sort of prominent role in broadcasting and not to have had some sort of relationship with the corporation. That being said, I have never actually worked for the beeb, and at my stage of life and career, I doubt an offer of employment is heading my way.

So why should I, a pure commercial radio veteran, who has spent all of his career competing with BBC services, care about the current debate about future BBC funding? Well, I think there is a good chance that one particular direction of travel being discussed as a future funding model, a subscription based approach, could lead to the up-ending of the whole of the UK’s radio ecosystem - BBC and commercial - to literally no-one’s listening benefit.

I will leave others to argue about BBC political reporting bias, and if that perception is sufficient reason to change its funding model, or what the role of its TV services are in a world exploding with subscription based choice (Sky, BT, Netflix, Amazon, Apple, Disney etc etc), or if the fact younger viewers are spending far less time consuming BBC product is enough to force through change, and whether or not it is too “metropolitan elite” and not representative of the country as a whole. I understand all those arguments and we should always be challenging an organisation that takes in £3.7Bn of our money compulsorily on these matters, and more. Of course we should. And these beefs with the beeb seem to be the main driving forces behind this debate in advance of licence renewal in 2027 - and they are all focussed, as so much debate on the BBC tends to be, in the main on its various TV channels.

The debate seems to end up either with an argument for the licence fee being retained, or for BBC TV to end up behind a paywall as a subscription service, paid for by choice rather than mandate. I think that is the essence of the dilemma, as I cannot see a partially free/partially paywalled service working, and straight up funding via the tax-payer is a non-starter. It surely must be one or the other. Licence fee or voluntary subscription. And voluntary subscription must inevitably mean lower income. 

My concern is that those arguing for the BBC to be turned into a subscription based service are completely ignoring its potential effect on radio. I think the same issues I will outline below probably apply to the BBCs online services as well, but I am going to ignore online and digital simply for the sake of brevity.

It’s technically possible for the BBCs TV services to be placed behind a subscription paywall, although Freeview is not really encryptable as it stands and this might require new hardware to be purchased which would be a big impediment. But even if that’s all possible at some point, radio can’t be encrypted. In the UK all radio is free-to-air, and the prospect of scrambling the DAB signals and selling new boxes to decode them is pie-in-the-sky.

So, given they cannot be bundled as “added value” in a subscription package, and will have to remain free for all to consume, why would a subscription-based BBC TV operation support its current radio channels. Assuming subscriptions brought in less than a compulsory licence fee (and this surely must be the case otherwise the BBC would already have pursued that route), any BBC TV subscription service will be desperately fighting for its share of an overall pool of TV subscriptions, and will not be able to, or want to, fritter away subscription revenues on output that doesn’t retain or enhance its subscription model. Free to air radio just doesn’t fit into that business environment. 

The obvious, simplistic, but ultimately catastrophic, answer will soon present itself - let the BBC radio networks join the thriving commercial sector in taking ad revenues to fund themselves - either within a joint corporate structure with BBC TV, or spun off in some fashion, with OFCOM mandated formats similar to the current BBC service agreements (the Irish equivalent, RTE Radio, already takes advertising, folk will point out).

The reason this is catastrophic is that the maths simply don’t work. BBC radio in the UK (including BBC local radio) has roughly the same audience market share as commercial radio (51% vs 47%). However, It costs the BBC £650m to produce this output. In order to run BBC radio as a single entity simply at break even, it would require someone to bring in roughly £800m in ad revenues to support that level of programme cost (after royalties and sales costs have been deducted). But commercial radio only currently takes £450m in national income (I’m ignoring local income for a moment, as the BBCs national radio services are the dominant factor here), and as any economist will tell you, if you double the supply of something with no particular increase in demand, prices will go down. So a doubling of radio ad space for sale won’t double that national revenue take from £450m to £900m. In fact, given how fierce the ad sales market is (TV, outdoor, digital, press and magazines won’t disappear) you might not get much extra income at all. Even if income did go up by, say, 75% or so to £800m in total (a highly ambitious figure in my view, given all players will drop prices to secure revenues), and this was spread evenly between the existing commercial players and the BBC radio services in line with market share, no one would win. The BBC radio networks would only keep around £325m after royalties and sales costs, and would therefore be facing 50% reductions in overheads just to break even, and the commercial players could very well be plunged into losses with a 15% drop in their revenue base. You couldn’t “privatise” BBC Radio on this basis, as there would be no profits to base any privatisation value on.

Keeping all of the BBC radio services together therefore makes little commercial sense (and might be challenged by the CMA in any event simply due to its size). The only practical way to mitigate this is to break up the Radio services and treat them differently, hypothetically as follows:

BBC local radio would almost certainly have to be closed down. At £150m or so to run per annum it carries a larger cost than any of the National networks, and the chances of any significant funding via advertising through growth in local ad revenues is non-existent (local commercial radio ad income is c£100m and falling). Local income for radio is in sharp decline and the older audiences delivered by BBC local would not be sufficiently attractive to stem that retrenchment. I doubt national advertisers would find buying the network attractive either. Closing BBC local radio would be a huge political issue of course, and would still leave the rest of BBC radio needing to trim costs from £500m to £300m - some 40% - hence the need to do something else radical.

BBC R4/5 could/would probably be merged, and alongside Radio 3 could/would be given some form of continued “Grant in Aid” scheme funding (perhaps through the Arts Council, to put some distance between them and Government). Along with the BBC nations and regions radio services, and Asian network (which are all highly politically sensitive), in total the current costs of these services are c£350m, so with some brutal merging might be reduced to £300m. This is a big, politically sensitive number for the government to be handing over from the public purse - but the alternative of 40%-50% cuts and decimating the ad market is surely politically even worse? And all this would come at the horrible risk of making these stations feel much more subject to regulatory/political capture. All of the digital offshoots would have to go too I suspect as simply being unsustainable within a constrained GiA budget 

This would leave just R1/R2 - which might well be effectively privatised. Even here I would worry about sufficient extra ad income being available, and the strategists inside Global, Bauer, NewsUK and other organisations would have to make some pretty careful calculations before bidding, about how much of the existing R1/R2 audiences would stay in an ad-funded environment, and what the overall effect on the size of the radio ad market will be. Undoubtedly many of the programming elements which make R1 and R2 unique would be lost in the move to the commercial sector.

So both the BBC radio networks and the big commercial players (Global, Bauer and NewsUK) would all be affected, in whatever scenario can be envisaged. I simply cannot see a way in which UK radio in its current form survives the collateral damage to BBC radio and knock-on effects on the commercial sector that the elimination of the licence fee would entail. Both sectors would become poorer, and both would inevitably sacrifice any non-essential output for cost savings. Can you imagine what 40% cuts to BBC network radio services will sound like, or what would be lost in a merged R4/5live? The quality, breadth and depth of their output will be immeasurably damaged. No doubt there are efficiencies to be made, but the size of cuts likely to be needed goes way beyond anything a firm of management consultants might suggest I’m sure.

In principle, and as someone who generally supports a libertarian approach to economics, I can obviously see why mandatory poll-taxes are bad things. I can also see arguments both for looking at the level of the licence fee and whether it should be constrained, and also whether or not greater external scrutiny of the BBCs editorial output is needed - but both of these points are outside the scope of this blog, and areas that will come under separate debate elsewhere. Whether or not they require the wholescale dismemberment of the current funding model is open to debate.

However, as regards the totality of the effect the licence fee has had on the UK media landscape, in my view this particular poll-tax has allowed a critical industry sector, broadcasting, to survive and thrive on more than just ad revenue and subscription, by adding in the licence fee income. That three legged funding approach has fostered one of the best broadcast eco-systems (TV and radio) in the world. There is more than just economics at play here too. BBC news is the most highly regarded source of information we have - critical to a healthy democracy - and much of its integrity is driven by its radio services; we punch way above our weight culturally across the world because of our strong TV sector, underpinned by the BBC and cross-fertilised by radio; and finally the supply of advertising is essential for a free market economy to operate, and commercial radio is a vital cog in that structure. 

For all these reasons, alongside the obvious damage it would do the the medium I have worked in for 40 years, I’m just not convinced that this is all worth sacrificing on the altar of changing a satisfactory (if disliked) licence fee to a voluntary subscription model, as a “punishment” for something the BBC may or may not have done, or because of a particular philosophical dislike of publicly-funded broadcasting, or because you are unhappy with the editorial line taken by The Today programme on R4. We are in danger of throwing out both the baby and the bath with the bath water here if we are not careful.

How we judge the ARIAs

Well, it’s awards season once again - and actually for the first time in my memory we have a set of radio awards that are roughly in sync with those of TV and film.

I’ve been chairman of judges for the ARIAs for four years now, and given the controversy we’ve seen with the BAFTA and Oscars nominations, I thought it might be useful to explain how we judge the ARIAs and endeavour to achieve balance between the sectors in our industry.

There are two areas we focus on. The first is the pool of judges. We aim to have around 100 judges in total across the 20 odd categories. Four judges for most, with more for the bigger categories where we have to have multiple rounds of judging. It’s obviously impossible to maintain complete gender, age and ethnicity balance in every set of four judges, but we try to ensure a balance in each group across most of those characteristics. Certainly across the 100 or so judges in total there is pretty much a complete balance to ensure genuine diversity across everything we deem important. We also ensure that head judges for each award are always either fellows or academy trustees, there is always someone from both a BBC and independent/commercial background, and one of our recent “30 under 30” winners is included in each set to ensure age diversity.

Each set of judges runs entirely independently - so there shouldn’t be any “groupthink” going on, and they initially score every entry according to set criteria to deliver a list of nominees, and then review those nominees qualitatively in a group discussion setting to decide Gold, Silver and Bronze.

Because each decision is made in isolation, it has been possible in the past for one piece of audio to be entered into multiple categories and end up winning multiple awards. There’s a school of thought that this is fine, but our view has been that with only a small number of awards to distribute, across a very disparate range of categories, and with a big variance in the resources available to entrants, we ought to limit multiple entries in adjacent categories so as to broaden the winner base. We’ve done this by pairing a number of categories - effectively saying for example you can’t enter both the “best music breakfast” and “funniest show” categories with the same show - you have to put two completely different entries in. This seems to have worked pretty well in focussing nearly everyone on giving one category their best shot.

Much has been made in the press about the parity in nominees between BBC and commercial/community/independents - but that is quite deliberate. We have a unique audio industry in the UK - not comparable to TV or film in its structure. Two roughly equal dominant sectors (BBC and commercial), funded in entirely different ways, but achieving pretty much parity in terms of audience delivery, alongside a significant number of independent production companies who in the main focus on supplying the BBC, newer community operators growing alongside commercial, and now a growing pool of podcasters. It would be entirely possible for any one of those sectors to get swamped in any judging/nominations process, ultimately not reflecting the diversity of the sector as a whole. In order for that not to happen, we have taken the following approach. 

In the background, without bothering the judges, we split the entries into two pools, BBC (including indie productions for the BBC) and commercial/community/indie podcasts etc. We then give the judges, after they’ve scored all the entries as a whole, the best three from each pool as finalist nominees. Only in a couple of categories (Drama or Commercial Promotion for example) do we relax this rule and allow for a preponderance of BBC or commercial nominees. We want the best from across the industry to be represented at the nominee stage - and we want judges to qualitatively debate the relative merits of, say, a local commercial show vs Greg James on R1 for best music breakfast at that final awards allocation meeting, or an indie podcast to be compared to and debated against File on 4 for a best factual gong. It may well be that in the end, the best three entries in a particular award category are all from the BBC, or all three are from commercial/community etc, and that’s fine - no deserving entry will have been denied a gong by our process, but this approach means the very best audio from across the industry will have had a chance to be judged against its peers.

The one award which falls outside this system is our new “moment of the year”, where the entire industry was asked to nominate individual stand-out pieces of audio. A special committee of trustees then filtered that down to just 10 nominee “moments”, and we are going to let the Great British Public decide which of those 10 is the most worthy, via a public vote backed by the Radio Times. I think this is a really exciting new development and look forward to seeing how the votes go - it’ll be fascinating given the quality of the nominees.

Finally, it’s obviously disappointing that not every company participates in the ARIAs. All I can say is that the Academy is trying it’s hardest to make the awards as open, inclusive and welcoming as possible, and will keep up its efforts to persuade everyone within the business to join in our annual celebration of the best radio and audio across the UK.